Start With a Free Consultation
Every client is different and every investment portfolio has different needs. First, we must determine your risk tolerance to see what type of portfolio best suits you. Then we ask what your investment objectives are based on three criteria: investment income, speculation or conservative income strategies. After we determine which portfolio is appropriate for you, we create a tailored investment mandate; which is a specialized document that guides our management of your portfolio.
The first step is to determine your risk tolerance to see what type of portfolio best suits you. Then we ask what your investment objectives are based on three criteria: investment income, speculation or conservative income strategies. After we determine which portfolio is appropriate for you, we create a tailored investment mandate; which is a specialized document that guides our management of your portfolio.
Select a Strategy
We manage three separate strategies: Traditional Asset Allocation, Dynamic Active Equity Strategy and our Dynamic Active Income Strategy. The Dynamic Active Equity Strategy is for clients with a higher risk tolerance; whereas, the Traditional Asset Allocation and Dynamic Active Income Strategy are reserved for clients with a normal risk tolerance.
A traditional asset allocation works best for many clients, which is based on “Modern Portfolio Theory”. We buy a combination of stocks, bonds and ETFs, so that if one asset goes down in value, another will go up in value. The purpose of this strategy is to reduce overall portfolio risk and generate above market returns.
Customize the Portfolio
We create the portfolio comprised of individual stocks, ETFs, option securities and bonds. We never purchase mutual funds because they are never in our clients best interest. Our portfolios are created based on value and fundamental analysis, meaning we purchase stocks that are undervalued and backed by positive earnings.
We select investments that have a lower expense ratio because we believe reducing overall investment expenses, increases the compounding effect of returns.
Manage the Portfolio
We analyse client portfolios on a daily basis. When appropriate, we make buy or sell decisions that benefit our clients portfolios. We trade on a discretionary basis, meaning we have a limited power of attorney from our clients to buy or sell when we deem appropriate. We keep clients informed about their portfolios by communicating on a regular basis.
How it Works
We are active portfolio managers, our goal is outperform the broad stock market through intensive research and making the correct buy or sell decision.
We look at valuation multiples, profitability/liquidity and long term solvency ratios. We search for companies that have consistent free cash flow generation, so the company has capital to reinvest in operations for future growth. On occasion, we build discounted cash flow models to analyse a prospective business and see what the 5-10 year outlook is for company. Once we build the operating model, we forecast projected free cash flows to discount back to a present value share price, which allows us to determine whether or not a company is worth investing in.
We look at indicators such as moving averages and long term pricing trends. Technical indicators drive short term movements in share prices and allow our investment managers to achieve the best possible share price for our clients. The simple 21, 50 and 200 day moving averages have tremendous influence on short term moves in share prices. These moving averages can act as a support to stabilize a share price from falling, or even a resistance which can prevent a share price from rising any further. When you use technical analysis it can explain pricing behavior and market psychology to better help our portfolio manager make a buy or sell decision.
When it comes to purchasing or selling options for clients, we analyse the options pricing model to determine the probability of a specific trade to end in favor of the client. An example would be when we sell a 2 standard deviation covered call option from the current share price, this means under 97.5% of probabilities this specific trade would end in the clients favor. Options pricing tends to be skewed to the put side, meaning put options are often priced for a large move to the downside because investors fear a large stock market crash. We capitalize on this put option skew by selling cash secured out of the money put options to collect theta and time premium for our client accounts.
Get In Touch
We look forward to talking about the stock market with you, it’s our passion!
Copper Canyon Investment Advisory
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