We manage money differently than our competition, and our beliefs and philosophies set us apart from our mainstream peers. Based on our experience in actively managing accounts, we believe:
- To succeed over the long term in the dynamic markets that are constantly changing and evolving, the investment approach must be disciplined yet flexible and evolving.
- Stock market forecasts are entertaining and make nice headlines, but are not useful for making money.
- Making investment decisions based purely on fundamental analysis is a mistake. Even if your analysis is completely right, until other investors begin to buy or sell... nothing happens. At TCM, quantitative models drive our investment process, followed by technical and fundamental analysis.
- Application of behavioral finance investment theory is very useful in determining portfolio allocation. Crowd sentiment is a very important factor that must be constantly measured.
- Traditional methods of fund selection focus on long-term track records even though research has repeatedly shown that such data is not indicative of future performance. We focus on what the market is doing now, not what it has done over the past three to five years.
- Spreading a portfolio across all major market segments in the name of diversification is a cop-out. Why invest in sectors that are going nowhere?
- Most low turnover managers are overpaid for what they do. How difficult is it to buy some stocks and watch them go up and down forever?
- Portfolio turnover, in and of itself, is not bad. Also, simply focusing on fund expenses, rather than what an investor earns, is a big mistake.
- Matching the performance of the S&P 500 is not particularly impressive. If that is the objective, then investors may as well purchase an index fund.
Our clients are paying us to actively manage, adjust, move, and change-their portfolios, depending on market conditions. This is what most clients believe their managers are doing, when in reality, most advisory firms do not provide this service. They usually diversify across all asset classes and take a 'buy-hold-hope-pray' approach.