The Herd represents approximately 85% of investors – investors who make decisions in an emotional state of mind with a short time horizon and a short fuse. They buy and sell based on greed and fear. When a stock goes up, they buy high. When a position begins to decline, they ride it down and often sell low. If the assets of the long-term investor are mingled with the Herd via mutual funds or large institutionally managed private accounts, the investor’s holdings are attached to the same emotional roller coaster.

 

We have spent over two decades developing a proprietary patent pending investment management system that totally removes human emotion from decision making, thereby separating our clients from the Herd. It is based on three key disciplines which we use to our clients’ advantage.

 

 

Holding Periods

 

The first discipline is Holding Periods. The equity markets for any given asset class make a full up-and-down cycle every five years. That means an investor should remain in an asset class for a full five year cycle in order to achieve its highest high or recover from its lowest low. However, most of the Herd operates with a much shorter holding period, causing performance to be driven by short-term, emotional decision makers. Therefore, we ask that any investor who joins our system remain committed to a five-year holding period.

 

Inverse Correlation

 

Inverse correlation simply means that in any given market cycle, not all asset classes behave the same. Oftentimes they rise and fall inversely to one another. Therefore, we try to maximize inverse correlation when integrating asset classes into each portfolio, thereby reducing the volatility of the portfolio without sacrificing growth. 

 

Rebalancing

 

Most firms and asset allocation portfolios offer rebalancing, either monthly, quarterly or annually. This pre-set rebalancing returns your portfolio to its originally intended allocation regardless of the market. Our system uses pre-determined trigger points based on historical average discrepancies between the various asset classes, enabling us to take advantage of opportune buy/sell cycles in the market.

 

The combination of these three disciplines, and removing human emotion from the investment process, allows Discipline Advisors to add value to managing your investments. This same disciplined approach makes it possible to manage accounts during the wealth accumulation stage as well as the income withdrawal phase of the portfolio. By allowing us to significantly and strategically reduce the number of shares sold to produce retirement cash-flows, our system adds to the long-term growth potential of your portfolio, maximizing the amount of income you can withdraw without diminishing principal.