The Internet has fundamentally reshaped international markets
If history is any guide, this erratic market could go on for another 10 years or longer
tors to build wealth for retirement,” said Mr Pinto. This is where DWA joined the team. This group is a US-based global research and money management firm that is the primary provider of technical research to large institutions such as Morgan Stanley, SmithBarney and Wachovia Bank. This firm provides on a subscription basis its global technical analysis productivity system on DIF. It also provides the guided or auto managed investment models on DIF, which is truly revolutionary. DIF, in conjunction with DWA’s auto managed accounts, shares the only broker/dealer platform in the world that provides this information to the individual investor. “Our next few years will be characterised by innovative modeling solutions that will change how people invest. I guarantee it,” said Mr Pinto. Most investors are always looking for that stock that will constantly increase in value. In many cases, however, the overall market is simply not in a position to support rising prices; rather, lower prices can often be a more reasonable expectation. At times like this, one must think about playing defensively and for the long-term. The market moves through periods conducive to wealth accumulation and periods of wealth preservation, and a prudent investor must be aware of these types of markets. “For most people in this business, it’s always a bull market if you have the right stocks. At DIF, it’s different because we believe we could be 10 years into a 20-year bear market. We now have the Dow at the same level it was in 1999, which means we have already lost a decade in the index’’ said Pedro Lino, Chief Executive Officer. “Markets move in cycles, and we had a 19-year bull market from 1982 and 2000 when it was easy to make money. This past 10 years proved how difficult it is to make money in a bear market bouncing up and down, yet going nowhere. If history is any guide, this erratic market could go on for another 10 years or longer.’’ Not only that, but the modern portfolio theory, which relates individual stock price changes to group stocks’ values, has now been
discredited; the year 2008 demonstrated that all asset classes can become correlated simultaneously. Stock trading is uncomplicated in a bull market because times are good and people are optimistic; whereas attitudes and fears rise during bear markets. It is easy to confuse and correlate clear thinking with a bull market. This is why we at DIF created the private broker concept with a top-down approach to the market that begins with the overall market. We then break up the market into its components: asset classes and sectors. We view the overall market first with an offensive and defensive approach and then put our game plan into force. Our unique approach has not changed since we began using it, yet Wall Street has lost favour with this method in exchange for highly sophisticated, yet questionable, algorithms that all too often sink investment programmes. One must embrace the irrefutable law of supply and demand and nothing else to understand the simple price changes of stocks in world markets. At DIF, people are no longer willing to believe in some version of the myth that one’s portfolio can grow 15-20 percent a year without risk. We endeavour to mitigate risk as much as possible by establishing a close relationship with the client. We educate and build our client’s confidence, as he works with an investment professional to construct a personal portfolio tailor-made to fit his expectations. The client and investment professional will work together on making good decisions and smart trades, and the client will be apprised of all alerts and portfolio changes that may be of interest. The day is rapidly approaching where the individual will have to take greater responsibility for his own financial affairs. We will help them learn to manage their own portfolios, watch their investments, and remain calm during bear, bull, and sporadically changing markets. Dif Broker is an independant and privately owned registered Broker company; www.difbroker.com
53 World Finance | Mar - Apr 2010