Our Approach To Investing

Research Financial Strategies provides our clients with a reproducible, non-emotional investment process using technical analysis to monitor market risk within the industries, sectors, and our actual investment decisions. It starts first with understanding our clients financial goals & needs and helping them plan for the future. Below is an overview of RFS’s investment process.

Technical analysis is an emotionless investment decision making process that does not allow for getting caught up in the company or industry story. Investments are made through a series of technical factors. The most notable factor is one called “relative strength.” When a security price shows a recognizable pattern of higher highs and higher lows it demonstrates that there is higher demand than supply for that security. This means that the “buyers” are in control and not the “sellers.” While we cannot guarantee investment performance, securities that demonstrate this technical behavior have a higher probably increasing in value.

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Determining Investor Suitability

As investment advisors it is our fiduciary responsibility to make sure we understand each of our clients investment tolerance and risk profile. RFS has the unique capability to create unlimited customized asset allocation blends for our diverse client base.Rest assure we will incorporate beautiful imagery into your project so it stands out to the world.

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Determining When To Invest

The oldest law of economics is supply and demand. At RFS we place a premium on when to make an investment decision based on price movements using technical analysis. Technical analysis is an emotionless investment decision making process that does not allow for getting caught up in the company or industry story. Investments are made through a series of technical factors. The most notable factor is one called relative strength. When a security price shows a recognizable pattern of higher highs and higher lows it demonstrates that there is higher demand than supply for that security.This means that the buyers are in control and not the sellers.

Determining When To Exit An Investment

Our ability to minimize portfolio risk for our client is a result of having a Sell-Side Discipline. Prior to investing in a security we establish an exit point based on the % of loss or price our investment advisors determine is acceptable. If the security price is violated then it is sold. This ensures that profits are protected for our clients, or worst case, risk to principle is minimized. Only through having an investment approach that has a pre-determined exit strategy for each investment position, can you mitigate portfolio risk during market corrections.

In this section of RFS’s website we will provide educational content on technical analysis and how we use it daily to make investment decisions for our clients. But before doing so, we first need to establish a baseline understanding of how private wealth & retirement is managed by the financial services industry.

Modern Portfolio Theory – Since the 1950s Wall Street has propagated this approach to long term investing. Often called “set it and forget it” or “buy and hold” Modern Portfolio Theory advocates making long term investments in asset classes and securities based on a person’s horizon, required market return, and investor suitability. Market returns are based on long term (50+ years) of defined asset classes. Once the portfolio using is constructed using mutual funds it is held for the long term with yearly re-balancing.

Fundamental Analysis – Fundamental analysts attempt to study everything that can affect the security’s value, including macroeconomic factors (like the overall economy and industry conditions) and company-specific factors (like financial condition and management). Traditionally used with portfolios that have stocks versus mutual funds.

Here is where they fall short:

Modern Portfolio Theory does not allow for investors to mitigate portfolio risk during down markets. They assume that historic returns over long periods of time that are longer than an individual’s investment horizon apply.

Fundamental Analysis assumes that investors will be rational and invest based on corporate & industry fundamentals and economic conditions. The problem is the stock market projects investor sentiment for the future and no one knows exactly how far they are looking out. In addition there is commonly a disconnect between the stock price and corporate earnings.