RATIONAL INVESTING
IN AN
IRRATIONAL WORLD

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THE STRONGEST PRINCIPAL
OF GROWTH
LIES WITHIN HUMAN CHOICE

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RETIREMENT PLAN CONCERNS?
CALL A PAISLEY ADVISOR
AND SLEEP EASY TONIGHT

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Our Strategic Advantage

The edge you will get with Paisley Financial lies within our strategic design to Capital Management. Our Trilateral Active Management approach is our optimal way to achieve maximum diversification & growth, as it encompasses all of our active management capabilities into a single, engine.

Active Strategic Management

  • Growth Strategies

    An aggressive portfolio strategy mostly comprised of our top growth stocks which aims to maximize capital growth. Risk is typically managed through the use of a well-diversified stock portfolio.

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  • Moderate Strategies

    Strategies that attempt to achieve growth but is averse to taking on large amounts of risk by tilting towards stocks, up to 60%. Growth is placed as the primary emphasis and current income as their secondary emphasis though may change depending on prevailing market conditions. 

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  • Conservative Strategies

    An amalgam of fixed income & short term revenue generating instruments that are focused on low risk objectives. The investments sought are of a high yield with a steady dividend history. Option strategies may be use to grind out additional gains or to work as a volatility hedge.

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  •  Hedge Fund Style (Long/Short)

    Our Trilateral Active Management approach is our optimal way to achieve maximum diversification & growth, as it encompasses all of our active management capabilities into a single, engine. The strategy incorporates all of our fixed income, currency, equity and commodity trading strategies we have developed into a model that will ebb and flow with volatility, growth, recessive interruptions or trends.

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  • Managed Futures

    Professional Money Management in the global currency, interest rate, equity, metal, energy and agricultural markets. Depending on your goals Managed Futures may add substantial diversification to an investment portfolio.

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  • Active versus Passive Management

    Active management is the art of stock picking and market timing. Passive management refers to a buy-and-hold approach. Buy and Hold worked well enough until 2008 when the DOW dropped 37% and has still not recovered. To understand the right choice for you, please learn more below.

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Managed Futures

Managed futures is an alternative investment established to trade in global futures, options and forex markets in which successful performance does not depend on continued upward movement in traditional equity or bond markets. The account is managed by a professional trader known as a Commodity Trading Advisor (CTA) or Commodity Pool Operator (CPO) and is responsible for determining what trades to make and when, pursuant to a power-of-attorney or limited trading authorization.

Most investment advisors agree that being diversified is essential to a successful portfolio. However, according to Modern Portfolio Theory, portfolios consisting only of stocks, bonds and mutual funds are not adequately diversified. Professor Harry Markowitz, in his article Portfolio Selection illustrated that holding stocks, bonds and mutual funds do not adequately lower an investor’s risk because each of those types of investments move in concert with each other. He concluded that diversification “reduces risk only when assets are combined whose prices move inversely, or at different times, in relation to each other.”

In other words, investors can properly diversify their portfolios only when investing in different asset classes having no correlation with each other. Since stocks, bonds and mutual funds are all of the same asset class and generally move in concert with each other, an alternative investment solution is needed to properly diversify a portfolio.

Potential Benefits:
Portfolio diversification - By allocating a portion of your assets to managed futures, you may increase the diversification and the long-term performance potential of your investment portfolio while potentially reducing overall portfolio volatility.

Access to world economic markets:
Managed futures investments may participate in up to as many as 80 global currency, interest rate, stock index, metals, agricultural and energy markets.

Professional portfolio management:
Managed futures investments utilize professional money managers with sophisticated risk management systems, years of experience and the capital needed to successfully participate in these markets.

Improved portfolio efficiency:
Adding managed futures to a traditional stock and bond portfolio may provide the potential to increase the long-term risk-adjusted rates of return in the portfolio.

Low-correlated performance potential:
Many portfolios contain traditional investments such as stocks and bonds. In order to maximize profit potential (with commensurate risk) in all market cycles, investors often look to include investments that have the potential to perform when these markets experience difficulty. Managed futures have historically demonstrated the ability to perform independently of traditional investments, such as stocks and bonds. This is referred to as low correlation. The degree of correlation of any given managed futures fund will vary, particularly as a result of market conditions, and some funds will have a significantly greater degree of correlation with stocks and bonds than others. To the extent the performance of managed futures and the performance of traditional markets exhibit low correlation, managed futures may or may not perform well when traditional markets are performing well, and vice versa. The factors that influence the stock and bond markets can affect the futures markets in different ways and to varying degrees.

Potential Risks:
Managed futures does involve risks that stems from the use of leverage in futures contracts. Some markets traded in futures contracts involve segments of assets that may be riskier than usual. For example, in the energy market, crude oil contracts skyrocketed in prices from under $17 per barrel to $147 a barrel between 2002 and 2008. Then in just 6 months, prices of crude oil dropped from $147 per barrel to $35 per barrel. This type of volatility may vary greatly compared to the equity and bond indices and appropriate use of leverage and understanding of volatility is crucial to the ability to profit from opportunities

Although managed futures can provide badly needed portfolio diversification to many portfolios, only investors with risk capital who understand and can deal with the risks and rewards involved in trading futures should invest in managed futures.

Please note that Managed Futures are not suitable for everyone and you should speak with a Paisley Financial Advisor to see if this type of investment is suitable for you.

You can learn more from this document from the Chicago Mercantile Exchange.

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