"A penny saved is a penny earned!" - Benjamin Franklin
KAM Asset Growth & Protection Model of Investing
True Diversification
Most Advisors "Diversify" by buying a bunch of funds
but when the investments are boiled down, the vast majoriy,
(as much as 85%) are investing in domestic large-cap stocks and bonds.
At KAM, We don't believe that is Truly Diversification
Systematic Allocation
85%
We believe that is diversification...in a couple of asset classes
But what about the Rest?
Mid- and Small-cap Stocks
International
Developed
Emerging Markets
Other Fixed Income
Convertible Bonds
High Yield Bonds
TIPs
Preferreds
Alternative Investments
Real Estate
Commodities
Currencies
Managed Futures
Absolute Return
Market Neutral
Adding each one of these Asset Classes
Increases Return AND Reduces Risk!
Isn't that what YOU want?
More Return with less Risk...
During the "Lost Decade" a non-diverse portfolio Lost Money.
A Moderately Diverse Portfolio doubled those results
When filling the "buckets,"
KAM follows three principles:
1. Invest in strategies that tend to outperform over time.
KAM's QVP has outperformed!
2. Reduce Risk
We use other outperforming strategies too!
in some cases, all of it!
Philosophical:
Mechanical:
Two Major Principles:
One Year
Three Years
Five Years
Since Inception!
Let's see how powerful this can be...
Diversification works precisely because when some investment are up...
...other investments are down...
The net result is a more smooth return
But what if we can eliminate the "down" investments...?
Eliminate the "downs"
The result: Higher average returns with less risk
Keep the "ups"
3. Reduce "drag" or costs
Don't use Expensive Mutual Funds that have No Competative Advantage
Use ETFs that are less expensive and tend to out-perform
Buy Individual Securities
Less expensive
More Tax efficient for you
Benjamin Franklin might say you "earned" 2-3% more per year!
Remember the Performance Chart?
KAM's strategies added 30% more than a diversified portfolio!
On a Million dollars, 2%-3% per year in 10 years could mean another $340,000 "earned"!
That's a lot of "Benjamins"!
How does this strategy work for our clients?
We measure results in a variety of way
In theory, anybody can get more returns...
...by taking on more risk...
You should be intersted in KAM's clients returns over a variety of risk tolerances.
We use "Up/Down Capture Ratio" as one measurement of risk adjusted returns.
What is that?
Say the market is up 10% --->
if your "moderate" portfolio is up 6%,
it "captured" 60% of the market's up move.
An aggressive portfolio that was up 12%,
"captured" 120% of the market's move.
"Down capture" works the same way...
...but in declining markets.
This time the market is down 9% --->
If a modeate portfolio is down only 4%,
then 44% of that move was "captured."
if an aggressive portfolio was down 7%,
78% of that move was "captured."
Put those ratios together...
We know the market's "up capture" is 100%
Same with the "down capture"
So the Up/Down Capture ratio is 100/100
Remember our "moderate" portfolio?
It captured 60% of the "up" move.
...and 44% of the down...
For an Up/Down Capture ratio of 135%
By the way, a market that is up 10% and down 9%
has a net return of 0.1% (not 1.0%).
In spite of the lower relative movement,
the risk-adjusted returns of our moderate portfolio are superior!
What about our aggressive portfolio?
It captured 120% of the upside.
...but only 78% of the down move...
...for an up/down capture of 154%.
In this example,
The aggressive portfolio has much better risk-adjusted retuns
KAM's 'average' client
has up/down capture ratios
closer to 200%.
Some were below 
100%
This client has a concentrated stock position.
We are not allowed to sell
This client
uses only one 
asset class...
This client
tries to "time"
the market.
The other 17 -- and all the clients that follow our strategy -- 
have an up/down capture ratio that averages close to 200%. 
This client has a "negative" down capture...
...which means, the returns were positive in a down market.