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Alpha Wealth

Alpha Wealth focuses on proactive investment management throughout varying economies and market cycles. Ken Stern & Associates does not try to force the market to agree with our personal belief as to what a good investment should be. Rather, we seek to ascertain “what works” and what the market is revealing. Long term (secular) bull, bear, and flat markets must be incorporated into investment strategies rather than employing the “buy and hope” methodology.

In the past, investment managers would often utilize one approach to build an investment model. Alpha investment management seeks to create three distinct portfolios. The rationale is simple: Modern Portfolio Theory suggests that if you truly diversify a portfolio and create asset classes with lower volatility and less correlation, one may be well positioned for optimal risk-adjusted returns. The flaw in using that theory today is many assets are highly correlated, including: international, commodity and real estate. Embrace the evolution and seek to take advantage of this trend by building different strategies to capitalize on volatility, long-term potential opportunities, and asset classes that truly offer different correlation coefficients.

We apply Core, Tactical and Uncorrelated strategies for each portfolio.

Core seeks to capitalize on both macro trends and deep value strategies. Both are aimed at long term growth with a goal to outperform a broad market index such as Standard and Poor’s 500 Index with similar volatility ratios. We select sectors and industries that are most attractive and undervalued based on the economic climate. By over and underweighting the sectors, we strive to achieve superior results. Certain industries and businesses will become essential to the world over the next several years. We track population growth, consumer habits, and business trends, then use quantitative analysis to seek Rising Stars. Rising Stars are those companies rising above their peer groups measured by many factors including earnings, sales, and cash flow.

Tactical seizes on short-term opportunities. Market cycles will create situations where the foolishness of the “herd” causes specific asset classes to bubble or create what we believe to be, substantial short-term, mispriced (either upside or downside) opportunities. Panic trades often cause assets to bid up to potentially unsustainable levels, and/or companies and sectors to trade at deep discounts to what we perceive to be fair value. These windows of opportunity are usually short-term and often last only a few months. We look to capitalize on these opportunities.

Uncorrelated/Hedge Not all asset classes move in the same direction at the same time. If two types of assets move in tandem, they are highly correlated. If they move independently of one another, then they are uncorrelated. In this portion of the portfolio, we look to invest in asset classes that have very low, negative or no correlation to the stock market, depending on market trends and investment objectives. This could include real estate, market neutral strategies, fixed income, or even private equity. The goal of the Uncorrelated allocation is to provide a hedge for the rest of the portfolio and add Alpha during times of stock market declines.