Return is intrinsically linked with risk, but the relationship is not constant.
Portfolios should maximize the return-to-risk ratio.
The most efficient way to maximize the ratio is to reduce risk.
Diversification can reduce risk without sacrificing return.
Correlations between various risk factors create diversification, not the total number of positions held.
A momentum anomaly exists in asset prices.
An investment thesis must be defined into a process and tested for validity.
Investment Advisory Firm Guided by First Principles
Reasoning from first principles is an effective way to solve complicated problems and unleash creative potential. The idea is to break something complex down into its most basic elements, or principles, and reassemble it from the ground up. PMV relies on this process to move beyond common adviser limitations. Our principles, outlined below, illustrate the building blocks of our investment portfolios:
The PMV Endowment Creation Program
“Improving the lives of our community through wealth generation has always been at the heart of what we do. The PMV Endowment Creation Program is a natural and novel extension of this core value.
The Program provides fulfilment to investors who are funding their preferred organization, allows PMV to grow and further benefit our community, and cultivates an innovative and enduring source of donations for our partnered organizations.
Remarkable things will happen when stakeholder interests are all aligned.”
Daniel Snover, CFA, ChFC
President and Chief Investment Officer
Existence of Momentum
We believe momentum, a market anomaly also known as the persistency of prices, can be utilized to extract excess returns.
Momentum has been observed in various assets going back hundreds of years. This anomaly may be explained by behavioral biases causing investors to herd into the best performing assets or react slowly to new information that does not support their current viewpoint. Momentum can also exist in efficient markets as risk premiums lead to positive trends.
Asset Class Diversification
We believe the best way to capitalize on price momentum is through asset class diversification.
Using momentum factors, we aim to identify asset classes that are both inversely correlated and trending higher. Reduced correlation is the key to reducing risk without sacrificing returns.
Our approach provides the flexibility to adjust to a myriad of market conditions.
We believe an investment process should be well defined. This allows for the testing of investment theses and reduces emotional mistakes
As we consider markets unknowable, our investment thesis does not rely on personal convictions for asset class prices. We, therefore, reallocate exposure when markets turn negative and seek to continue to exploit gains if positive trends persist.