The foundation of York Capital Management's investment philosophy is based on the principles of tactical asset allocation and diversification. By employing disciplined portfolio management tactics, this strategy can add long-term value by enhancing returns and reducing risk.
Avoiding the loss of principal is the ultimate objective for long-term investment success. That's why the proper portfolio mix and management of stocks, bonds and cash is the single most important decision for investors. Therefore, YCM's prime directive is to achieve growth, income and capital preservation in market advances and more importantly, avoid major losses during market declines. The highest risk to any investor's principal is greatest during times of significant market volatility and uncertainty.
From year to year, the best-performing and worst-performing asset classes frequently change. No single investment style consistently outperforms the rest, so it's all but impossible to predict which styles will be in favor in any particular year. By diversifying among a mix of investments that focus on specific investment styles, market capitalizations and industry sectors, risk can be reduced and any losses from one category may be offset with gains from another.
Through tactical asset allocation, investment decisions based on global economic trends can take advantage of market volatility by shifting into an asset mix that can potentially capture more gains during market upturns and preserve more capital during market downturns. Successful tactical asset allocation depends primarily on what type of investments are owned, and for what period of time they are held. Tactical asset allocation management can add value and reduce the risk of underperforming by investing in asset categories that will likely outperform during certain stages of business and stock market cycles.
Managing market risk involves a blend of investment intuition and experience when making asset-mix changes. This requires not only a detailed analysis of economic, geo-political and social influences but also their impact on the stock market and investor psychology. YCM manages this risk with time-tested defensive and offensive investment strategies designed to reduce risk and enhance financial performance. Most importantly, these investment strategies can avoid the big mistakes that sidetrack most investors while improving the odds of achieving real and lasting wealth.
In order to maximize investment opportunity and properly diversify an account, the mininmum investment for new clients should be in excess of $100,000. Accounts under this minimum will be considered depending on an individual's personal circumstances and investment goals.
YCM Portfolio Styles
One Decision...One Investment Objective...Delivers a Diversified Portfolio
Research shows that asset allocation has by far the greatest impact on overall investment performance. Most often the mix of stocks, bonds and cash, not the performance of specific securities, has the greatest influence on long-term performance. Studies of pension funds confirm that the allocation among different markets or asset classes contributes to over 90% of investment returns- far outweighing market timing and individual stock selection.
YCM allows you to choose a portfolio style that achieves a suitable asset mix for your investment goals. Personalized investment strategies will help decided what type of portfolio style is appropriate for you. To define your investment plan, you need to answer some basic questions about where you are, where you want to go, what you want to accomplish over what period of time and how much risk can you take.
Do you need income now or are you investing to find some future dream? Is growth more important to you than current income? Do you wish to defer or reduce taxes? After a thorough review of your circumstances, requirements, expectations and attitudes, we will jointly decide the best investment strategy to match your unique time frame, resources and tolerance for risk.
Five Asset Allocation portfolios emphasize reasonable growth or income generation by managing risk through a broader application of asset allocation principles. Two Tactical Allocation portfolios more aggressively identify the highest level of capital appreciation potential among U.S. and international investment opportunities. YCM will monitor and adjust your asset allocation mix through the ups and downs of all stock and bond market cycles.
YCM's Tactical Allocation Portfolios
The objectives of YCM's highly concentrated Tactical Allocation portfolios are to identify the highest level of captial appreciation within selected domestic and international markets. YCM researches specialized industry and country sector opportunities with potential to realize above-average growth. Portfolio construction and rebalancing are achieved primarily through a diversified selection of no-load mutual funds, Exchange-traded funds (ETFs), stocks, bonds, CDs and tax-deferred annuities. YCM does retain the flexibility to incorporate money market exposure, bonds and other defensive strategies during times when such a tactic enhances capital preservation.
(7) Dynamic Growth Portfolio
The Dynamic Growth portfolio is designed to accomplish above-average growth primarily among companies listed on the Nasdaq, Rusell 2000 and among international emerging markets. A strategic alloction of no-load mutual funds, stocks and exchange traded funds (ETFs) will seek high, rapid growth through aggressive investments in narrowly defined industry groups and foreign sectors.
The Dynamic Growth portfolio will be less constrained in using a more aggressive investment focus than all YCM's Asset Allocation porfolios and the Tactical Allocation's S&P Growth portfolio.
(6) S&P Growth Portfolio
The S&P Growth portfolio is constructed to attain above-average growth among the U.S. companies listed within the S&P 500, S&P 1000 and S&P 5000 Indices. A focused strategic allocation of large-cap mutual funds, stocks and index-oriented exchange traded funds (ETFs) is expected to produce capital appreciation as the primary objective. Income is secondary and above-average market risk is acceptable.
The S&P Growth portfolio will be less constrained in using a more aggressive investment strategy than YCM's Asset Allocation portfolios that emphasize reasonable growth by managing risk through a broader application of asset allocation tactics.
YCM's Asset Allocation Portfolios
The objectives of YCM's Asset Allocation portfolios are to identify the highest level of capital appreciation given the level of risk constraint within each of the five portfolio models. For the majority of client accounts, portfolio construction and rebalancing are achieved through a diversified selection of no-load mutual funds, Exchange Traded Funds (ETFs), stocks, bonds, CDs and tax-deferred annuities. YCM does retain the flexibility to incorporate money market exposure, bonds and other defensive stratagies during times when such a tactic enhances capital preservation.
(5) Global Equity Growth Portfolio
The Global Equity Growth portfolio is designed for above-average growth emphasizing capital appreciation from a mix of equity-only investments. Growth of capital is the dominant concern and reasonably high risk is acceptable.
Through a blend of strategically diversified global investments, the Global Equity Growth portfolio is expected to have above-average growth potential by fully participating in U.S. and selective international markets. This portfolio will be less contrained in using a more growth-oriented strategy than the Moderate Growth portfolio.
(4) Moderate Growth Portfolio
The Moderate Growth portfolio is chartered to seek near-average equity growth through a combination of equity investments with some income positions. Growth of capital is the primary concern and safety of principal is secondary.
Through a blend of prudently diversified investments, the Moderate Growth portfolio is designed to provide capital appreciation and income that will produce the highest total return over full market cycles. This portfolio will be more constrained in using a growth strategy than the Global Equity Growth portfolio. A moderate amount of risk is acceptable.
(3) Balanced Growth Portfolio
The Balanced Growth portfolio aims for growth and income return through an approximately equal mix of equity and income investments. Safety of principal and growth of capital are of equal importance.
Through a broad selection of diversified equity and income investments, the Balanced Growth portfolio attempts to provide near-average total returns over full market cycles. This portfolio will be more contrained in using a growth strategy than the Moderate Growth Portfolio. A small amount of risk is acceptable.
(2) Conservative Growth Portfolio
The Conservative Growth portfolio seeks above-average current income with some degree of long-term growth potential. Safety of principal is the primary concern and growth of capital is secondary.
Through a broad array of income investments with some equity positions, the Conservative Growth portfolio is contructed to be a long-term buffer against inflation. This portfolio will be more constrained in using a growth strategy than the Balanced Growth portfolio. Minimal risk is acceptable where growth opportunities exist.
(1) Income Portfolio
The Income Portfolio is weighted toward fixed income assets yielding the highest level of current income. Safety of principal is the dominant concern.
Short and long-term investment grade fixed-income positions are expected to provide above-average income while seeking to minimize price fluctuations. Risk must be kept to an absolute minimum.
YCM's Philosophy on Long-Term Wealth Building and Market Volatility
1. In the long run, real wealth comes to the owner, not the loaner. Stocks are the best long-term builder of wealth.
2. The great risk of the 20th century was losing money. The great risk of the 21st century will be outliving your money.
3. All you have to do to be a good equity investor is watch huge percentages of your capital disappear every so often, and have faith that the disappearance is temporary.
4. No panic, no sell. No sell, no lose. Market declines are only temporary, advances are ultimately permanent.
5. You can't time the market. The only way you can be absolutely sure of participating in every day of advances is to be willing to participate in every day of the temporary declines.
6. If the volatility weren't there, the returns wouldn't be either. Historically, the market, like a dance routine, takes two steps forward and one step back.
7. A portfolio matched to long-term goals is an investment. A portfolio driven by short-term market outlook is speculation.
8. Focus on the big picture- Global economic expansion. The world is turning away from socialism and communism towards free enterprise.
9. Focus on the other big picture- Technological progress. It's one of the main driving forces behind the stock market.
10. Try to remember how relatively elegant today's problems are by historical standards. In the long haul, stocks are the best investment.
I look forward to hearing from you and your interest in taking the next step with a professional advisor you can trust. An investment partnership with us can provide financial solutions that best meet your investment needs. At YCM, we are totally dedicated to investment success ... yours!
David J. York, MBA
York Capital Management, LLC
1873 S. Bellaire St., Suite 1110
Denver, CO 80222
Tel: 303-759-1561
Fax: 303-759-1658
Email: djbcyork@aol.com