Portfolio Plan Changes? Aims™ Update

     The AIMS™ system is complete, and your Portfolio Board is actively operating it. We are excited about the potential for AIMS™ to help clients successfully navigate the challenging market conditions we see for the next several years, and look forward to discussing it with each of you soon.

     To recap, AIMS™ is a substantial evolution of ISIS™—a “new and improved” version of our asset allocation investment methodology, which seeks to enhance returns and reduce risk by diversifying over many different asset classes which are expected to not all move in the same direction at the same time. Unlike ISIS™ and most mainstream asset allocation systems, AIMS™ is designed to select asset classes base on your Portfolio Board’s analysis of likely future economic and market conditions over the mid-term, out two or so years. AIMS™ will seek to hold slightly fewer total positions in each portfolio, all of which we expect to be in better-performing asset classes. AIMS™ will also “mix and match” different fund types (mutual funds, ETFs, and closed-end funds) to target the best opportunity in each asset class. While this may introduce some tax inefficiency where mutual funds are used instead of ETFs, for example, we believe the increased investment opportunity should more than outweigh this.

     The new AIMS™ portfolios will have the same names (Capital Appreciation, Balanced, etc.) and general risk parameters as the old ISIS™ ones, so it will be easy to “map” your current ISIS™ holdings to the new AIMS™ positions, which we will discuss in detail with you. When we do, we will also explore changing your overall portfolio plan, perhaps including or increasing your allocations to some of the Camarda individual stock portfolios, such as Viking, Strong Stock, and Columbia. These tend to be much more cost efficient than using fund portfolios like ISIS™, and can be more surgical in targeting specific investment objectives.

     So, stay tuned! AIMS™ has had a long and careful road coming, but we are nearly there, and think you will be very pleased! For instance, value investing, a style by which the manager endeavors to buy quality investments at bargain prices à la Warren Buffett, is expected by Barron’s and others to outperform growth investing in the years ahead. Camarda uses value investing methodology in its individual stock portfolios like Columbia, Strong Stock, and Viking, of whose performance we have been proud of.

     Traditional asset allocation generally treats all asset classes the same, and would not allow a portfolio to focus on a style like value in hopes of better performance—a limitation AIMS™ is designed to overcome by emphasizing only those asset classes our Portfolio Board believes will outperform in the coming periods. Stay tuned! We are confident you will share our excitement about the potential of our new AIMS™!

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