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 SYNTHESIS Investment Program

PROGRAM OVERVIEW

The SYNTHESIS Investment Program is based upon these core beliefs:
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  • Markets are dynamic.
  • Markets are driven by investor fear and greed.
  • Buy and hold investing works...until it doesn't.
  • Different strategies are required for different market environments.
  • Risk can (and should) be actively managed and monitored.
  • There is a time to be aggressive...and a time to be defensive.
  • You can make a lot of money investing in leaders and avoiding laggards.
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What follows is an overview of SYNTHESIS.  Those desiring a more detailed look into our program can find additional information by clicking on the SYNTHESIS Deep Dive link at the top of the page.
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Our approach, SYNTHESIS, is the culmination of years of testing, research,  and experience.  The program is designed as a complete strategy suitable for an investors entire portfolio.  SYNTHESIS features:
 

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MULTIPLE STRATEGIES
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Synthesis is defined as "the combination of ideas to form a theory or system." 
 
For our purposes, SYNTHESIS is how we describe our investment management system/approach.  Elements of various investment and trading strategies are incorporated into a comprehensive methodology for managing client portfolios.  Among the concepts incorporated into our process are stage analysis, long-term trend following, momentum trading, and tactical, shorter-term, trading.
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We use multiple strategies as we believe no single strategy is successful in all market regimes.  Here is a brief overview of the strategies:
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                  SYNTHESIS Global Opportunity (SGO) Strategy
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  • ETF based

  • Longest holding period.  Trades less frequently than our other strategies.   

  • Invests in leading asset classes, sectors, regions of the world. 

  • Actively seeks to invest in trending markets wherever we find them.  Go anywhere approach.

  • Incorporates stage analysis, trend following, and sector rotation concepts to identify investment opportunities.

  • Seeks to capture longer-term trends.

  • Most diversified strategy. 

  • Used as the core of most client portfolio allocations.

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SYNTHESIS Equities (SE) Strategy
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  • Invests in US stocks and foreign stocks (ADR's) listed on US exchanges.
  • Momentum strategy. Goal is to generate 10%-20% returns per trade and to repeat as many times as possible.
  • More active than our SGO Strategy.
  • Targeted approach.  Least diversified strategy.
  • Risk is actively and rigorously managed.  Exit strategy planned prior to entering a position.
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SYNTHESIS Tactical (ST) Strategy
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  • ETF based
  • Shorter-term tactical strategy.
  • Used to control risk at the portfolio level. May allocate 100% to cash while other strategies remain invested during market corrections. 
  • May use leveraged and inverse ETF's to enhance returns and/or manage risk.
  • Goal is to capture profits on shorter-term trades while maintaining the flexibility to remain invested in trending markets.
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Most client portfolio allocations include all three strategies according to their individual tolerance for risk and personal situation.  Clients may exclude one or more strategies from their allocation upon request. 
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Throughout this website the terms "strategy" and "model(s)" are used when referring to our process.  The terms are used interchangeably. The SYNTHESIS Investment Program is our process, it consists of three strategies, and is implemented via model portfolios using the trading platforms of our brokerage firm/mutual fund partners. 
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MULTIPLE TIMEFRAMES
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Depending on the timeframe(s) analyzed, price may be in an uptrend, moving sideways, or in a downtrend... simultaneously.  For example, a stock may be in an uptrend on a weekly chart, trading sideways on a daily chart, and in a downtrend on an intraday chart.  Depending on which timeframe is used to make decisions, it is possible to be bullish over the longer-term, neutral over the medium-term, and bearish in the short-term at the same time. 
 
Looking at the above scenario using our models, we may find SYNTHESIS fully invested in the SYNTHESIS Global Opportunities (SGO) Strategy (maintaining risk exposure), partially invested in the SYNTHESIS Equities (SE) Strategy (reducing risk exposure), and holding 100% cash in the SYNTHESIS Tactical (ST) Strategy (eliminating risk  exposure) due to the nature of the trend in the different timeframes used for each strategy.

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ACTIVE RISK MANAGEMENT
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Our approach is best explained as "Tolerate and Mitigate."  Markets rise and fall as market participants engage in trading activities. During bullish periods it is not unusual to see double-digit declines as gains in the market are digested and the market prepares for the next leg higher.  These pullbacks are temporary and represent the type of volatility we "tolerate" in our approach.   At some point, bull markets morph into bear markets and losses must be mitigated...not tolerated.   Risk mitigation requires an active approach to risk management.  The buy and hold investment approach tolerates all price movements and does not attempt to mitigate the impact of adverse price trends. 
 
We believe risk management is very important.   Losses are asymmetric as any loss requires a gain larger than the loss to breakeven.  For example:
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  • A 10% loss requires an 11% return to breakeven
  • A 15% loss requires a 17.6% return to breakeven
  • A 20% loss requires a 25% return to breakeven
  • A 25% loss requires a 33% return to breakeven
  • A 33% loss requires a 49.2% return to breakeven
  • A 50% loss requires a 100% return to breakeven
 
 
Proper risk management minimizes losses; the less time spent getting back to breakeven, the quicker we can positively compound  returns in client portfolios.   

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The SYNTHESIS Investment Program...

Diversified by strategy

Diversified by timeframe

Active risk management

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Mult Strat
Mult T/F
Risk Mgmt
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