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The Importance of Sell-Side Discipline

Investors are learning that a “buy and hold” strategy may not be an effective approach to managing a larger investment portfolio. Many Baby Boomers survived the tech bubble of 2002, watched their portfolios recover and then were set back (often for years) during the mortgage bubble of 2008. Despite this trend, a large number of advisors are still adhering to buy and hold asset allocation, also known as Modern Portfolio Theory.

When Nobel Laureate and father of Modern Portfolio Theory Dr. Harry Markowitz was questioned about the failure of diversification to mitigate risk in 2008, he replied, “Well, it was only a theory.”*

We agree with Dr. Markowitz, which sets us apart from advisors who are still implementing buy and hold strategies. An important trait to seek in your financial partner is vision. At 1 On 1 Financial, we have the vision and humility to change strategies as the economic climate changes. When markets trend down for long periods of time, so do your investments. We believe that our sell-side discipline helps you get out early on an extended decline, possibly saving you years of recovery.

We set triggers for our client’s portfolios, which we monitor to help us determine when we should sell a particular investment. We use a philosophy developed by Charles Dow in the late 1800s called “point and figure charting.” It’s not new. It was pushed aside when buy and hold became the methodology fueled by nearly 20 years of uninterrupted appreciation during the last two decades of the 20th Century. Whether a strategy is new or old is not important, only if it serves the best interests of our clients.

Our investment strategy won’t guarantee that you will make money or that we will outperform our given benchmark. But we can assure you that we will evaluate an allocation for your investments and recommend new strategies when appropriate by asking the fundamental question: “Is this a good company or fund to own?” and the technical question: “Is now a good time to own it?”

If our approach makes sense to you and you are seeking personal, collaborative guidance, then we are the firm for you.

*This Is Your Time, by David Richman & Alan Parisse, third edition, 2009, page 48.