
FSA believes successful investing is dependent upon two factors:
1. Preserving gains when prices reverse – FSA Safety Net™
2. Being properly positioned in rising markets – Follow the Money
1. FSA Safety Net™--At FSA, our mantra is “You win by not losing.” This is more than just a catchy phrase. It is at the root of our investment philosophy. We know that a 100% gain is needed to offset a 50% loss. While many advisors and investors constantly seek opportunities for higher returns; we believe protecting what you’ve made is the most important strategy you can take. We do this by creating the FSA Safety Net™ to help minimize losses during times of extreme volatility. The FSA Safety Net™ is a stop loss point applied to each security in the portfolio. As the price of each security drops, it is sold when it crosses through the stop loss point. The goal is to prevent small losses from turning into catastrophic losses.
2. Follow the Money – FSA does not believe in holding asset classes through all market cycles. Asset classes and sectors go through extended periods being in-favor and out-of-favor. Our investment process seeks to own those assets when they are in –favor, while avoiding them when they are out-of-favor. Identifying when assets are in-favor is a function of “following the money” into investment areas dominated by buyers during good market cycles. It is as simple as supply and demand. When demand dominates, prices rise. For example, technology stocks were dominated by money flows during the late 1990’s while early this past decade, money flows dominated the real estate, emerging markets and commodities markets. The end of the decade resulted in money flowing predominantly into corporate bonds and dividend paying multinational and international stocks. When investors shift and move money “out”, the FSA Safety Net™ is in place to catch things as they fall – our exit strategy.
FSA believes successful investing requires more than passively watching your investments – it requires active, disciplined management.
Given the inherent risk and volatility from investing in individual securities, FSA prefers to use pooled investment vehicles, such as open-end mutual funds and exchange traded funds (ETFs). We will use both actively managed funds if there are superior managers within a particular investment style, as well as index funds if we are just looking for passive exposure to a particular investment style.