It is our belief that by making investment decisions based on historical data, facts, and figures, investors may be rewarded with more positive outcomes over the long-term, as opposed to knee-jerk reactions based on the current market environment. The Weatherstone investment team does this by evaluating various factors that have influenced the returns of both stocks and bonds throughout history. They then apply those insights gained from their analysis to the appropriate investment portfolios. Macroeconomic factors such as inflation, interest rates forecasts, and overall investor sentiment are just some of the indirect measures the Weatherstone team considers. Whereas, valuations across sectors and industries, global stock market participation, or even historical price movements based on seasonality are direct market influences the team scrutinizes and analyzes.
All of these factors combined allow the investment team to view how financial markets have historically performed, given similar conditions. The team is then able to develop internal risk profiles, similar to how insurance companies determine risk based on age, gender, risky hobbies, etc. These risk profiles are then combined with insights from the team’s proprietary research, which allows them to more accurately pinpoint potentially positive or negative market conditions, but more importantly, better equip clients and their advisors with the tools to seize opportunity, or take shelter from the storm.
In order to accomplish this, the investment team looks for publicly traded, liquid investment vehicles such as low-cost exchange traded funds (ETFs), or traditional mutual funds. This allows the investment team to obtain broad diversification across sectors and industries, provides access to the areas of financial markets that may be attractive in a quick and efficient manner, and results in minimal overall market impact when conditions change.
The Weatherstone team is regularly analyzing and dissecting the various investment models it oversees, looking to incorporate new sources of information and data points, as well as evaluating the effectiveness of existing risk measures and how investors can benefit. Change is the one constant, and just like technology, communication, or even the financial markets, we too must change and adapt. Therefore, the Weatherstone team continually monitors the investment models to ensure that they can adapt to changes in the market landscape.
Of course, a detailed and intricate process like this does take more time and effort, as opposed to buying an investment and waiting for a positive result over the long-term. However, the commitment by the Weatherstone team to a very stringent process allows investors to have greater confidence in their portfolio, not only in the short and intermediate term, but over the long-term as well.