"It is not the strongest of species that survive, nor the most intelligent, but the ones most responsive to change."
- Charles Darwin
Nature provides a cruel, yet proven and effective system to manage growth. As an investment manager, we are inspired by and have great respect for Mother Nature and human nature which both interact every day in the financial markets. We believe that if you want to be on the right side of the evolutionary process, you must have a disciplined system that will:
Adapt
Our approach seeks to adapt our investment holdings to align with markets showing either upside or downside strength. Acorn monitors a very broad range of market opportunities that go well beyond conventional stock, bond or real estate investments alone. The strategy we employ continually adapts to three things:
- Market Direction
- Market Risk
- Portfolio Risk
Every day we evaluate each market to determine its direction and risk. We then take action to ensure that our holdings are aligned with or adapting to the direction and risk in each market. The end result is that losing positions are quickly eliminated while remaining winning positions are adjusted to reflect individual market and total portfolio risk.
This process is done methodically every day and relies primarily on market prices. The present price in any given market is considered more important than opinion or speculation of what might happen in the future. This belief supports a disciplined daily execution of the strategy and downplays strong convictions or emotions relating to the hoped for future of any given position.
Diversify
This adaptive strategy is applied across a diversified universe of liquid markets. Diversification occurs by:
- Geography - North America, Europe, Asia, Emerging Markets.
- Sectors - Currencies, Bonds, Short-term rates, Energy, Metals, Equities, Agricultural Products.
- Instruments - Cash, Equities, Futures, Options.
- Systems – Different systems with low or negative correlation to each other provide strong diversification benefits.
- Frequency – Varied time horizons.
- Trade Direction – Rising and falling markets.
Prosper
