Our Investment Philosophy

We use a Fact-Based Investment Strategy to provide Dynamic Risk Management.

 Our core beliefs are:

·         We don’t know where the market will go – and neither does anyone else

·         Wherever the market goes, it will get there by trending

·         Along the way, there will be outperformers and underperformers.

Armed with these three core beliefs, we are well equipped to handle whatever the market brings - all without having to make a single prediction. Using supply and demand analysis, our Fact-Based strategy concentrates on identifying market trends to determine market exposure and identifying outperformers to include in our portfolios. Together, they give us the "when" and "what" the two essential ingredients of success.


Establishing Your Risk Tolerance

We build portfolios that fit your risk using quantitative math and psychological theory. Traditionally advisors only used a subjective risk questionnaire to assign risk tolerance. Subjectivity suggests, if you are young you must be chasing aggressive growth and, if you are of retirement age you must be extremely conservative, etc.)

We use math to pinpoint your exact risk tolerance.   Using an award-winning technology that is based on a noble prize winning framework, we quantify your risk tolerance into a simple Risk Number between 1 – 99.  This is based on the actual dollars that you have today, to assess how much you are willing to risk (or lose) in exchange for an opportunity at a specific gain. This results in a quantified and objective outcome which is customized for you alone. 


Constructing Your Portfolio

Once we have established your risk number, we look at the when - (Technical Indicators) and the what - (Investment Ranking Tables) to create your “customized portfolio”. Your portfolio is comprised of multiple asset classes.  Each asset class has risk associated to it when the asset classes are blended together it creates your customized portfolio and will have a weighted average of risk from the asset classes and the tactical management as part of its total risk score.  We can adjust the risk up or down by increasing or decreasing exposure to Fixed Income or Equity security.  Your customized portfolio will be rebalanced monthly or quarterly based on the asset classes, ranked positions and the status of the Technical Indicator.


Your Customized Portfolio and Risk Tolerance:

Using your risk number to determine portfolio construction



STAR Min/Max

This model combines relative-strength rankings, current Market trends, and predetermined minimum and maximum Equities exposure. It provides a very effective way to deal with typical High, Medium, Low "investor risk profile" considerations and is a great choice for 401k and other retirement accounts. Acting on quarterly intervals it fits easily into restricted 401k or 403b plans.

Bull Bear

Emphasis is on the longer-term Bull and Bear cycles in the U.S. Moves completely in or out of the market. When the Bull/Bear indicator is negative, is 100% out of the market and when it is positive, is 100% in the market. The asset classes in this model are chosen and reallocated quarterly. 

Technical Market Indicators Appendix

Bull-Bear Indicator

The Bull-Bear Indicator is constructed from specific market measurements and is intended to show the relationship between supply and demand at the longer-term timeframe of months to years. The measurements are ratios of supply and demand factors, normalized to a scale of 0 to 100. There are 7 inputs in total, 5 supply vs demand ratio and 2 price inputs. These ratios are then weighted, and combined into a single, statistically smoothed final Bull-Bear Indicator. When the Bull-Bear Indicator is in a Bull Market mode and then pierces the Bear Market Threshold, a new Bear Market is signaled. When the Bull-Bear Indicator is in a Bear Market mode and then pierces the Bull Market Threshold, a new Bull Market is signaled. Once a mode (Bull or Bear) is established, it is considered to remain in place until the Bull-Bear Indicator eventually pierces the opposite threshold.


Quarterly Trend Indicator

Designed to act only at quarterly intervals, it is a quarter-by-quarter look at the probable risk environment of each quarter, using the trend status of US and International equities. The trend labeling is derived from the slope of a tangent to a curvilinear regression line going through the last “n” data points of a smoothed closing price data series; stated more compactly, it’s based on the direction of the regression curve through a smoothed price series, and the ‘prices’ referred to are the Russell 3000 for the US, and the MSCI Ex-US for International.  If either the US or International equities are in an uptrend, a lower-risk quarter is indicated; if neither the US nor International equities are in an uptrend, a higher-risk quarter is indicated.

Investment Ranking Methodology

 The Ranking Tables are constructed by measuring performance characteristics of the candidates, aggregating the measurements, and then ranking the candidates in descending order of aggregate measurements. The performance characteristics measured include price performance over four timeframes (the past 30, 60, 120 and 240 market days), performance on "market-up" days vs. performance on "market-down" days, nearness to 52-week highs, and several other performance-based measurements. The specific measurements have been chosen to highlight those performance characteristics that are likely to persist for at least several months. These performance-based measurements are classified as "momentum" types of measurements in the academic literature, and the ranking that results from them is called a "relative strength" ordering in academic studies. The higher-ranked candidates are typically selected for inclusion in portfolios, while lower-ranked candidates are removed from portfolios, at intervals usually ranging from 1 to 4 months between such selections.

“It's only when the tide goes out that you discover who's been swimming naked.”

 -Warren Buffett “The Oracle of Omaha”-

“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”

 -Warren Buffett “The Oracle of Omaha”-

 “Be fearful when others are greedy and be greedy only when others are fearful”

 -Warren Buffett “The Oracle of Omaha”-

“I am more concerned about the return of my money than the return on my money.”

 -Warren Buffett “The Oracle of Omaha”-

"The essence of investment management is the management of risk, not the management of returns."

-Benjamin Graham-

"The Dean of Wall Street"

“Be fearful when others are greedy and greedy only when others are fearful.”

 -Warren Buffett “The Oracle of Omaha”-

“Loss avoidance must be the cornerstone of your investment philosophy.

 -Seth Klarman-

“The most important rule is to play great defense, not great offense. Every day I assume every position I have is wrong. I know where my stop risk points are going to be. I do that so I can define my maximum drawdown. Hopefully, I spend the rest of the day enjoying positions that are going in my direction. If they are going against me, then I have a game plan for getting out.”

- Paul Tudor Jones -

“The greatest mistake of the individual investor is to think that a market that did well is a good market rather than a more expensive market.”
-  Ray Dalio -

“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that is likely to get you where you want to go.  In the end, what matters isn’t crossing the finish line before anybody else but just making sure that you do cross it.”

― Benjamin Graham, The Intelligent Investor

“The longer the bull market lasts the more severely investors will be affected with amnesia; after five years or so, many people no longer believe that bear markets are possible.”

― Benjamin Graham, The Intelligent Investor

Investment Advice Offered Through Sandos Financial, Inc. Investment Advisor.  Sandos Financial, Inc. may only conduct business in states where it is properly registered.  401kreportcard.com is a Service of Sandos Financial, Inc.  Addition information about Sandos Financial is available on the SEC’s website at www.adviserinfo.sec.gov  The data and asset allocation strategy presented in the 401k Report Card is from investment models that Sandos Financial, Inc. uses as a pattern to guide investment allocation in client accounts.  Activity & performance may be substantially different from that of the models due to the amount of each investment, specific timing of trades, the actual security used and contributions or withdrawals which may vary from account to account.  The information contained herein has been obtained from sources that are believed to be reliable.  However, Sandos Financial, Inc. or 401kreportcard.com does not independently verify the accuracy of this information.  Past performance is no guarantee of future results.

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