Why We are Different
As we guide our clients along the path of portfolio success we stay true to a number of guidelines, a few of which are listed below.
1. Our money is in the same place yours is, in our investment portfolios, and when we need to move from one stock to another, we all move together at the same exact price.
2. We do our own independent research; we do not repeat or echo any larger firm's views. Our newsletters are good indicators that we do our own home work (they are not ghost written). We provide our sources when we quote them in our newsletter.
3. We schedule regular and frequent client meetings to exchange information and keep in constant communication (i.e., we have bi-monthly market reviews on the third Thursday of every other month for clients and others who may be interested, as well as sending out the newsletter).
Now more than ever there are very high levels of wisdom and experience needed for managing money. With the S & P 500 at 2024 points in late 2015, markets have made only 1.69% (Annualized) since March of 2000. If you indexed over that time, as many say you should do, you just wasted 20% of your investment lifetime going almost nowhere. Even if you stayed invested 100% in stocks since the high of March 2000, you are still only 30% above the balance you would have had in such a portfolio 15 years ago. Many are aware of this failure to make progress and have withdrawn from the markets. But did you know that an investment in 20 year U.S. Treasuries would have returned 7.1% annually over the last 13 years, far out-performing the S & P 500. The same kind of thing happened during the prolonged bear market from 1966 to 1982, during which huge swings occurred multiple times, but with the net effect of index investors losing about 11% over a 16-year period. (Refer to chart).
There are real reasons for concern regarding the uncertainty now pervading the markets, but we believe that the answer is not to retreat from your dreams or financial goals. Instead, you should proceed cautiously, but with full awareness that this too shall pass. Indeed, we have been through long periods of market decline before this (e.g., the bear market mentioned above) and have eventually experienced equally long periods (e.g., the bull market of 1982-2000) of sustained growth. At some point this cycle will turn again. A prepared investor should be able to minimize losses when fear prevails, and obtain reasonable gains when the inevitable optimism of the markets returns. This requires prudent active tactical portfolio allocation, something we work very hard at, and with which we have much experience. Since markets are so volatile and complex nowadays, we suggest that you hire a registered investment advisor you can trust, one who has the experience and wisdom in handling risks to navigate this environment. We humbly submit that Blue Water Capital Advisors, LLC is such an advisor. Remember that registered investment advisors are held to a fiduciary standard, much like a trust company. That means that they must always put each client’s needs first, ahead of those of the firm or its employees.
In our approach to money management we make macro-economic calls on trends, use fundamentals to evaluate stocks, and then apply an actively managed tactical overlay on allocations to limit the downside. You will find very few firms willing to do the work required for this sophisticated approach. That’s one big way we’re different. Our copyrighted quarterly newsletter has been published since October, 2006 (see the most recent editions of the newsletter under the Client Relationship tab). In that newsletter our CEO, Kevin Wilson, predicted the 2007-2009 recession and bear market a year in advance, and he also predicted the 2011 bear market well in advance. Most of our investors found these early warnings useful. Naturally we can’t always be right, and we make no promises about the future, but few firms have made the kind of commitment to research that Blue Water has and continues to do. You can also catch the latest on our weekly blog, accessible from our homepage. Finally, when big things are happening in the markets, we send out client letters that discuss what is going on and what we are doing. So all-in-all, we are making communications with our clients a priority, something we know is not the average experience of clients at most other firms.
Tactical Segmentation Example
We maintain certain core holdings under almost all circumstances, but then add layers of other risk assets when circumstances permit. The example below illustrates our approach to portfolio structure.
BWCA’s Tactical Segmentation Model
Example: Strategic Allocation
Building this structure is how we manage client assets in volatile markets - core holdings are individual stocks and mutual funds, but in rallies we add ETF's and more stocks chosen on the basis of technical and fundamental indicators, and our macro views.
Try Blue Water for an advisory experience that is different, and get your advice directly from the portfolio managers.