We combine Value and Timing. We build positions on stocks with solid fundamentals, or reasonable technology prospects. For riskier accounts, we look at turnaround situations. Then we add or trim positions depending on market vagaries.

We integrate Macro Analysis – economics trends on an international level – and Technical Analysis – what investors do as opposed to what they say. Our main focus, however, is Fundamentals. First, what drives revenues - the nature of the product, is it cyclical, is the technology proven, who are the competitors? Then, what are the costs involved, including leverage, cash burn, cash flow? Last, who is Management, who is the Board? Our motto: “What is it used for? How much does it cost? How much does it bring in – and can I trust them?”

Because of our diversified and opportunistic approach, our investment universe is open ended. We do not confine ourselves to any index or to institutional research. In addition to the companies we have come to know over our 31 years of salt mine work, we update our universe by screening companies through various statistical databases.

On the Technical side, we integrate the Dow Model that Franck Prissert devised some 15 years ago, based on a simple observation: the standard deviation of individual returns was so large that forecasting the index was in itself an irrelevant task. He figured a more statistically reliable bottom-up approach. The Dow Model looks at individual stocks through five technical filters, then aggregates the results. The output is thus based on 150 observations, as opposed to a few. While this analysis can from time to time lead to stock selection, it has proven more useful in calling market trends, especially at tops or bottoms – when the market focuses on the index as opposed to individual stocks.

In the end, a lot of work and a lot more of luck.

Asset Management for Institutions and High Net Worth Investors
127 Dalena Way, Palm Beach Gardens, FL 33417 – U.S.A. – Tel: 1-561-493 7077
www.capmax.com • www.theotherstreet.net