Profoundly Different: Here is the Evidence

Profoundly Different: Here is the Evidence

Writing in Financial Advisor Magazine, Mitch Politzer, the president of a consulting group, wrote an article called “Managing In a Post-Economic Crises Era.”  In the article, Mr. Politzer discusses how financial advisors should be shaping their practices to not only meet the changing perceptions of clients, but also the changes in the reality of investing and the financial services arena.

While I disagree with how Mr. Politzer suggests advisors and clients should be investing, I do agree with how he ends the article.  He tells the reader that we must “invest in those who understand how profoundly different the world is and will be.  Invest in those who will innovate, seek growth and truly understand this new world.”

He could not be more correct.  The vast majority of financial professionals and investors are investing with strategies that are equivalent to financial “blood letting.” Just as medicine has been driven by thousands of years of science, it has really only been the last 50 years that we have seen major medical breakthroughs.

Such is the world of investing and finance.

Over the course of the last 100 years or so, we have seen tremendous advances in the understanding of capitalism, capital markets and how individuals and groups make investing decisions.  Armed with this understanding of the history of the capital markets, we set out to truly understand the science behind the capital markets.  Specifically, and more importantly, how this understanding would help our clients.

As a result of that research, we began using the phrase Evidence-Based Investing to describe how Aubry & Eustice would continue to manage client portfolios.  Evidence-Based Investing delivers the performance of the capital markets and increases returns through state-of-the art portfolio design and trading.  While the overwhelming majority of investment platforms are based on the more risky practices of stock picking, market timing and track-record investing, we base our strategies on what the evidence, driven by the scientific method, has led us to.  Because Evidence-Based Investing is not based on speculation or guesswork, but on tested and proven results, there is a measured certainty that can be expected.  For more information about Evidence-Based Investing, click here.

The key to Evidence-Based Investing is a patient, long-term view that utilizes strategies based on the evidence provided by the capital markets.  Within that, it must be understood and accepted, that over time, there will be short-term losses.  But, when driven by the evidence, those losses will be regained and the best decisions for our investor-clients will be made without being driven by emotional factors, reactions, or “predictors.”

What Does the Evidence Show?

It shows that the profoundly different strategies used by Aubry & Eustice are providing returns that are superior to the traditional benchmarks and traditional investing strategies.  We will let the results speak for themselves.  Below are the returns of the 9 portfolios that Aubry & Eustice manages and how they have compared to the traditional benchmarks.  We have portfolios for all risk levels.  All periods end June 30, 2009.

Aubry & Eustice                YTD                1 Yr                 3 Yr                 5 Yr                 10 Yr

International 97             20.89%            -23.88%          -2.64%           7.48%              8.23%

International 88             19.09%            -21.06%          -1.77%            7.28%              7.97%

International 75             16.59%            -16.70%          -0.45%            7.07%              7.71%

International 50              11.60%            -8.72%            1.71%              6.38%              6.88%

Standard 97                      14.57%            -24.65%          -5.29%            4.35%              6.75%

Standard 88                      13.73%            -21.82%          -4.10%            4.55%              6.70%

Standard 75                      11.96%            -17.51%          -2.56%            4.70%              6.61%

Standard 50                       8.56%              -9.45%            0.20%              4.74%              6.19%

Standard 25                      4.89%              -1.92%            2.54%              4.40%              5.29%

Benchmarks                        YTD                1 Yr                    3 Yr                 5 Yr                 10 Yr

S&P 500                              3.16%              -26.22%          -8.22%             -2.24%             -2.22%

EAFE Index                       7.95%              -31.35%          -7.98%               2.31%              1.18%

Throughout the rest of this year, we will spend a great deal of time discussing the “evidence”.  We will also be sharing with you how we are shaping our practice to meet the needs and manage the expectations of our clients. But for the time being, we wanted to show you the fruits of our Evidence-Based Investing labor…the Evidence-Based Results.

For more specifics and disclosure information, see Evidence-Based Returns - June 30, 2009.

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