The asset management expertise of Houghton & Martin Asset Management has been built up over many years. Our investment strategies unite tradition and innovation. Sophisticated processes with a long-term horizon and a conservative slant centre on continuity and discipline. Above all, we are geared to the needs of our clients.

 

Our methodology is decidedly different from that of most money management firms, who tend to utilize fairly static “portfolio theory” asset allocation models combined with fairly active stock picking strategies based on “bottom-up” fundamental analysis and/or technical analysis.

 

We believe that our clients are better served by a top-down, big-picture approach designed to keep them fully invested in a semi-passive well-diversified portfolio of ETFs, taking defensive measures to protect capital only during relatively rare periods of significant downside volatility (bear markets).

 

We eschew stock picking in favor of owning well-diversified baskets of stocks, such as low-cost index funds and exchange traded funds (ETFs). Not only does most of the research demonstrate that individual security selection plays a much smaller part in determining long-term returns than does asset class, style, and sector selection, over shorter periods of time, having too much exposure to a single company that blows up can cause significant damage to the entire portfolio. If Wall Street’s best and brightest couldn’t predict Enron, WorldCom, Tenant, and the many other major meltdowns in the early part of this decade that were attributable to company-specific circumstances like fraud, the odds are that we can’t either.

 

Our methodology rests on two broad principles:

 

1. Economics establishes that changes in the supply and demand relationship determine the future direction of prices in any well-regulated free market, regardless of asset class.

 

2. Behavioral finance provides strong evidence that the “hard wiring” of the human brain is poorly suited to modern financial markets, causing investors to make poor decisions based on basic instincts (“safety in numbers,” “fear of heights,” “loss aversion,” “pride and regret,” etc.)... and hence the value of contrarian analysis.

 

We believe that our disciplined approach to evaluating and monitoring these indicators is crucial to keeping our investors on the right side of the market and determining which categories are likely to outperform.