The second step in the advisory relationship is to develop a process whereby we can appropriately monitor your investments in real-time. If we open an account on your behalf with one of our custodians we will simply import your daily holdings and transactions into our database. We start by importing statements or position data from your custodians about your positions into our own comprehensive system. We utilize this system as the foundation for our decisions and advisory services.

Our process in evaluating your portfolio combines two components. We start by evaluating how trends in the global economy impact the respective opportunities and risks on the different sectors and industries your portfolio is subject to. From there we move on to our second, bottom-up approach where we evaluate how individual companies are exposed to or insulated from these trends. By examining a corporation’s financial statements – and sometimes by sitting with some of its executives – we are able to gain insight into whether or not a company complies with the mandate given to the portfolio and where the business falls in the macroeconomy’s risks and opportunities. Our overriding mandate is to protect the value of the portfolio in all cases, while seeking reasonable opportunities to grow it. From there, technical analysis is utilized to determine points of entry and exit.

Our system of portfolio tracking allows us to follow relevant news and trends impacting each holding in the portfolio. In our analysis we determine the impact trends may have on the economy, sectors, and individual holdings. If the news is company-related we analyze its potential consequences according to the objectives we have for the portfolio as well as their time-related impact. In all cases, we review those developments and classify them accordingly into categories ranging from noise, to temporary disruption, to medium-term but tolerable effect, to long-term effect that requires hedging, to systemic which may necessitate a strategy change.

Reviewing your portfolio involves discussions on what assets need to be sold, bought, hedged, or enhanced and how to protect and grow the value of current holdings, according to the agreed-upon goals and objectives pertaining to growth and income needs.

BlackSummit Financial Group directs hedging strategies in three broad scenarios: First, when a brand new position is initiated we consciously place a limit on how much of a loss we are willing to tolerate before exiting. Too often positions are initiated with only the thought of what could go right for the investment and not what could go wrong. Second, hedging strategies are used to protect profits on a specific investment while allowing for continued appreciation if we find the fundamentals favorable. Third, we deploy hedging techniques across our portfolios when we see a heightened risk of an external shock that would pervade all asset classes. The threat of the EU disintegration is a recent example. For instance, we may buy put options, or we may opt for call options on an inverse market ETF or a currency forward to take advantage of a depreciating currency.

Sell-Stop and Trailing-Stop orders are tools we employ to hedge current positions against an adverse turn, allowing for both the ability to limit downward moves and ensure a profit. Both techniques allow us to lock in profits on a position or exit an investment whose losses exceed our tolerance. These practices allow our team to conform to the guidelines and desires you have with your capital. We also explore investing in funds that hold a negative correlation to the market, such as inverse funds, that appreciate in value if markets decline. Bond funds, for example, appreciated in price significantly during recent market volatility.

The overall thesis in our investment approach is centered on three core elements: First, the portfolio cannot be guided by wind blowing and inefficient diversification where holdings are thrown into it without consideration of risk appetite, liquidity considerations, client’s objectives, conviction, and strategic focus. We rather opt for a strategy (e.g. value oriented) which will be rules-based, which can be tested over time and simulated under different scenarios.

Second, evaluate holdings that can advance risk parity considerations, mitigate risks, while advancing the income objectives of the portfolio.

Third, explore options that would increase the growth prospects of the portfolio while enhancing the portfolio’s income stream.

Our method of investing is open to a variety of instruments, so long as it is consistent with your investment goals. Stocks, bonds, hard assets, mutual funds, commodities, real estate, alternatives, index funds, ETFs, MLPs, private equity, and options are all products that we are comfortable using and crafting to deploy in your portfolio, where appropriate.

When looking to add a position to your portfolio our staff searches for opportunities that provide value and stay true to your investment goals and income needs, while staying compatible with the overall investment strategy that Client and Advisor have agreed to.

We review companies based upon their fundamentals factors such as earnings, debt levels, competitiveness, profit margins, growth in sales and profits, management and vision, reliable cash flows, valuation, etc. Candidates are heavily analyzed and scrutinized when pondering a new position. Technical analysis is utilized to affirm our opinion on an asset while also allowing us to plan points of entry and exit, giving us a clear vision for what to expect and how to behave with the position’s future moves.

The prospective position is then offered up for review and discussion to our Investment Committee. If approved by the committee we then either offer our recommendation and rationale to you directly or we can enter the order ourselves if you desire to give us this discretion.