We layer our portfolios with investments that are aimed toward three different time horizons: long-term, intermediate-term, and short-term.

Investment Strategy

One key word defines our current investment strategy: flexible. It wasn't always that way.

Prior to 2008, we primarily were a long-term, buy-and-hold investment firm. But, as it was for most of our industry, 2008 was a challenging year for us. We had made a decision to move partially out of the market in the summer of 2008—based on our concerns about the housing/credit markets—but our  partial "cash" position wasn't enough to protect our portfolios from the severe correction that fall. We held most of our positions long throughout the remainder of the year—many of those positions later recovered—but we realized our management style needed review.

In early 2009, after reviewing 2008's market activity, we came to some important conclusions about the markets:

  1. Market volatility is likely to remain high for the forseeable future. Thus:
    •  Risk measurement and management are more critical than ever.
  2. We are in a substantially different market environment than anyone in the business has ever dealt with before. Thus:
    •  Traditional asset allocation models are not likely to be effective.
  3. Despite overall choppy moves up and down, the overall direction of the market is likely to be relatively flat. Thus:
    •  Long-term buy-and-hold strategies by themselves are no longer sufficient.
  4. New drivers are having substantial influence on the markets; these drivers may negate or dampen more traditional fundamental market drivers. Thus:
    • A "macro" investment strategy is required.

Our current investment strategy is shaped by these conclusions.


Since 2008, we have developed a number of new, proprietary risk measurement models that help us determine when to make changes to our portfolios.

These models assess and quantify factors such as: economic indicators, probability of recession, financial stresses, currency swap transactions, the Federal Reserve's balance sheet, and equity risk.

These indicators help us determine:

  1. Which investment vehicles are likely to perform well (bonds versus stocks, for example).
  2. Which market sectors and subsectors are likely to perform well.
  3. When a partial move out of the market, an inverse position, or a hedge (generally a put option, for those accounts authorized for this strategy) might be prudent.

Since early 2009, acting on our interpretations of these models generally has helped performance during periods of market downturn.

Past performance is not necessarily indicative of future results. Performance of individual accounts may vary for a number of factors including, but not limited to: investment objective, trade restrictions, account features, and time of entry, among others.


Our strategy is also more flexible now than in the past.

We layer our portfolios with investments that are aimed toward three different time horizons:

  1. Long-term: investments in sectors that match our core philosophy; low to moderate turnover
  2. Intermediate-term: investments in sectors that look attractive given our reading of where the economy is in the business cycle (growth, slowdown, recession, recovery, peak); moderate to high turnover
  3. Short-term: investments that respond to "increased risk" periods in the market, or in specific sectors; relatively quick turnover

This "layering effect" means that our portfolios are able to respond to near-term market conditions, while remaining true to our long-term philosophies.

Please note that not all of our portfolios utilize all of these trading strategies.

Visualization of Portfolio Allocation Strategy
Portfolio Allocation Strategy

Again, the key to our investment strategy is flexibility. As market conditions change, we may explore new strategies or approaches. Clients should be prepared for, and be comfortable with, these changes.


If you are interested in opening an account, please complete our Invest with Us inquiry form or call us directly at (888) 486-3939 or (858) 487-3939.

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At PFS Group, we are committed to helping you build, maintain, and preserve your wealth