INVESTING SOLUTIONS FINALISTS
Auour Investments advocates an investing strategy based on the detection of changing investment cycles, as a path to appropriate asset allocation. The firm regards market timing as a gradual approach, rather than all-in or all-out approach.
“We’re acting as missionaries here,” said Joseph Hosler, managing principal at Auour. Although people may like high precision month-by-month, Auour takes the stance that it’s actually more effective to lengthen the time-frame perspective from one to three years.
Most in the industry try to adjust portfolio risk according to economic factors or momentum measures, but economic factors can often suffer significant forecasting errors while momentum is reactionary.
Mr. Hosler notes the impact of correlation in times of market duress. Assets normally considered to have low correlation can see their correlation increase greatly in difficult markets; clients, in turn, feel out of control and react too late. Investors time sales badly when volatility hits; they sell at the worst time and grow to distrust advisers.
“There’s not enough humility in the investment world. We just want to be approximately right,” Mr. Hosler said. “We use our crystal ball to understand three-to-nine month shifts in mentality, for phasing in and out of different environments.”
– Vanessa Drucker