INVESTMENT DISCIPLINES

Our truly tactical rules-based investment disciplines only buy when our decision rules show an uptrend has begun or is in progress. We don’t just look at share prices, but use exponential moving averages to help drive our decisions.

• We buy only when our decision rules show an uptrend has begun or is in progress.
• Once a given asset class or sector begins an uptrend that is adequate to generate a “Buy” signal under our proprietary discipline, we analyze all mutual funds and ETFs in that asset class or sector to determine which to buy.
• “Buy” signals are quantitative – and the discipline is the contrary of our trailing stops for “Sell” signals.

We use an extra moving average for a Buy, because we want more evidence that a new uptrend may have started for us to put money into risk, than to take money out of risk (Sell signal).

• As part of our risk-mitigation discipline, we give preference to asset classes/sectors with low volatility. Our trailing stop bands will be tighter thus when the trend reverses from up to down, we give back less.
• When there are multiple asset classes/sectors in uptrend, preference is given to those that are not highly correlated to each other, or the overall portfolio.

We treat a Sell signal as a mandate (we sell to prevent any possibility of further damage to the account). A “Sell” signal occurs when the price rises below the recent high of the lower band.

• We monitor and review our trailing-stop-loss discipline daily for every holding.
• When the price of a holding declines below the trailing-stop (lower band), we sell, and move temporarily to cash.
• Our trailing-stops are completely quantitative and are proportionate to the historic volatility of each asset class/sector.
• Our stop-loss discipline helps to limit the impact of any sustained decline on the overall portfolio.