Our goal is to have a better return for you, our client, than you could get investing in the S&P 500 Index, by approximately +2 to +3%, AND take only 2/3 to 3/4 of the risk of the S&P 500 Index to get it. Our three year and five year numbers crush the S&P 500.
The Prism Grid investment program was established in 1996. What we do is analyze political, business, and economic events around the world. This helps us spot potential opportunities wherever they happen to be. Once we have determined the area of the world, the sector of that economy, and the asset class most opportune for profit, then the hard work begins!
The mutual fund market is so specialized at this point in history that virtually all asset classes have several, if not hundreds, of money managers concentrating in just that particular asset class, country, region, or index. We look at all the manager choices, compare them and their track records, using multiple judgment points, to pick the “Best in Category” based on our criteria and judgment.
The best managers in every category are “Rocket Scientists”. They are the best of the best. But… their advantage – specialization – is also their downfall! A good example of what I mean is Gold. The best money manager that specializes in Gold investments will make more than his peers when Gold is in “In Favor”. But Gold is not “In Favor” all the time. No asset class is “In Favor” all the time. All asset classes cycle in and out of favor. So even the
best manager in a specific asset class will have periods in time where they CAN NOT make a good return compared to the S&P 500 Index. This point is even more obvious when you hear that 85% of all money managers’ returns DO NOT beat the S&P 500 Index! The pundits, whose glass is half empty, say why try to beat it, just buy the Vanguard S&P 500 Index Fund, and at least you will get the average return. But for those whose glass is half full, their view is that the 15% who do beat the S&P 500 Index, are worth trying to grab. Using the Symmetric Advisors Prism Grid three and five year net numbers comparison with the Vanguard S&P 500 Index Fund, as of 12/31/2010, see what the difference can mean to your wallet:
Investment of $10,000 on 12/31:
|Three Year Comparison|
|The Prism Grid||The Vanguard S&P 500 Index Fund|
|12/31/2007||$ 10,000.00||12/31/2007||$ 10,000.00|
|12/31/2008||$ 7,155.00||12/31/2008||$ 6,298.00|
|12/31/2009||$ 9,737.24||12/31/2009||$ 7,966.34|
|12/31/2010||$ 10,858.97||12/31/2010||$ 9,154.12|
|Five Year Comparison|
|The Prism Grid||The Vanguard S&P 500 Index Fund|
|12/31/2005||$ 10,000.00||12/31/2005||$ 10,000.00|
|12/31/2006||$ 13,020.00||12/31/2006||$ 11,564.00|
|12/31/2007||$ 14,263.41||12/31/2007||$ 12,187.30|
|12/31/2008||$ 10,205.47||12/31/2008||$ 7,675.56|
|12/31/2009||$ 13,888.62||12/31/2009||$ 9,708.82|
|12/31/2010||$ 15,488.59||12/31/2010||$ 11,156.40|
That 15% breaks down into two distinct groups. One group is the current asset class winners that are “In Favor” at the moment. This is the group of managers we select our “Rocket Scientists” from. The other group includes US! The managers in this group are more regularly in the coveted 15% that beat the S&P 500 Index, because of how they invest. They do not specialize in any one asset class, or Region, or Country, or Index. They focus on whatever is currently making money, be it Gold, Chinese Stocks, Semiconductors, Apartment Complexes, you name it! These managers specialize in Global Tactical Allocation! Now this group gets broken down into two groups.
First, there are managers that pick individual stocks in the “In Favor” asset classes. They have to be specialists in every asset class in the world. No one’s that good! But even if they are not the best in every asset class, their ability to move, to surf, from one asset class to another usually keeps them ahead of the S&P 500 over any trailing three and five year period, see previous chart. Does this mean they are always ahead? No! It takes time to recognize that one wave is over and move to the next wave. Selling out of the old assets and buying the new assets is just busy work. Even with the need to change, the managers usually keep ahead of the S&P 500 over any trailing three and five year period, see previous chart.
Second, there are those managers who hire the “Rocket Scientists” in the “In Favor” asset classes. We are in this group. We believe that it is more efficient to hire and fire these “Rocket Scientists” in their various asset classes and get the added percentage return edge their expertise gives rather than trying to be the Jack-Of-All-Trades stock pickers the other group tries to be.
The gospel according to SAI: Those who CAN NOT COMPETE ON RETURN, cash in pocket, try to turn the focus, and COMPETE ON COST, cash out of pocket. Vanguard runs advertisements on TV constantly saying their funds cost less than virtually any of the competition. And they get all the people whose glass is half empty to invest! WE COMPETE ON RETURN! Wouldn’t you rather put more money in your pocket than less? Again, reference the previous chart.
On a different note, we have just entered into a contract with a national Broker/Dealer: Envestnet. This agreement allows Brokers and Registered Investment Advisors across the United States to access our Money Management Program, The Prism Grid. This is the next big step in the evolution of our Firm to a Nationally Known Morningstar 5 STAR Money Manager. Thank you to all our clients who helped make this possible over the 20 years we have been in business!