Media Coverage
Why staying the course no longer works
October 12, 2010
Mainstream investment philosophy directs us to invest assets in the financial markets while mitigating risk through prudent diversification. Inherent in this approach is the belief that the best-performing asset class will vary from year to year and cannot be predicted.
But what did we learn in 2008, a year when nearly all asset classes showed tremendous correlation on the downside? That this approach does not work. Moreover, clients are tired of the roller coaster ride of investing and are demanding an active approach that better protects their wealth. Telling clients to “stay the course” isn’t a solution.
Many studies have proved the importance of asset allocation decisions in meeting investors’ financial objectives. A well-known study by Gary P. Brinson, L. Randolph Hood and Gilbert L. Beebower, “Determinants of Portfolio Performance,” (The Financial Analysts Journal, July/August 1986) analyzed asset allocation decisions and returns of 91 large pension funds.
The authors concluded that asset allocation decisions accounted for greater than 90% of the investment return and that active choices were less important, if needed at all. Many investment professionals continue to point to this study to prove that asset allocation is the most important investment decision and to support their buy-and-hold approach.
After the past decade of bubbles, followed by corrections, in technology, commodities, real estate and most recently banking, investors are questioning the traditional buy-and-hold approach.
Investment professionals today realize that the nature of investing has changed dramatically over the past 10 to 20 years — but what is the real difference? Technological advances such as rapid-trading programs, quantitative investment management, short selling and the growth of the short-term-focused hedge fund business have all contributed to the challenges facing the long-term asset allocation mind-set by permanently increasing volatility, cyclicality and trading volume.
WHAT’S THE SOLUTION?
Rapid-trading programs are not the answer, as these are difficult to implement in an individual client portfolio and they tend to be extremely tax-inefficient.
However, tactical investment strategies that utilize active management are a more attractive option. In fact, a new style box is rapidly emerging in tactical exchange-traded-fund strategies. Tactical strategies seek to allocate the portfolio to the asset classes that are most attractive at a given time, and tactical, short-term adjustments are made to take advantage of market trends. Cash is a viable investment option in many of these investment strategies, facilitating wealth preservation and downside risk mitigation.
Many advisers have been slow to adapt to this tactical-investing approach because they have been trained to believe that market timing doesn’t work. To change this mindset, advisers need to view these tactical investment strategies not as market timing but as active and systematic buy-and-sell disciplines made possible due to the major technological advancements over the past 20 years
Active investment strategies that allocate assets tactically to areas of the markets that are trending well (including cash), while avoiding those areas that are declining, are a sophisticated, quantitative investment solution.
Advisers can consider active tactical investing a permanent component of a well-diversified total portfolio. A shrewd decision would be to segregate 20% to 30% of a client’s portfolio to invest in tactical strategies available from separate account managers or through pooled vehicles.
Advisers need to do due diligence and seek managers with real long-term track records, proven tactical formulas, strong reputations and competitive fees. Advisers should be careful when reviewing a manager’s hypothetical back-tested results and should instead seek historical figures compliant with global investment performance standards.
Investment strategies that can employ a high level of cash add true differentiation, downside protection and wealth preservation. Clients will appreciate the proactive nature of tactical management, especially in downtrending markets. The next time there is a large market decline and your client’s portfolio holds a large defensive cash position, you will have something positive to say beyond just, “Stay the course.”
Can Advisors Give Clients What They Demand?
October 8, 2010
An article written by David J. D’Amico, President of Braver Wealth Management, was published in FA Mag on October 4, 2010.
Posted on: October 8, 2010
How to Protect Clients Against Downside Risk
October 1, 2010
By: David J. D'Amico, CFA
Mitigating portfolio risk is one of the most important issues facing high-net-worth clients and advisors today. Most focus on asset allocation – diversifying assets across a wide collection of low correlating asset classes, market capitalizations, and geographical locations, in order to reduce risk. Asset allocation accounts remain fully invested, even when the markets are declining day after day after day. But we believe remaining committed to such a strategic asset allocation approach can be a liability today.
Published on: October 1, 2010
Source: FUNDFire.com
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Why I Married an Android
September 22, 2010
By: Kenny Rounds CEO, Braver Technology Solutions, LLC
Choosing new mobile phones for our office was actually a fairly easy decision. We are in the enviable position of not only seeing but configuring almost all of the phones that are currently on the market. When it came time for us to upgrade to new devices we just tapped into the knowledge we already had and made the best decision for our business based on the experiences we have had in the field.
Posted on: September 22, 2010
Revising Total Beta
September 6, 2010
By: Sarah von Helfenstein, MBA, AVA
Source: Business Valuation Review
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Real Options ‘in’ Economic Systems Exploring Systemic Disturbance Causes & Cures
September 6, 2010
By: Sarah von Helfenstein, MBA, AVA
Source: Published in Professional Journal
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Debbie Levenson Quoted in New York Times Article
August 24, 2010
Debbie Levenson of Braver Wealth Management quoted in an online dating article featured in the Your Money section of The New York Times on Saturday, August 21st.
“The trick, it seems, is to use such subtle codes, the same way people slip in mentions of their jogging habit rather than coming right out and saying that they’re not overweight. So rather than projecting frugality outright, try dropping a classic investing book like “A Random Walk Down Wall Street” by Burton G. Malkiel, into the list of things you’ve read recently, suggested Deborah H. Levenson, a financial planner with Braver Wealth Management in Newton, Mass., who recently became engaged to a man she met online.”
Braver Voted #1 Accounting Firm Winner in the Banker & Tradesman “Best of 2010 Readers Poll”
August 3, 2010
Braver was selected by B&T readers as one of the best providers of accounting services to the Massachusetts market. B&T readers are among the most influential people in the real estate, financial, and construction industries, and you have clearly made an impression on them.
Thank you to our clients, employees, and friends for voting Braver “Best of 2010″!
Is IFRS for SMEs For Your Company?
July 1, 2010
By: Robert S. Miller, Shareholder
Imagine if the federal tax code were reduced to the length of a novella. Well, something nearly as unlikely has taken place. Private companies — which make up more than 95 percent of United States businesses — now have the option of replacing 17,000 pages of accounting regulations with the newly published 230-page International Financial Reporting Standards for Small and Medium Sized Entities, known as IFRS for SMEs.
Posted on: July 1, 2010
Source: Financial Executive [www.financialexecutivemag.com]
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Just When You Thought Securities FLPs Were Dead: Mirowski Beats Section 2036(a)(2)
May 20, 2010
By: Edward J. Giardina, Braver Valuation Services
“The IRS has been successful in its attacks on family limited partnerships (FLP) whose principal asset is a portfolio of marketable securities.”
Posted on: May 20, 2010
Source: The Value Examiner
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