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| Additional information |
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| Professional Financial Advisors, LLC |
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Profile:
Professional Financial Advisors, LLC was founded with the goal of assisting our clients in every aspect of their financial lives. We’ve provided the most comprehensive and personal service available, thus earning a reputation for excellence in our industry. For each of our clients we strive to help create financial stability to provide financial independence. |
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Overview:
Having an investment philosophy is important if you are going to risk money in the markets. We believe most people want their finances managed in a way that reduces the risk of investing and simplifies their life so they can focus on the things in their life that are much more important than money; things such as enjoying retirement, helping out their family, or working with organizations that are important to them. We believe most people don’t desire to make as much money as possible, but instead want to live a low-stress life and enjoy the things that really matter to them.
As demonstrated by last decade – also known as the lost decade – many investors have achieved little to no market gains by buying and holding the U.S. equity market (S&P 500). Their portfolios were adrift in the ocean, essentially going nowhere. Albert Einstein said the definition of insanity is, “doing the same thing over and over and expecting a different result.” Those who chose this approach are like the frog that is put in a gradually warming pot of water on the stove – the frog is cooked without ever realizing its environment changed. Many investors experienced this same phenomenon the previous ten years and their portfolio was cooked without ever realizing the environment had changed.
Our investment philosophy is based on facts; not what should happen or what ought to happen. It’s not based on theories or predictions.
Fact-based investing makes NO market predictions.
It does not require the markets to be rational or efficient
It does not maintain static allocations regardless of market circumstances
We zero in on measurements that reflect the continuous tug-of-war between supply and demand. We believe that every single tick in the market - and every trend - results from imbalances in supply and demand. After all, if there were no imbalance of supply and demand, prices wouldn't budge at all! Longer-running trends are, in our view, driven by longer-term imbalances in supply and demand. Our supply and demand analysis reveals two truths about the Market.
Markets Trends -Trends can occur in any time frame, from intra-day to multi-decade. The most useful trends for us are those that last from months to years at a time, commonly known as Bull Markets and Bear Markets. The fact that Markets are irrational and prone to extremes can actually work to our advantage, because irrationality typically extends trends, both up and down.
Momentum - The second truth derived from supply and demand analysis applies to the selection of portfolio components. In Fact-Based Investing, the selection of portfolio-components is based upon the tendency of performance to persist. Researchers have labeled this phenomenon as ‘momentum’, and have documented its widespread existence in the markets over a span of many decades. In his Second Law of Motion, Sir Isaac Newton said that a body in motion tends to stay in motion. Similarly, in the Stock Market, high performance has been shown to be more likely to continue than to reverse, at any given time. The same holds true for low performance. It, too, has been shown to be more likely to continue than to reverse, at any given time!
Using continuous measurements of “what-is,” Fact-Based Investing simply selects high performers in portfolios, and excludes low performers. Fact-Based Investing makes no attempt to predict future changes or “the next big thing,” instead it relies on careful measurements of actual performance to guide portfolio construction. |
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