P-PRO process
About Our Investing Journey
Porter Investments was started by Bob Porter in 1996 after working for Fidelity Investments, where he advised high net worth clients on investment planning. The early years of the firm relied on various analytical tools and research services to construct portfolios with mutual funds, stocks, and exchange-traded funds. While this approach yielded solid results and some outstanding annual returns – the overall portfolio performance was inconsistent and increasingly difficult to manage. We believed we could do better.
After 2008, we improved our process and began incorporating quantitative and tactical models to help smooth out the annual returns and better manage volatility risk. This approach was effective in achieving those objectives, but it came with trade-offs. While overall volatility risk is always present, it does not negatively impact market prices every year. So, managing for it can lead to extended periods of underperformance relative to the market. We still felt like we were forced to choose – either outstanding returns with higher volatility or below average returns with lower volatility. The financial services industry did not seem to have a solution for the individual investor.
In fact, we have always had a slightly different perspective from the broader financial services industry when it comes to individuals. One, we do not need services that must be scaled up to thousands or millions of customers. In addition, large firms and industry consultants constantly preach to financial advisors to concentrate only on long-term goals, dreams, and aspirations rather than market indices or returns. While we spend a good amount of time on these topics, we find that many engaged investors typically aim for two key objectives with a meaningful portion of their investments:
- Achieving returns that closely match those of the broader equity and bond indices – after deducting any fees.
- Protecting their portfolios from significant downturns during prolonged bear markets.
The ongoing pursuit to achieve these goals has evolved into our third generation of investment strategies. As a group, they are designed to achieve more comprehensive and panoramic investing solutions. Solutions that allow you to see your optimal balance of these two objectives. These strategies start with our proprietary P-PRO process, which integrates analytics, Monte Carlo simulations, and statistical modeling. It provides a much clearer and reliable picture of how your investments can perform in the future – not just what they did before you started.
How does the P-PRO Process provide better investment clarity?
Below is a sample* of just one type of analysis we do in the process.
* The above chart is for illustration purposes only and is not intended to provide an indication of your potential results or any results from any past, present, or future client.
In this illustration, we assume a starting investment of $100,000. Each of the 4 bars represents a range of potential growth outcomes in your investment for the various holding periods. The red areas represent the lowest and least likely growth possibilities. The black areas at the top are the highest and least likely growth possibilities. The larger, shaded blue/gray areas represent the most likely outcomes. We perform the same analysis on a meaningful benchmark such as a broad market Index.
Many people think risk is volatility. But we feel that true risk is the probability of a bad outcome. Our process quantifies those probabilities, along with specific return trade-offs, over 4 specific time frames. This provides confidence that just cannot be attained from just past performance or seeking average returns.
Would it make sense to explore whether we're a good match for what you are looking for?
If so, then here’s how we approach this – no pressure, just a clear process to help you make the decision for yourself..
Step #1
Introduction and Discovery Meeting
We will spend the first 15 minutes getting to know each other and determine if we are a good fit to work together.
Step #2
Review our Analysis and Assessment
In this 30-45 minute meeting, we will review the findings of our P-PRO process. and show you any hidden risk in your current portfolio.
Step #3
Time to Reflect
Now is the time for you to reflect, without us, on everything we’ve discussed.