The Markets

Dec 19, 2012 | Blogs, Daily Financial

Terrry Sawchuk Financial Advisor Terry Sawchuk
Founder & Chairman

It’s hard to believe that 2012 is almost gone.  As I write this, according to our Mayan friends, my efforts are pointless as the end of the world is this coming Friday.  Sounds like a good excuse for an epic party to me.  I decided I should get this update out, just in case the sun comes up Saturday morning.  I almost had my kids convinced there was no need for Christmas presents this year, seeing as the world was going to end on the 21st, but alas, it was determined that if I wanted them to be around to change my diapers when I’m Bill’s age, I had better not show up empty handed on the 25th.  So to the mall I go.  While we’re on the subject of being prepared just in case the Mayans were wrong, Bill and I have made a significant investment of time and money into something that we think will make a noticeable difference in our money management services.

I don’t think it’s a secret, that Bill and I are not enthralled with the state of affairs in the world of finance and politics these days.  I’m quite sure, you are not either.  In the more than 20 years of experience I’ve had in the business of professional money management I can say with confidence that the game has changed and that, at least for the foreseeable future, the old rules no longer apply.  A confluence of events and manipulations has radically altered they way the stock market operates today.  The vast majority of trades are handled electronically, and frankly, the largest institutions have a significant advantage as they have the biggest and fastest computers.  Throw in a complicit Federal Reserve chairman with an appetite for expanding the balance sheet and a political process that has become an utter joke, and what you have is an investment environment that is radically different (being polite) from anything any of us has ever seen.  That backdrop has forced us to adapt, and change our approach to managing money.  It has become survival of the fittest, a bit of Darwinism in the financial sense.

While Bill and I don’t fancy ourselves as the smartest guys in the room, we are smart enough to learn from our past experiences, aware enough to know when it’s time to adapt, motivated enough to be successful and empathetic enough to passionately pursue anything that will help our clients live a more comfortable life .  These qualities are what led us to our latest endeavor, the pursuit and development of an algorithm (computerized trading program designed to automate the buying and selling of securities with the goal of minimizing risk and maximizing return).  We are very happy to declare that the process is now complete, and we have a fully functioning algorithm that we will employ before the end of 2012.  All of our model portfolios will have the assistance of the algorithm starting the first week of the New Year.  This means that, more than likely there will be some fairly significant changes to the portfolios.  The interesting thing, and perhaps the biggest benefit of the algorithm, it doesn’t care about politics, Federal Reserve policy, what the hedge fund community is doing, what the empty heads on CNBC are spewing, it simply identifies investments that have strong trends and directs the money towards those vehicles.  It’s a significant departure from the traditional approach, but frankly, in our view, one that is necessary in this new era.

Computers will never take over our approach to managing money, part of what makes us valuable is the experience we have, the contacts we’ve established, the economic environments we have participated in and our overall history of successfully running a financial services business.  These are qualities that are nearly impossible to quantify, but play a major role in long-term performance.  The algorithm is simply another tool at our disposal, we think a very valuable tool that to our knowledge, very few, if any other independent financial advisors have committed to.  In our experience, our industry focuses on many of the wrong areas and is not nearly committed to taking responsibility for and actively pursuing strategies to make money for their clients.  At the end of the day, we are very clear on one thing.  We realize that you want to make money; that you don’t necessarily care about all the reasons why the world is more difficult today, how politics have influenced the process, or any other distraction from the bottom line.  You want results and that is our primary objective.  We get it, and that is why we are working diligently to provide you with the best results we possibly can.

Ultimately, you won’t see the machinations taking place.  On the surface everything will look the same.  We will continue to write the monthly newsletter, we will continue to review the models every month, and of course, make changes wherever the algorithm gives us the signal.  It is our belief that we are in the best position we have ever been to deliver the results you expect.

Finally, we take this opportunity to thank you for your continued trust and confidence.  Your faith in us is respected and appreciated.  As we look towards 2013 we are eager to continue our very successful series of wine and beer tasting social events.  We’ve really enjoyed spending time in a more casual setting with all of our clients and friends.  If you haven’t attended one of these events, you should, we believe you will really enjoy the time spent.  2013 will also bring an overhaul of our current website, with many new features and a more current appearance.  Announcements are forthcoming on that front.  As always, we are optimistic about the future, as difficult as these last 5 years have been, we can see the light at the end of the tunnel and we’re looking for opportunities.

It is our wish that you have a merry Holiday season, and the New Year brings you and your family joy and happiness.

Best regards,

Terry Sawchuk

Visit to review past issues of The Marketview.

Securities offered through First Allied Securities, Inc., A Registered Broker/Dealer, Member FINRA/SIPC. Advisory services offered through First Allied Advisory Services, Inc. A Registered Investment Adviser.

* All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  Please consult your Financial Advisor for further information.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* Investors cannot invest directly into an Index.

* The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks.

* The Nasdaq Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Consult your financial professional before making any investment decision.

  • Past performance does not guarantee future results.