Letter To A Friend {Part III}

Every investor should have a long term investment strategy. For my clients this is strategy comes by understanding their unique risk/reward criteria and then incorporating that into one of our six investment disciplines. Each of these strategies is based on something I call the playbook. The playbook is situational analysis based on historical market results. We study money flows along with the disciplines of fundamental and valuation analysis to see how markets have responded to similar historical events. The playbook gives us different scenarios regarding current market activity. We use it to then formulate our game plan. The game plan is a tactical and strategic allocation of assets based on what the playbook tells us has historically occurred. It is further refined to the specific risk/reward parameters of our various clients.

I want develop investment strategies that reduce and control client portfolio risk while attempting to give clients returns based on their specific investment goals and concerns. Risk can never be completely eliminated from a portfolio. However I believe that most types of risks can be defined and to a certain extent mitigated. I primarily invest client assets by using Exchange Traded Funds {ETFs}. In fact I believe that I have created value by our investment research on how ETFs trade while also developing strategies for investing in this relatively new and exciting asset class.

Tomorrow:  Conclusion.