- How would you describe Tango's services?
Tango is a fee-only, discretionary portfolio manager, in that clients assign Tango the ability to make trades in their accounts. Because compensation is based on assets under management, I receive no commissions or incentives to make trades or to invest in one security over another. When my clients do well, I benefit. Our interests are aligned – to increase the value of their account.
- What is an active investment approach?
An active investment approach looks for opportunities for profit based on current market conditions, and invests according to those perceived opportunities. This is very different from a passive asset allocation approach. I watch the market and the individual investments in my clients’ portfolios on a daily basis. Investments are selected based on identifying the leading market sectors and leading stocks within those sectors. To merit a place in a client’s portfolio, a stock must meet our criteria for "bullish." When it no longer meets those criteria, it is sold. We strive to “let our winners run and sell losers quickly.”
- I've always heard that investors are best off to buy a diversified portfolio of index funds and hold for the long term. What are your views?
I have met very, very few people with the emotional fortitude to make that approach work. You have to be willing to watch your portfolio lose value without knowing how far down it will go or if you will ever be able to recover. Personally, I don’t have that level of blind faith in the market. I want to be able to control losses and to use the best systems I know to identify potential winners.
- Why do you use primarily stocks in your portfolios?
One, I think I am very good at identifying good stocks to hold. Two, stocks offer you your best chance of achieving exceptional returns. Returns that can really turbo-charge a portfolio. Three, when you invest in large diversified funds you are always going to get average or market returns. Why not aim for something better?
- Can't I just manage my own portfolio and not pay 2% annually for your service?
You can do anything you want, but whether it makes economical sense is a different matter. I believe I more than earn my fees by watching the market on a daily basis on your behalf, continually running risk analysis and time-tested indicators to buy and sell portfolio positions, using best execution to reduce trading costs – that alone can more than equal my fees – and actively managing the risk in your portfolio.
- I noticed you use hedging. Isn't that risky?
I think the perception of risk results from people associating hedging with hedge fund strategies. True hedging, and that is not what most hedge funds do, is a risk management technique used to offset the potential for a stock to decline in value. I may have a stock in a portfolio that I am not ready to sell, but that looks a little risky. A hedge is structured so that if the stock declines in value, the hedge increases, offsetting the loss. It keeps you at a market neutral or slightly biased risk level.
- Describe your investment philosophy in a nutshell.
• Assets should be actively managed.
• Technical indicators and data are used to determine direction of trading, trigger points, objectives and exit points.
• Heavy emphasis is placed on the exit point.
• Short-term gains need to be kept in perspective.
- What Indicators do you use to make buy and sell decisions and which of these indicators have the most influence over those decisions?
• Moving averages and oscillating indicators have the most weight.
• Seasonality, gaps, volume, patterns, trading bands, resistance, and support levels are taken into consideration for confirming an entry, objective and stop loss point.
- How do you define risk in the portfolio?
Draw down and volatility.
- How do you control risk in the portfolio?
• Limit losses
• Limit losses
• Limit losses
• Once a position is taken, you have good indication by confirming indicators and market action if it’s a good position. If not, the position is exited as quickly as possible.