Whether you work with a financial advisor or “go it alone,” there are a variety of investment vehicles that can be used to achieve your allocation objectives, including mutual funds, exchange traded funds (ETFs), and individual securities. Are all investment vehicles created equal? For taxable investors, the answer is a clear “NO.” To illustrate this conclusion, the following is a brief study of the total cost taxable investors pay for mutual funds - some components of which are visible while others are well camouflaged.
Volatility is a measurement of the ups and downs of price movements. Stock prices change because the everchanging economic conditions impact companies in different ways depending on the nature of their business. Investors react to the news flow by buying or selling based on their view of the future. Some stocks experience more pronounced volatility than others.
Ahhh…high school physics class…lots of wonderful memories! It was here that we were introduced to the concept of “momentum,” a measure of the rate of change of an object in motion. Years later, the concept of “momentum” popped back into view unexpectedly in the field of finance. For investors, momentum refers to the rate of change (price performance) of an investment relative to competing assets. Studies on investment performance among stocks showed that momentum exists in relative stock price movements. Stocks that outperformed (high momentum) in the recent...
What constitutes a “high-quality company”? Among academics and investment professionals, the metrics used to identify quality companies differ. Many financial measures have been researched in the pursuit of a factor premium that “aims to capture the excess return of ‘high quality’ companies vs. the market.”
Blue Chips, Red Chips… Large Cap, Mid Cap, Small Cap- most investors understand there is a range of different sizes of public companies. Today, the largest companies have stock market capitalizations (the total number of shares outstanding multiplied by the stock price) approaching one trillion dollars, while the smaller stocks in the public realm sport capitalizations less than $50 million. The largest companies are extremely well known, widely held by investors, and heavily researched on Wall Street. In contrast, most investors have heard of only a few dozen of the small-cap companies making up the Russell 2000 Index. Long ago, investment strategies began to specialize in stocks of different sizes. How does the size differentiation matter?
High Probability Advisors, LLC was created to take advantage of the investment benefits offered through the use of specific “factors” within the construction of our portfolios. Factors are not new; the structure has been used by practitioners for more than 40 years. The combination of several factors in a multi-factor strategy is a more recent development. Each of the five factors utilized by HPA has been identified and supported through academic and industry research as providing an evidence-based approach to enhance return and/or reduce volatility within an investment portfolio.
Call (585) 485-0135 to discuss how a factor-based approach could pay off for you.