Investment Philosophy & Strategies

 

Our Philosophy

In a constantly evolving world, we believe that the best investment strategy is to stay in harmony with the markets. Not forcing our opinions or beliefs on the market, but instead, taking what the markets are giving us. A combination of discipline and flexibility are keys to our philosophy.

 

The Truth

The truth about the long-term is that it consists of a sequence of short-terms full of episodes we call history: war, peace, pestilence, progress, revolution, invention, discovery, depression, birth, death, taxes, etc. Kingdoms rise and fall, debts are incurred and repaid, and sometimes not repaid.

The question then is how to manage a long-term portfolio while being cognizant of short-term episodes that can change what we thought of as normal.

The answer starts by realizing that we don’t know the future, but we do know that anything is possible.

 

“It ain’t what you don’t know that gets you into trouble.  It’s what you know for sure that just ain’t so.”  – Mark Twain

 

Diversification

Diversification of risk is the key to protecting our portfolios from the unknown. Risks such as inflation, deflation, currency devaluation, sovereign defaults, and corporate defaults can be managed by actively diversifying amongst non-correlated, liquid asset classes, U.S. and International stocks, U.S. and International bonds, U.S. and International real estate, commodities, gold, and cash.

In a world driven by macro events, where correlations among assets is higher than ever, markets have been divided into Risk-On and Risk-Off camps. We believe that in order to be successful in this “New Normal,” investors need to be active Tactical Asset Allocators. Moving assets in a disciplined manner into areas that are working, and moving away from those that are not — and not being afraid of stepping to the sidelines when nothing is working.

At Rockhaven, we practice Global Tactical Asset Allocation using relative strength and price momentum.

 

“The best way of preparing for the future is to take good care of the present, because we know that if the present is made up of the past, then the future will be made up of the present. All we need to be responsible for is the present moment. Only the present is within our reach. To care for the present is to care for the future.”  – Thich Nhat Hanh

 

Investment Strategies

Our first step at Rockhaven is to meet with potential investors to analyze their goals and their current portfolios. Determining the appropriate allocation to be made to our various investment strategies. We can do a lot of things at Rockhaven, but we will not try to do everything. If we’re not willing to put our own money into an investment, right along side of you, then we simply don’t make the investment.

Currently we have three Investment Strategies:

  • Global Tactical Asset Allocation (GTAA) – This is our core strategy, a defensive portfolio designed to protect assets during bear markets while still participating on the upside. It offers broad global diversification among the following markets: U.S. equity, international equity, gold, real estate investment trusts (both U.S. and int’l.), commodities, fixed income (both U.S. and int’l.), and cash. We use our proprietary screens to determine the appropriate weight to be allocated to each investable market. These weights change as markets evolve.
  • Focused Tactical Asset Allocation (FTAA) – This focused strategy is similar to GTAA in broad global diversification, but differs in the weights allocated to each asset. We focus our investments into those assets that have the best relative strength and have zero weight in those that are currently less attractive. In broad systemic bear markets like 2008, it would not be unusual to be 100% in cash.
  • High Yield Portfolio – This portfolio is designed to offer investors high current income by tactically investing among various high-yield markets, such as high-yield corporate bonds, preferred stocks, mortgage REITs, master limited partnerships, and emerging market bonds. Our proprietary relative strength screens are used to determine appropriate weights and cash levels.  


Risk Management - All portfolios are continuously monitored along with the markets. We closely watch the weights we have invested in various markets, as well as correlations amongst markets, and monitor potentially new investment vehicles.