Point & Figure Charting methodology by Tom Dorsey. Look up Dorsey, Wright, & Associates. This could be the answer your looking for to help make sense of  managing portfolios by managing risk. The 3rd edition to his book was just released.

[quote=Ashland]


The question: What is your specific methodology to manage portfolios & what do you do to stay ahead?



Thx.[/quote]



1.) I know what I’m doing.



2.) Think in pictures. Decide on a top down allocation, and then have
some good choices for funds for each asset class. There are a huge
amount of mediocre funds out there. Most funds with hot track records got that way b/c of luck and not manager skills. So look for cheap funds with steady returns.

Read some books.

[quote=Ashland]I've been in the biz since 1998 & have just been confronted w/ an uncomfortable truth:

I don't know my arse from a hole in the ground when it comes to picking, measuring, managing and reallocating portfolios.

Yeah, I use Principia, and I've been talking upside/downside w/ clients since 2002 but that's not the it.

For instance, have you noticed w/ American Funds that it doesn't matter which 5 funds you pick you pretty well get to the same place? And isn't that all rear view mirror during a period when value stocks have really rocked?

The reason I ask the question is I've recently started doing a lot of wrap biz & it's not just about Franklin, American, and Hartford... It's about how do you create not only a strategic allocation, but manage that thru and ahead of the curve. For certain clients it makes sense to self-manage.

The question: What is your specific methodology to manage portfolios & what do you do to stay ahead?

Thx.[/quote]

Mutual Funds suck. Any numbskull can use them. Find something else to do and you will get a lot more business.

He asked a good question.  How do some of you knuckleheads survive?  Read a book???  That is history.

You have to use forward looking research.  Not what has happened in the past, but which funds are going to perform in the future. 

We have unbiased, internal research, that recommends funds.  PM me if you want to know more.

And they are NOT just American Funds, Franklin, etc.  Some great small shops like Keeley and even T Rowe.

[quote=vbrainy]

He asked a good question.  How do some of you knuckleheads survive?  Read a book???  That is history.

You have to use forward looking research.  Not what has happened in the past, but which funds are going to perform in the future. 

We have unbiased, internal research, that recommends funds.  PM me if you want to know more.

And they are NOT just American Funds, Franklin, etc.  Some great small shops like Keeley and even T Rowe.

[/quote]

How many of them consistently beat the indices?

[quote=Philo Kvetch][quote=vbrainy]

He asked a good question.  How do some of you knuckleheads survive?  Read a book???  That is history.

You have to use forward looking research.  Not what has happened in the past, but which funds are going to perform in the future. 

We have unbiased, internal research, that recommends funds.  PM me if you want to know more.

And they are NOT just American Funds, Franklin, etc.  Some great small shops like Keeley and even T Rowe.

[/quote]

How many of them consistently beat the indices?

[/quote]

You win the award for idiotic question of the day.  You are still talking about the past.  Believe it or not, some people want protection in good times and bad.  You get the best possible asset allocation, re balance it, and service the client.

You cannot control the market.  You control your service.

[quote=vbrainy][quote=Philo Kvetch][quote=vbrainy]

He asked a good question.  How do some of you knuckleheads survive?  Read a book???  That is history.

You have to use forward looking research.  Not what has happened in the past, but which funds are going to perform in the future. 

We have unbiased, internal research, that recommends funds.  PM me if you want to know more.

And they are NOT just American Funds, Franklin, etc.  Some great small shops like Keeley and even T Rowe.

[/quote]

How many of them consistently beat the indices?

[/quote]

You win the award for idiotic question of the day.  You are still talking about the past.  Believe it or not, some people want protection in good times and bad.  You get the best possible asset allocation, re balance it, and service the client.

You cannot control the market.  You control your service.

[/quote]

Nice sidestep, but no prize.

I think we can safely assume that the answer is, "None of them."

Why don't you use individual equities and guard them with stops?

Chris Davis, Tom Marsico, Dan Fuss. Those three right there have consistently outperformed their benchmarks for all conceivable time periods. And I would sleep well knowing a little Bill Gross and Marty Cohen were busy managing my money (even Nick Calamos, with his recent underperformance, would make the line up...).

The fact is, there ARE excellent managers out there. You simply need to fully understand their process and have faith in their ability to run money.

My point is that one can do equally as well with individual issues or ETFs, with less of a downside risk to the client.  Of course, the commissions are lower…

Chris Davis, Tom Marsico, Dan Fuss. Those three right there have consistently outperformed their benchmarks for all conceivable time periods. And I would sleep well knowing a little Bill Gross and Marty Cohen were busy managing my money (even Nick Calamos, with his recent underperformance, would make the line up...).

The fact is, there ARE excellent managers out there. You simply need to fully understand their process and have faith in their ability to run money.

Mutual Funds suck. Any numbskull can use them. Find something else to do and you will get a lot more business.

Unless they are inside a VUL or annuity?

[quote=silouette]

Mutual Funds suck. Any numbskull can use them. Find something else to do and you will get a lot more business.

Unless they are inside a VUL or annuity?

[/quote]

I don't use them in VA's, either, and I've never sold a VUL.

My methodology:

Use asset allocation, customized to client's personality. " Push" the allocation tactically, a little, based on market performance expectations.

Funds: work with my preferred providers, now Fidelity, Oppenheimer and Columbia, some ETFs, some individual securites mainly. Why? Train clients to expect steady performance, and branded, top down management of the fund managers themselves. Fidelity is not too shabby - if a fund manager develops a drinking problem, they are usually on it pretty quickly.

Lots of things work, simplification is pleasant. If you train your clients to focus on performance, that's what they focus upon...

Bobby is right, mutual funds are not very unique. But the you can sell sizzle and still enjoy the traditional benefits of diversification, professional management, liquidity and so on. There is so much BS about alternative investments, it is true high net worth expect more, but I think we are talking 5m AUM +.

I don't use them in VA's, either, and I've never sold a VUL.

Well then if you stop molesting mom, you might get an apology.

[quote=silouette]

My methodology:

Use asset allocation, customized to client's personality. " Push" the allocation tactically, a little, based on market performance expectations.

Funds: work with my preferred providers, now Fidelity, Oppenheimer and Columbia, some ETFs, some individual securites mainly. Why? Train clients to expect steady performance, and branded, top down management of the fund managers themselves. Fidelity is not too shabby - if a fund manager develops a drinking problem, they are usually on it pretty quickly.

Lots of things work, simplification is pleasant. If you train your clients to focus on performance, that's what they focus upon...

Bobby is right, mutual funds are not very unique. But the you can sell sizzle and still enjoy the traditional benefits of diversification, professional management, liquidity and so on. There is so much BS about alternative investments, it is true high net worth expect more, but I think we are talking 5m AUM +.

[/quote]

Yawwwwwwwnnnnnnnnnn.......

I’ll mention this…



If you use Principia, you might consider adding their asset allocation

module. It is virtually the same thing as the Ibbotsen Allocator Pro

software - it’s portfolio optimization software.



Yes, they give you the historical risk/return numbers, and yes… you are

looking in the rear-view mirror to judge risk/return numbers.



But…



You have the ability to construct your OWN risk and anticipated return

expectations within the software in order to construct portfolios for your

clients. If you think high yield will have 50% more risk, and 30% less

return than its historical average, then make the adjustment within the

software. You can do this for each individual asset class. At that point,

you are using an historical reference as your guideline, making

adjustments according to YOUR expectations about underperforming/

outperforming asset classes going forward.



Once you’ve completed your inputs, you complete the model and the

software will provide you with an optimum allocation based on your

assumptions.



At the least, it’s a methodology that allows you to use your own expected

returns, while optimizing the blend based on YOUR anticipated risk/

return expectations. You can then move along the efficient frontier, and

build different portfolios for each level of targeted risk for each client

group (aggressive, moderate, conservative). It will provide you with the

appropriate allocation, and you pick the funds to fill the segments.



Asset allocation software is just over $1k. Good product, great support.



C

[quote=Captain] I’ll mention this…



If you use Principia, you might consider adding their asset allocation

module. It is virtually the same thing as the Ibbotsen Allocator Pro

software - it’s portfolio optimization software.



Yes, they give you the historical risk/return numbers, and yes… you are

looking in the rear-view mirror to judge risk/return numbers.



But…



You have the ability to construct your OWN risk and anticipated return

expectations within the software in order to construct portfolios for your

clients. If you think high yield will have 50% more risk, and 30% less

return than its historical average, then make the adjustment within the

software. You can do this for each individual asset class. At that point,

you are using an historical reference as your guideline, making

adjustments according to YOUR expectations about underperforming/

outperforming asset classes going forward.



Once you’ve completed your inputs, you complete the model and the

software will provide you with an optimum allocation based on your

assumptions.



At the least, it’s a methodology that allows you to use your own expected

returns, while optimizing the blend based on YOUR anticipated risk/

return expectations. You can then move along the efficient frontier, and

build different portfolios for each level of targeted risk for each client

group (aggressive, moderate, conservative). It will provide you with the

appropriate allocation, and you pick the funds to fill the segments.



Asset allocation software is just over $1k. Good product, great support.



C[/quote]



Bobby… this is how you write a good response. Take notes.

My point is that one can do equally as well with individual issues or ETFs, with less of a downside risk to the client. Of course, the commissions are lower…