Our Investment Process
Combining value and sentiment analysis...
Over the long term, asset markets and stocks, in particular, serve as "weighing machines".
Over the short term, they fluctuate more as "voting machines".
This is why it is important to track investors' sentiment and risk appetite next to more tangible valuation metrics.
And why we track nvestment flows in and out of ETF' to assess the flow of money and monitor options pricing and positioning, sometimes as a leading and sometimes as a contrarian indicator.
There is no such thing as smart or dumb money. Both matter...
....with a long-term trend/momentum following framework.
We apply the same technical analysis framework to all elements of our investment universe, reviewing trend and momentum conditions on all of them on a daily basis. We try to swim with the tide for as long as the trend holds, exerting caution when momentum indicators suggest overbought or oversold conditions.
Investment Universe
Cash, bonds, stocks, precious metals, commodities, and foreign exchange are all part of our investment universe.
Liquidity is a key priority and all our investments can be liquidated or hedged on a same-day basis.
Fundamental vs. Technical Analysis
We evaluate fundamental and technical considerations for different reasons, essentially relying on valuation to pick and choose investment themes or certain asset classes and technical considerations to fine-tune timing.
Time Horizon
We focus on the long view but retain a nimble as opposed to a dogmatic stance to help us ride out volatility spikes and improve the quality of returns over time.
Our job is to adapt more than to forecast. Recognizing mistakes early can be costly in terms of pride ... and accrues positively over time.
Investment Vehicles
We invest primarily in highly liquid sectorial, regional and thematic ETFs offering instant diversification across asset classes.
We also apply a layer of security selection for certain stocks matching our investment criteria, subject to additional constraints to reduce concentration risk.
We use first-generation derivatives (futures and options) on major equity indices, FX, and precious metals to fine-tune the exposure of the strategic asset allocation and for hedging purposes. Futures are often the most liquid and cost-effective investment instruments to implement short-term trading or hedging strategies, being exempt from transaction (stamp tax) duties.
We do not invest in exotic options or structured products to remain liquid at all times.
Responsible Investing
We incorporate ESG (environment, social, and governance) considerations in the construction of our strategic portfolios, doing so in a way that does not sacrifice return or make us fall prey to a marketing buzz.
Ethical investing does not have much to do in following the recommendation of consultants telling us to own the Gafa's because they are on the right list of nonpolluting industries (for some reason most of them are on the green list...). But more to do with investing in companies trying to make cars and planes drive and fly on hydrogen rather than electricity!
Ethical investing also means investing in the best interest of the end investor and as a true fiduciary.
Ethical investing ought to be pursued at the same time as "responsible investing" in the interest of society as a whole and of the end investor.