More Than One Way to Skin a Cat
When it comes to investing, there are numerous ideas on the table, but the most successful will have the same underlying theme. Ultimately, successful investors want to find a way to buy stocks that are worth more than the initial purchase price when sold. The investment holding period, which can range from days to years, is unique to the investment strategy being implemented. Generally speaking, investors looking for longer term growth should lean toward holding more equities in their portfolio while others who have a shorter-term focus tend to invest more assets in fixed income type securities such as bonds. The challenge is to arrive at the desired balance between riskier and less risky asset classes while achieving the highest return.
Traditionally, striking the right balance between the various asset classes forces investors to compromise between return and risk. Choosing higher returns means investing in riskier assets with higher volatility over the short term while investors attempting to dampen short-term volatility invest more in less risky lower returning assets. Also, choosing multiple asset classes to achieve your diversification goals can result in higher fees which reduces your investment return even further. With the right investment strategy, investors do not have to give up higher returns to avoid short-term year-over-year volatility. The key is to have a superior equity strategy that provides significant upside potential while providing the short-term safety of a portfolio heavily invested in less risky asset classes.
Investors seeking to achieve adequate diversification should not have to give up returns by over investing in lower returning assets. Adequate diversification can be achieved by selecting a portfolio of stocks that strike the right balance between quality, value, and financial strength. In addition, the correct rebalance cycle is also a necessity as it helps to significantly reduce year-over-year volatility. For instance, a 100% equity portfolio based on our approach which focuses on large capitalization stocks with the right characteristics produces results far superior to a 70/30 portfolio with lower downside risk. Also, using the latter constructed equity portfolio with an aggregate bond index would be far superior to any other blended approach given the superiority of the stock portfolio. Over the last 18 years, an equity portfolio constructed as such had no returns less than 7% while averaging more than 20% on average for the18 year period. Having a base equity strategy as effective as our approach would lead to far superior long- and shorter-term strategies.
At Investoristics, our goal is to provide investors with an equity solution that is easy to implement while at the same time offering a portfolio that outperforms all indices with significantly higher returns and a lower risk profile. Most investors, including high net worth individuals, family offices, pension funds, insurance companies, and investment companies can benefit from this particular solution. Old ideas are great and effective for meeting goals but for investors looking to exceed goals then Investoristics has a solution that might be right for you. If you are an investor looking for a better approach, please contact us to find out more about our ideas.
