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You've done the financial planning.

You saved for retirement.

Your kids will soon be off your payroll (mostly).



And now, you need a specialized, complementary money manager to still grow your portfolio, but also sustain it through any prolonged, recessionary bear markets.  

 How will you responsibly improve the investment management of your portfolio in new market environments as you focus on the "second half of life" questions? 



Porter Investments is a specialized money management RIA firm based in Houston.  We work with seasoned individual investors across the United States, focusing on the sustainability of their portfolio through consistent performance.  Your life at this stage should not be spent making money that you have already made once before.


Do you have the time, desire, or energy to rebuild a portfolio after the next true bear market?  Are you seeking downside protection along with letting your accounts grow with the stock market?   



* For our purposes, a bear market is defined as a decline in price of greater than 25% from a previous high in the broad, US based equity indices, Bear markets are considered prolonged when lasting greater than 12 months in duration. While our goal is to preserve prior gains or profit from bear markets, there is no guarantee we can always be successful in achieving our goal or that account losses will be less than any predetermined or predefined amount or percentage.


Investment Performance Summary 


STRATEGIES
(Click Strategy for graphs and metrics)
Thru
9/30/24
 

1 Year
 
 
Past 5 Years1
 
Past 10 Years1 Maximum DAILY Drawdown1,2 Sharpe Ratio1,3
BOND BASED MODEL





2.22% 5.46% 1.13% 1.95% 10.12% 0.75%
S&P® US Aggregate Bond Index4
4.77% 11.20% 0.80% 1.89% 16.89% 0.43%








EQUITY BASED MODELS






2.49% 6.68% 8.13% 7.14% 14.69% 1.12%
    Moderate
1.91% 6.55% 9.98% 8.85% 21.77% 0.95%
    Growth
9.55% 15.57% 15.49% 13.68% 20.59% 1.39%
6.93% 19.12% 20.97% 17.18% 29.10% 1.24%
S&P500® Total Return5
22.08% 36.15% 15.97% 13.38% 55.25% 0.54%

All returns net of highest possible fee charged. Your actual return may be higher.






Strategy Comparison - CAGR vs. Volatility*


* Volatility measured as Standard Deviation of Monthly Returns, Annualized.



1 Period may include both hypothetical and actual returns. Please read Disclosure for detailed explanation.
2 Many firms choose monthly drawdowns, which will under report your actual drop when the market recovers before the end of the month. We calculate the maximum daily drawdown, which is expressed as a negative percent and refers to the maximum drop in a strategy's account value daily peak to valley, since inception. Inception is 1/1/2007.
3 The Sharpe Ratio will give an indication of how well the Strategy pays you (thru the CAGR) for the risk (as measured by the Standard Deviation) you incur. It is basically the Compound Annual Growth Rate divided by the Standard Deviation. The measure of risk you are trying to determine is the excess over a risk-free rate of return, or a three-month US Treasury bill. Generally, a higher number is better.
4 The S&P U.S. Aggregate Bond Index is designed to measure the performance of publicly issued U.S. dollar denominated investment-grade debt. The index is part of the S&P AggregateTM Bond Index family and includes U.S. treasuries, quasi-governments, corporates, taxable municipal bonds, foreign agency, supranational, federal agency, and non-U.S. debentures, covered bonds, and residential mortgage pass-throughs. 
5 The S&P 500 Total Return Index® is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation. The returns include reinvestment of all dividends and capital gains. You cannot directly invest in an Index. S&P 500 is a registered service mark of Standard & Poor's Financial Services LLC.

Third party trademarks and service marks are the property of their respective owners.

Returns should not be considered indicative of the skill of the adviser. Returns may not reflect the impact that any material market or economic factors have had on the adviser's use of the back-tested models if the models had been used during the period to actually manage client assets.


PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Please see DISCLOSURE for important information regarding this page.



What is our process?

Our process is built upon our strong belief that individuals cannot consistently outperform proven Quantitative models. These models are designed with an understanding of Quantitative analysis and mathematics and are successfully used today in hundreds of environments. Examples could be lane departure and collision avoidance systems in your car all the way to complex control systems used in commercial aircraft. 



Porter Investments’ technical advisers have spent hundreds of hours searching and learning from model developers that have formulated what we feel are some of the very best growth models available for individual use. We construct our strategies from this select group of outstanding models.  After considerable research, we have developed our own proprietary mix for each strategy.

What is different by using quantitative models?

   


To fully understand the Porter Investments' process, it is important to distinguish between the commercial models that we use and our Strategies that utilize those models. 

MODELS

The models we have chosen to guide our clients accounts are systems developed by professionals with an excellent understanding of Quantitative Analysis. From the thousands of models that have been developed that attempt to help identify and quantify directional changes in the broad equity market, we believe that we have some of the best models that are available to investment advisers. These models have been developed using one or more of the quantitative analytics below:

  • Trend following
  • Reversion to the mean
  • Pattern Recognition
  • Sector Rotation
  • Relative Strength
  • Momentum

The detailed selection process by our technical team has been proven through years of research, independent studies, and ongoing interactions with model developers. The result of this process is that we have access to ten or more quantitative models.  All the models we use have been verified, with 50% of them verified for over 10 years. 

STRATEGIES

We define a Strategy as a proprietary mix of up to 4-6 different models to achieve a specific risk/reward profile, while at the same time providing portfolio diversification. The Strategies' mix of the various models and their percent allocation is different for each strategy. We analyze the analytics and the subtle nuances of the various models to determine the best “mix” and allocation of models for each of our Strategies. By combining an optimum number of models, in a proper allocation, we produce a multiplicity of strategies that can fit certain risk/reward requirements for you. Collectively they form our Strategy lineup.


what should i know

Frequently Asked Questions

Account Management

What are your fees?

Our fee structure is based on the assets that we manage for each customer, ranging from 1.6% to 2% per annum. All returns on the performance page are net of the highest possible fee, so depending on your fee, your net return may have been greater.

How often is my account traded?

This will depend on your Strategy and the market environment. Periods of volatility may produce more trades as the systems attempt to get better clarity as to a potential change in an intermediate trend. Trades will be based on mathematics and the analysis of indicators, not any specific time frame. 

What type of securities do you trade?

Generally, we trade Index-based ETFs. The ETFs are designed the replicate, before fund fees, the daily movements of common Equity and Bond based indices.

How are my assets protected?

The Securities Investor Protection Corporation (SIPC) is a nonprofit organization that protects stocks, bonds, and other securities in case a brokerage firm goes bankrupt, and assets are missing. The SIPC will cover up to $500,000 in securities, including a $250,000 limit for cash held in a brokerage account. All Fidelity brokerage accounts are covered by SIPC. This includes money market funds held in a brokerage account since they are considered securities. Learn more about SIPC coverage at http://www.sipc.org or call or call 202.371.8300.

In addition to SIPC protection, Fidelity provides its brokerage customers with additional "excess of SIPC" coverage. The excess coverage would only be used when SIPC coverage is exhausted. Like SIPC, excess protection does not cover investment losses in customer accounts due to market fluctuation. It also does not cover other claims for losses incurred while broker-dealers remain in business. For example, fraud claims would not be covered if the brokerage firm was still in operation. Total aggregate excess of SIPC coverage available through Fidelity's excess of SIPC policy is $1 billion. Within Fidelity's excess of SIPC coverage, there is no per customer dollar limit on coverage of securities, but there is a per customer limit of $1.9 million on coverage of cash awaiting investment. This is the maximum excess of SIPC protection currently available in the brokerage industry.

Both SIPC and excess of SIPC coverage is limited to securities held in brokerage positions, including mutual funds if held in your brokerage account and securities held in book entry form.

Certain assets are not eligible for SIPC protection. Among the assets typically not eligible for SIPC protection are commodity futures contracts, precious metals, as well as investment contracts (such as limited partnerships), and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.

Fidelity Investments is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and other financial products and services to institutions, financial intermediaries, and individuals. For more information about Fidelity Investments, visit Fidelity.com.



How transparent and liquid are the invested securities?

All securities in your account will be widely traded and priced daily. Most strategies employ index-based funds that are designed to track the performance of the major market indices such as the S&P 500, the Nasdaq, and the Russell 2000. Accounts can be liquidated at any time.

Can I use multiple Strategies?

Absolutely. An account will utilize only one Strategy.  Many clients start with one Strategy, and then add funds to a more aggressive or more conservative Strategy. This is a great way to create a portfolio that has maximum model diversity. 


Investment Approach

Can you briefly explain your investment approach?

We seek to participate in the upward trends of the stock and bond markets, while preserving or in the more aggressive strategies, build upon any gains when those inevitable and severe markets corrections occur. In seeking continual growth of your assets, we invest differently in up and down markets. 

A great interview (old but still relevant) explaining our approach can be viewed here.

Why is your approach better?

There are many good investment approaches depending on your objectives. We believe if your objective is steady long-term growth, then anything you can do differently to either create more, or at least not lose significant money during major market corrections is better.  It may be true that an account using a "buy and hold" approach, if left alone, would probably work its way back up to its prior level.  But from purely a mathematical standpoint, wouldn't it be better if your account did not have to recover much of it's lost value first before it marched to new highs?

When does your approach not work?

Our approach may have some degree of difficulty performing as well as it’s long-term average during periods when market prices change direction very frequently in a trendless, sideways market. This is less frequent, and these periods tend to mainly be short-lived.

I feel that no one can effectively “time the market”. Is that what you are trying to do?

There are two different meanings of the term “time the market”. One meaning may entail that someone tries to predict the frequent up and down “wiggles” in stock prices. This requires many trades, and we would agree with you, that cannot be done successfully. The other meaning may concentrate on reacting to the changes in the longer, more intermediate term trends of the markets. Those types of systems, that react to more meaningful changes in a significant trend, are successfully used today in thousands of applications. You already experience the benefit of these systems every time you fly in a plane or drive a car.

How is money made in a bear market?

During periods of significant drops in prices, many Strategies use Inverse ETFs. Inverse ETFs are designed replicate, before internal fees, the opposite daily movements of a particular Index. They are generally held for short periods of time as the bulk of large moves down can be concentrated in a small number of trading days. 

Will your Strategies react to every 5-10% downward move in the market?

The Strategies will not react to all minor price moves in the markets but are designed to react as quickly as appropriate to the meaningful changes in the market data. How a Strategy interprets the changes to the data, and accordingly how much the market moves in price leading up to a trade, is based primarily on the frequency of the selected models in that Strategy.  More importantly, a weekly move of even 4-5 percent has to be viewed within the context of the more intermediate trend.  The overriding goal is to avoid the severe, prolonged corrections that can cause major harm, while allowing for the normal "wiggles" in prices that occur during an extended rise. Each Strategy is designed to deliver a different return and drawdown profile. 

Porter Investments

I already work with a wealth management firm. What do you provide that I cannot receive from my existing firm?

Some of our clients have some portion of their investment money with another RIA firm. If you already have an existing relationship with another financial advisor that you are happy with, but you like our past results, you may consider using our firm for part of your portfolio. Diversification of money managers is a good strategy if both are performing well.

Many firms do a good job of providing a broad overall structure and plan for your financial portfolio. Investors look to us to complement their existing relationships by providing a defined specialty and focused approach, for part or all of their assets. Sometimes they desire more frequent account surveillance and a more direct, controllable relationship to the person “working the levers”.

Is Porter Investments a fiduciary?

As a fee-based Registered Investment Advisor, we have always served our clients as fiduciaries, which requires a higher legal standard of business conduct than what has historically been required of a commission-based stockbroker. We welcome the recent legislation requiring some commission-based advisors to now adhere to this higher standard, as we have always felt that this standard more closely aligns a clients’ interest with the investment firm. If you have a question about your advisors’ role, ask them to represent in writing to you whether he or she is acting as a “fiduciary”.

How many people work for your firm?

Our firm has Investment Representatives, a separate trading team, separate research personnel, as well as customer support personnel.

What size is your average client relationship in terms of assets?

Our published minimum is $200,000; but we will consider investments as low as $50,000 under certain conditions. Our average initial client relationship is between $500,000 and $700,000.

Do you offer Financial Planning or free Retirement Planning?

It is important to distinguish between a full-scale financial plan and a retirement plan. We do not create extensive financial plans covering budgeting, insurance, and Estate planning.  We will provide a free retirement plan for you, that entails projections on the growth, withdrawal capability, and sustainability of your retirement assets, as well analyzing your outside sources of income such as social security. 

Many of our clients have worked with Certified Financial Planners (CFP) for specific non-investment related advice.  We would be please to direct you towards another financial professional to address a specific need. 

The History of Porter Investments.


The Porter Investments Strategies were developed by our President and founder, Bob Porter.  His prior work at Fidelity Investments allowed him the opportunity to advise and study a diverse group of investors.  At Fidelity he realized regardless of investors backgrounds, their career successes, or their net worth – Everybody falls into the same investing traps.  One of their more damaging traps for individuals is letting their portfolio go through periods where it gives back significant portions of it's prior gains.  If investor could improve, in just that one area, their longer term results would be dramatically better.

We realized you cannot dramatically improve just by trying harder, you have to change.   Prior work with technology companies and software development provided a basis for our understanding of Quantitative models and its potential impact on investing.  Large investment firms, with large IT budgets, had been using similar systems internally for years.  Since the early 2000s, advances in software and computing power have made it possible for the individual investor to prosper.

A team of engineers, PHDs, and industry people with a history of developing proven quantitative and mathematical models was assembled.  People were sought with varying backgrounds, that collectively could bring their unique experiences and algorithms.  Many hours continue to be spent researching, analyzing, and assembling the proper combinations of these models to provide our clients with an diverse offering of Strategies seeking various risk and reward goals.  We also developed relationships with institutional trading firms to provide an efficient execution of the Strategies derived from our tactical combination of models.  Our performance is the result of those associations.

We continually look for ways to develop relationships with firms that creatively use software and other applications to improve the investors experience and outcome.  We understand that no person can time the specific top or bottom of the market.  But we strongly believe that using proven Quantitative models, utilized in proper allocations, can help the individual investor avoid and even profit from the regular market corrections. 

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