Strategy

In 1952, Harry Markowitz, a Nobel Memorial Prize winning economist devised the Modern Portfolio Theory (MPT) which emphasized the importance of portfolio risk, correlations between securities, and diversification. His work changed the way people invested and has long been considered by many to be the "Holy Grail of investing".

Traditional Asset Allocation models have utilized MPT as a theoretical basis for designing portfolios of stocks, bonds, and cash. Percentages of each asset class changed to address an investor's risk tolerance and time horizon. Typically, a larger percentage of assets would be allocated to cash and bonds for conservative investors or those with shorter time horizons.

While MPT was intended to minimize risk and maximize return, its application may have contributed to the production and promotion of a multitude of "buy and hold" strategies. Unfortunately, the most precisely allocated and conservative portfolios may, in uncertain market conditions or during different periods, still lose money for investors.

USA Wealth Management, LLC, believes in a managed approach combining MPT with a rigorous, Technical Analysis of the individual asset classes within a portfolio to determine exit points. Exit strategies are employed to lock in a profit or prevent a significant loss by determining at what point an investment will be sold. The volatility inherent in modern markets, we believe, demands such active management.