We actively manage a portfolio of equities, exchange traded funds, and options. Our methodology focuses on the discovery, execution, and prudent management of investment ideas that possess the potential for strong gains with minimal downside risk.

Idea Generation
  • Investment ideas are initiated by filtering out stocks and industry groups that exhibit the potential for gains given the current trend and volatility in the overall market, and within individual industry groups. Some of the key parameters that are evaluated include the following:
    • Stock's relative strength within its industry group, and in the overall market
    • Industry group's relative strength versus the overall market
    • Outlying price movement, either up or down, on heavy volume
    • Extreme insider buying
    • Stocks making new highs or new lows
  • The target list is narrowed by reviewing the recent price chart, along with a combination of technical and fundamental factors for each company.
  • Potential targets may be eliminated from consideration if the overall market or industry group is currently moving against the direction of an expected price move.
  • Possible trade entry points and longer term price targets are established for those ideas that exhibit the strongest potential for gains, and they are added to a watch list.
  • An entry point is typically set up to capture the heart of a price move while minimizing the risk of losing capital. It is not expected to perfectly pick low points and high points in a stock's price.
  • As entry points for stocks on the watch list are crossed, trades are entered.
  • If an entry point for a stock is not crossed, it remains on the watch list for regular evaluation versus the market and its industry group peers.
  • Unexpected changes in a stock's industry group or in overall market conditions may affect the target entry price, or may change the decision to enter a position altogether.
  • Positions are typically not entered if the overall market or industry group is moving strongly against the direction of the expected move in the target stock.
Risk Control
  • Our disciplined risk control approach is designed to exit positions that do not make the predicted price move.
  • The current market and industry group environment affects the risk control tactics for each position.
  • A strong market or industry group represents a tail wind for the upward movement of individual stocks.
  • A weak market or industry group represents resistance against upward movement of stocks.
  • We monitor a series of market and economic indicators to assist us in evaluating market conditions. No one indicator is dominant over the other—they are evaluated collectively. Some of the indicators include the following:
    • Money supply
    • Interest rates
    • Inflation
    • Federal reserve action
    • Market sentiment
    • Volatility
    • Critical commodity prices and inventories
  • If the market or the industry group that a stock is in starts to deteriorate, exit points are tightened. If multiple positions are owned in the same industry group, the poorest performing positions may be closed.
  • As favorable price moves occur in a position, profits may be taken off the table depending on market and industry group conditions.
  • Risk is also controlled by using hedges against possible adverse price movement. Options and exchange traded funds are often used for this purpose.