Our investment process allows us to make money in a low risk environment and then protect the money once it is made. We call this "The Step Effect", because it is like climbing a staircase. The first part of our strategy is to make money in a low risk environment which is analogous with climbing a stair. The second part of the strategy is to protect the money once it is made, similar to pausing on the landing. Then we repeat the process of climbing the stairs. We indentify the likelihood of 10% to 20% upward market moves, giving us the opportunity to earn money in “steps” of 10 to 20%. Generally there are 6-14 of these opportunities, in a number of broad based indexes, occurring in rolling five year periods. From these 6-14 opportunities there are about 5-8 that carry acceptable risk (a confidence factor of at least 90%), allowing us to commit our clients’ capital. If we cannot find investments that meet both criteria, we invest in the lowest risk asset class and augment the return using options strategies. Historically, our lowest risk investment class has been cash equivalents or money markets but, moving forward, we could use currencies, bond, or commodity ETFs.
