At Thomas Meyer Investment Management (TMIM), we focus on investment strategies that are simple and effective. We always take risk into account. Here are some of the strategies we focus on. Be sure to read the disclosure at the bottom of this page.
Trend Following
At TMIM, we offer trend following investments in the major market averages as well as in a sector ETF strategy. Though the term “trend following” seems like it should be easy to implement and follow, very few investors take the time to truly understand what trend-following means and how it can be implemented.
In its essence, trend following is very simply a strategy. The manager identifies a trend through a set of rules and mathematical calculations. If the trend is moving higher, the manager will place a bullish trade. If the trend is moving lower, the manager will place a bearish trade. After the trade has been entered, a pre-determined exit strategy is applied. Famous investor Bruce Kovner said “Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I’m getting out before I get in.”
Trend following is a misunderstood trading strategy. I asked ChatGPT a simple question about trend following and received this answer.
Q – What are the advantages of trend trading in the financial markets?
A – Here are some advantages of trend trading in the financial markets:
Potential for High Returns: Trend trading can offer high returns in a short period of time. This is because traders can enter a trade at the beginning of a trend and exit it at the end, capturing a significant portion of the trend’s movement.
Reduced Risk: Trend trading allows traders to reduce their risk by avoiding counter-trend trades. By following the trend, traders can avoid the pitfalls of trying to predict market reversals and can stay in profitable trades for longer periods of time.
Simplified Trading: Trend trading is a relatively simple strategy to implement. Traders only need to identify the trend direction and enter trades in the same direction, making it easier to execute and manage compared to other trading strategies.
Objective Decision Making: Trend trading is based on objective technical analysis, which takes emotions out of the decision-making process. This helps traders to avoid making impulsive decisions based on fear or greed and stick to a disciplined approach.
Wide Range of Markets: Trend trading can be applied to a wide range of financial markets, including stocks, commodities, currencies, and bonds, allowing traders to diversify their portfolio and find opportunities in different markets.
However, it is important to note that trend trading is not foolproof and carries some risks, including false breakouts and sudden trend reversals. It is important to manage risk by using proper stop-loss orders and position sizing techniques.
We will discuss these points and others should you wish to know more about this strategy.
Structured Notes
Here is a definition of “structured notes” from Investopedia – A structured note is a debt obligation that also contains an embedded derivative component that adjusts the security’s risk-return profile.
There are structured notes for growth, for income, but the ones we focus on are those that protect the principal of the investor.
Here is an example of a structured note that was available recently from Goldman Sachs. The investor places $1000 in a 3-year note tied to the return of the S&P 500. At the end of the 3 year timeframe, if the S&P 500 is higher, the investor receives 100% of the return of the index up to a 25% gain. If the S&P 500 is lower at the end of the 3 years, the investor receives 100% of his/her money back. Of course, there’s no guarantee that type of return will be possible going forward.
Structured notes, as with every other investment, has a set of risks that must be discussed before investing your money.
Diversified Income
This is an income-focused strategy that invests in high-income ETFs and closed-end funds as well as buy-writes on individual stocks that pay good dividends and option premiums (a buy-write strategy is the same as a covered call). The primary goal is to generate a high level of income and the secondary goal is to generate a modest amount of capital appreciation.
Fixed Income
The goal of our fixed income strategies is to generate interest income with no risk to client principal. This is accomplished through CDs, municipal bonds, and highly rated corporate bonds. Each client portfolio is constructed and managed based on the client’s individual investment needs combined with their risk tolerance.
Disclosure:
Every investment strategy has a different set of risk characteristics. It’s important to understand these risks before investing any money. There is no guarantee that the investment objectives of any strategy will be achieved. It is possible to lose money in the short term or the long term. Consult with your investment professionals before investing any of your money.
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