**Since developing this strategy has taken over 18 years to develop it would not be uncharacteristic to believe that this will continue to evolve as new research and skill is developed. This representation above is for understanding the philosophy we continue to employ and is provided for informational purposes only. It should be noted that this diagram is not a suggestion nor recommendation to invest using this example.
Our approach to portfolio management generally emphasizes long term purchases which are generally held for longer than one year. At times, however, short term purchases are made which are subsequently sold in less than one year.
The primary investment strategy used with client accounts is a diversified asset allocation emphasizing mutual funds and ETFs that are broadly diversified. The size of asset allocations are determined by the secular market cycle (as calculated by Robert Shiller, Professor at Yale Univ. and Ed Easterling at Crestmont Research), the price of the S&P 500 index relative to the historical prices, the percentage increase in the S&P 500 index for a decrease in asset allocation and the percentage decrease in the S&P 500 index for an increase of allocation.
During secular bear markets (as calculated by Robert Shiller, Professor at Yale Univ. and Ed Easterling at Crestmont Research) a unique risk to this strategy is the possibility to under perform the S&P 500 index when the price of the index goes past the last historical all time high (when there is a decrease in stock index allocations to the portfolio) and increase in volatility in the investment portfolio when the S&P 500 index has fallen past average historical bear market lows as determined by percentage loss in the index (when there is an increase in stock index allocations to the portfolio).
Our investment philosophy is also a blend of conventional and unconventional methods that takes the complexity of the market into account and strives to make it simple and understandable to our clients. We strongly believe that patience and a flexible actionable plan for bear markets should be initiated prior to entering into a downward market. We do not abide by the conventional method of passively watching our clients investments during significant down markets. It is our goal to ride through a bear market with well-defined actionable steps that enable our clients to take advantage of significant down markets.
The client’s portfolio may be based on the client’s liquidity needs, tax implications, tax consequences and AustecWM’s perception of the amount of volatility that the client can tolerate. Measuring a client’s volatility tolerance is a difficult, imprecise task. The client may change these objectives at any time. Clients will be offered an Investment Policy Statement that documents their objectives and their desired investment strategy.