Investment Management

Understanding the Private Capital Market Portfolio Management Methodology

Laurie Thomas Vass, President, The Private Capital Market, Inc.

Five Year Investment Performance Comparison, 2012 to 2016. Private Capital Market A Stock Portfolio vs. S&P 500 Index. All investments bear risk, including the loss of all capital. The past is no guarantee of future performance. There are no guarantees of performance in investments. Data as of August 31, 2016.

A Stocks August 29 2016 v1

The Private Capital Market (PCM), investment methodology of selecting technology stocks and managing a portfolio of investments is based upon the explanation in the 2007 patent, entitled “Method of identifying a universe of stocks for inclusion into an investment portfolio. Vass, US 7251627 B1.”

The method begins by using the concept of an econometric model to identify a universe of stocks for inclusion into an investment portfolio that includes first scanning a computerized stock database and selecting stocks into the universe according to a predetermined set of factors and criteria.

The goal of the method is to identify technology stocks that are members of certain industry sectors who exhibit high income and employment multiplier linkages, and whose stock price tends to benefit from capital investments made by a member firm in one of the technology industrial sectors.

The method involves the application of a number of screening steps to end up with the final selection of potential stocks to add to a portfolio when the stock crosses into the Buy Target range.

All potential stock candidates are grouped into 3 model portfolios, (A stocks, B stocks, and C stocks), based upon the Standard & Poors© investment quality rating. For example, the chart of performance above is the entire set of stocks in the PCM model portfolio of A stocks, over a five year period of time.

Generally, but not in every case, as the risk of a stock goes up, from A stocks to C stocks, the potential return goes up, as well as the magnitude of potential loss. For example, the investment performance of the A stocks was about 140%  over five years, and the investment performance of the B stocks and C stock would be expected to be higher than the A stocks, with the concomitant increase in the volatility of the returns.

The main idea of selecting a specific stock into an investor’s account is to set the low price buy target, (Buy Low), and to maintain the discipline to sell the stock at the high price target, (Sell High). The theory of technology stocks explained in the patent predicts that technology stocks trace out a pattern over a 3-year period of time that is useful for identifying the buy and sell target prices.

If this method of portfolio management sounds better for you than your current method, please contact Laurie Thomas Vass to discuss your investment goals. ltv@privatecapitalmarket.com

Investment advice and portfolio management services of the Private Capital Market of offered by Investment Management & Insurance Advisors, Inc., a North Carolina state-registered investment advisory firm.

Laurie Thomas Vass is an investment advisor representative of Investment Management & Insurance Advisors, Inc.

Please obtain and read the IM&I investment disclosure document for details on fees for portfolio management.