Insight into the Investor Advisory Service
of
Thomas A. Rogers, CIM, FCSI, CFP, EPC

Some feel most at ease by limiting their portfolios to GIC style fixed income investments, while others seek to achieve higher prospects for capital appreciation through the inclusion of common stocks in their portfolios.
 
I offer a worthwhile level of expertise in low risk high income investments and in the proper selection of securities for conservative long term growth and of younger companies clearly identified as offering an excellent opportunity for investment success.
 
Once having determined a suitable Strategic Asset Allocation for the long term, investors may adopt any of several investment styles. Which is best depends on the general circumstances of the individual and his or her own comfort level.
 
A precis on different investment styles may be accessed by clicking on the title links above. I enjoy assisting with any of these approaches and offer professional guidance in the more active management styles too as these require the application of a timing discipline in addition to sound fundamental research common to all.

This investment style is most successful in sustained long term secular bull markets.
 
If securities are carefully selected with continuous information and research readily available, remarkable price appreciation in the shares of individual issues is a reasonable expectation over time. Generally the equities selected for this strategy would be from the major blue chip senior grade sector. Their price change would be sensitive to the stock market's direction in general as well as the ebb and flow of variables affecting the performance of the specific industries each security is participating in.
 
Other candidates suitable for the Long Term Buy and Hold strategy are well managed successful companies within an emerging industry whose enduring sustainable growth appears well assured.
 
Investors will tend to reduce holdings of individual securities when their position represents an unreasonably large percentage in relation to other holdings; or, a holding may be liquidated entirely when there is an evident unfavourable and long lasting development affecting the company.
 
As well, Investors will periodically "re-balance" the whole portfolio in order to maintain its predetermined strategic allocation. In some cases, Long Term Investors may elect to employ a Tactical Asset Management strategy in conjunction with their Buy and Hold plan.
 

An Investor's Strategic Allocation within the context of a Bull Market investment horizon may include provision to reduce exposure to risk in either the equity sector or the interest sensitive portion of the portfolio's asset structure when a market correction is expected.
 
This Tactical Asset Allocation option requires attention to the timing techniques of Technical Analysis (which I have studied intensely) and Value Analysis offered on an ongoing basis by our research department as well as other competent sources.
 
By invoking this option, the investor may decide to sell portions of the portfolio to increase its cash component temporarily while waiting out a market correction. One is then enabled to take advantage of reduced prices on repurchase; or, to replace positions with securities selected from more attractive sectors.
 
Despite the best efforts of an investor's analytical resources, Tactical Asset Management does entail considerable risk from an opportunity cost perspective as one may elect to sell too soon or buy too late.
 
On the other hand, lack of defensive action accepts an unknown downside risk during periods of overvaluation and overextension of prices; with the ancillary risk of being immobilized due to a lack of buying power at opportune market junctures.
 
I have found it beneficial to recommend Tactical Asset Management if carefully employed while sensibly maintaining respect for the investor's long term Strategic Allocation Strategy.

Strategic Asset Allocation is a long range plan for the overall portfolio structure between investments for growth, income and cash items. It is determined after careful consideration of :

1. The investor's long term objectives for the investment assets, making provision for any short term requirements and secondary needs within a specified time horizon.

2. The investor's stage in life and overall financial circumstances to determine a suitable risk and return profile for the portfolio structure.
3. The investor's personal attitude toward risk tolerance and return expectations.
4. The range of risk and quality choices available in the securities markets and the appropriate weighting for selections in each functional area of the portfolio.
5. A realistic assessment and compromise where necessary in result of the foregoing considerations.

The Strategic Allocation model serves as the fundamental point of reference in portfolio management. It should allow for modification in the event of significant changes in the investor's financial and life circumstances as well as in consideration of the financial markets' prevailing condition of Primary Bull (favourable) or Primary Bear (adverse).
 
Several styles of administration are have proven successful and a preferred selection is presented here.

I often use the term 'Trading from Position' to describe the Active Management style. The 'Position' referred to may be a full cash position or the core holdings within the portfolio.
 
Equity and Bond holdings may on occasion be eliminated down to 'position only' with market neutral 'on hold' securities such as money market funds being substituted temporarily.
 
This style relies on careful attention to overall market direction and sector rotation within the market to take advantage of prime entry and exit points.
 
Conversely the investor will also be alert to attractively priced individual issues which are unlikely to demonstrate meaningful down side market sensitivity even if purchased within an adverse market trend.
 
In all cases, securities for purchase consideration must have adequate supportive research references and be attractive from a technical analysis perspective as well.
 
Price targets over a time horizon of several months and upward to one year are clearly defined and reviewed as conditions develop.
 
Profit taking does not suggest repositioning of alternative selections unless the market trend is clearly intact and has further reasonable upside potential at that time. More often, the sale proceeds will contribute to building of cash reserves in advance of the next market prime entry point.

The investor following this management style has an active management approach similar to that described elsewhere in this exhibit.
 
Alert to the trend of the main market index, this investor concentrates on the evolution of individual industrial and resource sectors within the market, recognizing the market is actually composed of many markets. 
 
Watchful for exceptions, the investor seeks reliable confirmation of sector rotation through trend analysis and sound research. An example of sector rotation within a full market cycle has been observed as:

Bonds and Preferreds Utilities and Small Loan companies Consumers' groups: drugs, food, food chains, packaging Finance Companies and Retailing

Oil, Rubber, Housing, Highway Construction, Papers and Textiles Consumer Durables, Accessories and Chemicals Transportation and Rails Mining, Metals and Golds

Having determined the favoured sectors at prime market junctures, the investor will then position the most attractive issues within those industries based on sound valuation and price action criteria.

The investor will follow a disciplined sell policy as stocks meet their targets or the sector itself becomes over extended to ensure funds are available for redeployment into newly emergent sectors.