Our investment philosophy serves to focus on the well-being of our clients both today and in the future and within all market conditions.
The philosophy is centered around technical analysis, and we use machine learning to assist us in making strategic buy and sell decisions. This approach allows us to remove emotional biases from our investment philosophy, which can otherwise lead to errors that may negatively affect your portfolio and retirement plans.
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Active versus Passive investing - what's the difference?
Passive investing is a "buy & hold" strategy where you simply buy an investment and hold it over the long haul. Risk management is assumed to be achieved through diversification; however, that did not go well for most in the crash of 2008. Although given enough time this strategy has merit, it also has its flaws. By holding your investments through thick and thin, you will be subject to wild swings, which can be difficult to digest, especially in retirement when the pay check stops. We believe it's the lazy and uninformed method of money management, practiced by most advisors today.
Active investing is more responsive to situations that could impact the market and ultimately your portfolio. Risk management is achieved by both diversification and by exiting positions when they are no longer technically trending up. We believe that in order to truly guard and grow your investments to achieve your goals, you must do so by actively managing your risk. By having an active investment philosophy, our goal is to build out our portfolio using investments that have historically outperformed the market on a relative basis; however, the key is to not fall in love with them. As long as they're technically trending upward, we're in; however, when the investment begins to rollover, we're out. Although it sounds simple, it requires lots of time, experience, patience, understanding and skill. By actively managing risk within your portfolio, we feel it's essential in smoothing out the wild swings and providing consistent performance, especially in retirement when it counts most.
There are two types of investment representatives: 1) Investment Gatherers or 2) Investment Managers
Investment Gatherers are typically really nice and personable sales people who happen to be in the investment industry. The "successful" ones will talk a good game, but ultimately you will find yourself in a model portfolio, or worse a product, that they didn't build and are not actively managing. Portfolio costs are typically higher due to product and fee layering. They simply get paid to gather assets and manage relationships. It's the easiest and fastest way to become recognized as "successful" in the investment industry. They are passive, not active investors.
Investment Managers are focused on building and personally managing your portfolio, versus outsourcing the job. These managers avoid mutual funds and other products because they want to know, understand and control what is in the portfolio, as opposed to taking someone's word. Depending on the manager's strategy, costs could be far less due to the removal of third-party investment and product fees. They take great pride and responsibility for their results and are driven by out-performance. These managers could be classified as either passive or active investors.
At Cannon Advisors, we are an Investment Manager who manages Active Investment portfolios. Which is your advisor?
Watch a detailed example below.
*Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment losses. Investments are subject to market risks including the potential loss of principal invested.