What's New: Investment in Porter Capital Management
By Colin Twiggs
July 17th, 2013 2:30 a.m. EDT (4:30 p.m. AET)
I have acquired an equity share in Porter Capital Management Pty Ltd and will act as a director of the company with responsibility for global markets.
Having known Tony Porter and Bruce Vanstone for several years, I can attest to their outstanding ability and integrity. Tony is Managing Director, with extensive experience in trading financial markets and investment management, while Bruce — an assistant professor at Bond University — holds a PhD in Computational Finance and heads up Trading Research. My role will primarily cover global risk management and developing new trading systems with Bruce.
Porter Capital manages funds for high net worth investors (including self-managed super fund trustees and family investment offices) and independent financial advisers in individual accounts through a managed account portfolio service. All systems are rule-based — to ensure disciplined, unemotional and objective decision-making — and subjected to rigorous testing for their suitability to local markets.
The ASX200 Prime Momentum fund enjoyed excellent returns at the start of 2010/11, its first year of operation, but suffered in 2011/12 — along with many other equity-based funds — from the unusual market volatility. Bruce and I have worked closely over the past year, designing and testing strategies to cope with similar bouts of volatility in the future. Our results show that Momentum trading systems outperform the market about 90% of the time, but may under-perform in bear markets or when there is no strong trend and high volatility. We have focused on identifying and avoiding these periods of elevated risk.
ASX200 Prime Momentum recovered well, returning 27.69% in the 2012/2013 financial year, but further improvements will be introduced in the months ahead:
- use of Twiggs Momentum to enhance performance over the conventional measure;
- macroeconomic and volatility filters to identify market risk; and
- investment in cash and government bonds when risks are elevated.
We also plan to introduce new funds, starting with:
- an S&P500 Prime Momentum fund, offering Australian investors greater equity diversification; and
- an Australian Prime Income fund, suitable for Australian investors seeking tax-effective investment income and preservation of capital from inflation and market down-turns.
How does this affect existing readers and subscribers?
I will continue as director of Incredible Charts and with the Trading Diary newsletter and Gold, Stocks & Forex blog. Please understand that the newsletter and blog are my own views and will not necessarily coincide with the views of Porter Capital.
Readers will also benefit from additional research conducted by Bruce Vanstone and myself and related commentary on market conditions. We plan to publish a weekly Composite Market Risk Index — which encompasses our view of market conditions, based on a number of macroeconomic and volatility filters — and will license this to independent fund managers and advisers.
I will be visiting most major cities, initially in Australia, and look forward to meeting with you.
I believe that having the discipline to follow your rules is essential. Without specific, clear, and tested rules, speculators do not have any real chance of success. Why? Because speculators without a plan are like a general without a strategy.....
~ Jesse Livermore