Our Mission At TTG Financial
Is to provide above market returns, on a risk adjusted basis, while reducing the total risk across a broad range of portfolio allocations and risk profiles. TTG Financial uses a combination of tools in an effort to increase return and reduce the risk on any targeted allocation. Our focus is on achieving portfolio performance above that of our clients’ comparable portfolio benchmarks. This methodology is called Enhanced Portfolio Analysis and is made up of six primary components:
Modern Portfolio Theory is used to determine the best and optimal allocations for any level of risk. Modern portfolio theory is a practical method for selecting investments in order to maximize their overall returns within an acceptable or agreed upon level of risk.
American economist Harry Markowitz first discussed this theory in his paper “Portfolio Selection,” which was published in the Journal of Finance in 1952. He was later awarded a Nobel Prize for his work on modern portfolio theory.
A key component of the theory is diversification. Most investments are either high risk and high return or low risk and low return. Markowitz argued that investors could achieve their best results by choosing an optimal mix of the two based on an assessment of their individual risk tolerance
a) Modern portfolio theory is a method that can be used by risk-adverse investors to construct diversified portfolios that maximize their returns without unacceptable levels of risk.
b) Modern portfolio theory can be useful to investors trying to construct efficient and diversified portfolios using ETFs.
c) Investors who are more concerned with downside risk might prefer the post-modern portfolio theory. The post-modern portfolio theory is a portfolio optimization methodology that uses the downside risk of returns instead of the mean variance of investment returns used by the Modern portfolio theory . Both theories describe how risky assets should be valued, and how rational investors should utilize diversification to achieve portfolio optimization. The difference lies in each theory’s definition of risk, and how that risk influences expected returns.
Dow Cyclical Analysis to assist in identifying primary market trends and the required portfolio adjustments they dictate.
Dow theory is a financial theory that says the market is in an upward trend if one of its averages. the industrials or transportation index, advances above a previous high and is accompanied or followed by a similar advance in the other average. For example, if the Dow Jones Industrial Average climbs to an intermediate high, the Dow Jones Transportation Average is expected to follow within a reasonable period of time.
a) Dow Theory is a technical indicator that predicts the market is in an upward trend if one of its average’s advances above a previous high, followed by a similar advance in the other average.
b) The theory is predicated on the concept that the market discounts everything in a way consistent with the efficient market’s hypothesis.
c) In such a theory, different market indices must confirm each other in terms of price action and volume patterns until trends reverse.
Technical Analysis to assist in identifying secondary market trends and the adjustments they require.
Technical analysis is a trading discipline used to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume.
a) Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities in price trends and patterns seen on charts.
b) Past trading activity and price changes of a security can be valuable indicators of the security’s future price movements.
c) Technical analysis is in contrast with fundamental analysis, which focuses on a company’s financials rather than historical price patterns or stock trends.
Fundamental Analysis is used to assure “best of breed” representation across all asset classes and market categories.
Fundamental analysis is a method of measuring a security’s intrinsic value by examining related economic and financial factors. Fundamental analysts’ study anything that can affect the security’s value, from macroeconomic factors such as the state of the economy and industry conditions to microeconomic factors like the proficiency of the company’s management.
The end goal is to arrive at a number that an investor can compare with a security’s current price in order to see whether the security is undervalued or overvalued.
This method of stock analysis is considered to be in contrast to technical analysis, which forecasts the direction of prices through an analysis of historical market data such as price and volume.
a) Fundamental analysis is a method of determining a stock’s “fair market” value.
b) You search for stocks that are currently trading at prices that are higher or lower than their fair market value
c) If the fair market value is higher than the market price, the stock is deemed to be undervalued and a buy recommendation is given.
d) In contrast, market technicians ignore the fundamentals in favor of studying the historical price trends of the stock.
Defensive Option Strategies and Trailing Stops to further protect portfolios from large downside moves.
Options are not just speculative securities, but may also serve as effective portfolio management and risk reduction tools. To reduce risk, three strategies need further consideration:
a) Protective puts. The most basic defensive move allowing you to continue holding stock is the long put, also called the “protective” put. This is also termed a synthetic long call; in the event the stock value rises, the overall stock/put long position rises as well.
b) Covered calls. Another basic move is to sell a covered call. This allows you to collect a premium, and hold onto the position, as long as the stock price doesn’t move above a specified number.
c) Collars. The collar involves 100 shares of stock, a long put and a short call. However, the call and put normally are opened at different strikes so that both are out of the money. If the stock price rises, the call is covered; if the stock price falls, the put grows in value. And because the net cost of the two options is at or close to zero, it does not take very much movement for the long put to become profitable.
The real key to effective use of options is to use them to manage risk, not to replace one risk with another.
Trailing stops are used to exit stock positions. It is an order type designed to lock in profits or limit losses as a trade moves favorably. The stop limit only moves if the price moves favorably.
Offensive Option Strategies to generate additional portfolio income and enhanced return on invested capital.
The truth is that 80% to 85% of options trades expire worthless or unexercised, which means the options buyer LOSES money 80% to 85% of the time. The options SELLER makes money.
-Options BUYERS have a mere 1 in 5 odds of a trade working out in their favor. The Options Seller, however, has 4 in 5 odds of a trade working out in their favor.