Are you using a disciplined, evidence based approach when it comes to your investments? Are you tilting the odds in your favor by using history as a guide to analyze and create rules on how and what to invest in? If the answer is no - have no shame because most aren't doing this either. In fact many people think investing is just random and there is no way to win the game other than being diversified and staying the course.
While asset allocation is a good long term investment strategy, using factors within this can enhance your chances of success even more by offering the potential to achieve higher returns and lower your overall portfolio risk.
Why Factor Based Investing? When you think about it, we test everything in life - from the toothpaste we use to the car we drive to the house we buy - but for some reason, we just completely abandon this philosophy when it comes to our money!
By using actual historical data, we can create rules that our investments must adhere to in order to be included in what we invest in. This disciplined approach focuses on consistency and takes emotion completely out of the game.
In addition to this, our custom models can be incredibly tax efficient through the use of individual stocks and securities. We can tax loss harvest to keep your taxes and investment fees down while still creating a bespoke portfolio that fits your needs.
The result is a portfolio created based on a combination of strategies that are custom built for you to help increase your odds of winning the long-term investment game.
Factors can include many things such as value, quality, momentum, and size. Value is finding securities that are "cheap" and are trading at a discount to their intrinsic value. Quality is based on investing in companies with strong financials including balance sheet, cash flow, earnings, and more. Momentum is centered around the concept of investing in companies that do well historically in certain time periods with the odds that this will continue. Size is focused on investing in companies that are similar in market capitalization.
Rules are used in each of our models all based on the objective of the model. This could include including companies based on a certain size and excluding the rest. Or screening and filtering things based on score metrics and correlations such as earnings momentum, relative strength and correlation to oil. Our models start with a universe of securities that get whittled down based on these rules and rankings. Over time, these get updated on a regular basis which dictates any future model position changes.
Analytics involves the use of computer models and large amounts of data to try to predict the future price of investments. By looking at historically recurring patterns similar to current environments, the odds go up for the replication of investment performance and risk over time.
We create a portfolio of different models based on what makes sense for our client's investment goals and time horizon. These models could include one or several of the following such as the Bulls of the Dow, International Titans, Domestic Income, Small Cap Value, Recession 10, All Assets, All Cap Share Buyback, Global Income, Global Style Box Rotation and more. In addition, we also offer an Environmental/Social/Governance (ESG) model and/or a Biblically Responsible Investment (BRI) model if it makes sense and fits the client's wishes and desires.
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McHenry Capital, LLC is a registered investment adviser in the state of Washington and Texas. The Adviser may not transact business in states where it is not appropriately registered or exempt from registration. Individualized responses to persons that involve either the effecting of transactions in securities or the rendering of personalized investment advice for compensation will not be made without registration or exemption.
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