Investment Theme Dimensions
Posted on Monday, April 14th, 2008 | In Current Market News, Investing LessonsThe news is constantly full of “investment themes” — BRIC, commodities, falling Dollar, alternative energy, mortgage crisis, and so on.
Investing with themes is a good idea, because you will be swimming with the stream instead of against it. However, themes don’t last forever.
Getting onto a theme too early can be costly in terms of losses or “dead money”. Getting in too late can result in underwhelming profits or even losses, if everybody else is exiting when you are entering.
Whatever theme you may be contemplating, we think it is useful to analyze it in terms of generic theme dimensions. From our perspective, those dimesions are:
* Development Time
* Strength
* Duration.
Properly classifying themes will help you decide if they are right for you. For example, a fast development, weak and short duration theme is suitable only for the nimble — essentially short-term traders. On the other hand a slow development, strong and long duration theme is not really suitable for a trader, but may be suitable for a long-term investor in an asset allocation program. There are many degrees between those two extremes.
To help you with classification, we have developed this three-dimensional chart that creates 27 theme categories:
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 About Richard Shaw (http://www.QVMgroup.com)
Richard is a principal of QVM Group LLC, a fee-based investment advisor based in Connecticut with clients across the country. He provides investment coaching to "do-it-yourself" investors, and manages portfolios for those who prefer not to make their own decisions. His investment approach is based on value, asset allocation, benchmarking, expense control, risk management, customizing portfolios to each client's specific circumstances, and regular communication about strategy and performance. The QVM Group team also provides municipal refinance services, strategic business planning and financial analysis service for new ventures, private acquisition analysis, and custom investment research. Richard's extensive experience, includes serving on the Board of Directors of Aberdeen Asset Management PLC (London Stock Exchange: ADN), membership on the Board of Directors of Phoenix Investment Counsel (renamed Virtus Investment Advisors), a U.S. pension manager and investment advisor to the Phoenix Funds (renamed Virtus Funds), as well as serving as Managing Director of a series of offshore investment funds based in Luxembourg. He has led institutional asset management sales and had overall responsibility for management of a U.S. mutual funds broker-dealer. He was a charter investor and member of the Board of Directors of several internet companies, including Lending Tree prior to its IPO. He is a graduate of Dartmouth College. QVM Group LLC is a Registered Investment Advisor. Visit the QVM Group website http://www.qvmgroup.com/QVMinvest/ |
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