Alpha's investment philosophy is simple: Take our fair share in bull markets, and don't give profits back in bear markets. Our duty to our clients is to deliver consistently positive long-term returns without the heart-stopping volatility that often accompanies traditional equity investments.
Investors have been led to believe that the stock market will give them superior long-term returns if only they stay the course through thick and thin. The Wall Street crowd telling this story leaves out certain vital pieces of information. They fail to point out that the "thin" part of the story can last far longer than anyone expects. Investors who understand that they may have to endure 10-15 years or more of poor or negative returns would certainly approach investing in the stock market with something other than a simple buy-and-hold approach. Yet dry spells like this have happened regularly in the past and will undoubtedly happen again in the future - with the same result for buy-and-hold investors.
During such periods, the market suffers through a sequence of down years, followed by up years, recurring several times with the down cycles canceling out the gains of the up cycles. These long periods of investor frustration have typically ended when the market returned to under-valuation. At that point, all but the most dedicated investors have thrown in the towel. This sets the stage for the next secular bull market, during which a new generation of investors benefits from the "rising long-term" nature of the stock market - and dutifully passes that myth on to the next generation. And the cycle repeats.
Understanding Alpha's Methodology
Alpha manages money using asset allocation strategies that are based on long-term "seasonal trends". Objective research has revealed that the stock market has shown a consistent tendency to perform better during certain times of the calendar year versus other times of the year and during certain periods within the four-year presidential election cycle. We refer to these long-term, calendar-driven recurring patterns as "seasonal trends." While most market analysts focus the bulk of their efforts on technical and fundamental analysis, we believe that our focus on seasonal trends offers investors a unique "edge" as there are simply not as many investors trying to exploit these trends.
Alpha believes that seasonal trends are based on the one thing that never changes - human nature, and that as a result, these recurring trends are "structural" in nature. In other words, they are caused by recurring factors that are embedded in the investment "structure" of these time periods and that investors respond to these factors on a repetitive basis. This does not "guarantee" that certain things will happen in the market each and every time, but in the absence of other countervailing forces, they strongly influence the market.
We believe that long-term investors who consistently exploit these factors will enjoy above-average returns with reduced risk compared to investors who are exposed to full-time market risk.
Alpha's investment strategies are "fully disclosed". This means that the rules governing the strategies are objective, easy to understand and explain, and are completely explicit. No black boxes, no esoteric techniques, and no manager subjectivity. The strategies are mainly executed using index funds, ETFs and/or no-load mutual funds. Alpha's view is that when investors understand the exact nature of their investment strategy, why the risks are being taken and when, they are more comfortable during the inevitable periods when the strategy lags the market and are willing to persevere through periods of underperformance.