Grow and Protect Your Wealth
At Newport Capital Advisors, customized portfolio design and management is at the core of our offering. Many of our clients seek us out specifically for our investment management expertise. Others are interested in our comprehensive approach to develop a plan for their overall wealth management needs. In either case, we take the time to get to know our clients up front. We spend time to understand your personal situation and financial goals, which results in a customized investment portfolio and wealth management solutions tailored to your personal needs. As a leading independent wealth management firm, we take our role as your advisor seriously. After all, it’s your money, and we are here to help you make the most of it.
Algorithmic Trading Strategy
When it comes to algorithmic trading strategies, there are dozens of companies who present their solutions as the ultimate answers to everything. All too often, they haven't put in the time required to design financial management software that actually works. Time is what sets Newport Capital Advisors apart. We have been building the foundations of our strategic asset allocation system for over 20 years. Our investment team is passionate and brings its knowledge to the table every day because we are on a mission to defend our clients from inferior strategies and the chaos of the market.
This video explains our algorithmic trading strategy, providing guidance when to be defensive and when to be offensive and, when we are offensive, how to construct high-performance portfolios using low-cost Index and Exchange Traded Funds (ETFs). Performance data available upon request.
Meeting Retirement Expectations
If the future is anything like the past 25 years, Modern Portfolio Theory (MTP)’s “diversify and rebalance” will disappoint again, neither excelling to the upside nor materially protecting the downside. Retiring early and well will become just another shattered fantasy. Still, they continue to invest, and their expectations run high when putting funds in the care of professionally managed retirement accounts. As an investor, how can you fulfill your expectations with MTP’s inferior tools?
In Behavioral Economics, Kahneman and Tversky’s “Prospect Theory” showed that investment risk is about the probability of actually losing money, and that losing a dollar is many times more important than earning one more dollar. Unfortunately, risk is not a one-dimensional problem cured by a single act of diversification. We have worked long and hard to create successful solutions.
Unlike other investment theories, Newport Capital Advisors algorithms make decisions based on “what is already happening,” not based on cycles, patterns, correlations, or opinions of “what should happen.” We employ complex signal processing algorithms from the cross-disciplinary science of electronic communications theory to optimally extract trends from noisy market data. This allows us to identify asset classes and sectors that are showing strength in any market condition, even if the strongest asset class is cash.
Having a disciplined, rules-based system of buying and selling helps to identify and capture profits, and, more importantly, to help avoid losses incurred when holding a declining position over long periods of time. It is only by owning the trend leader and avoiding the laggards that one can simultaneously improve returns and reduce risk.
Our Performance Pedigree
MPT reliably achieves average returns with reduced risk -- but doing better requires changing the game. Momentum in market data supplements MPT's long-term statistical measures by indicating how to allocate more assets toward trend leaders and away from trend laggards. Extracting the momentum signal from noisy market data is the whole game. We credit these astute agents of change:
Narasimhan Jegadeesh, Emory University Professor of Finance, and Sheridan Titman, University of Texas, Austin Professor of Finance published "Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency" in 1993, which is widely considered the seminal academic paper proving momentum exists in stock market data.
Eugene Fama, Nobel Laureate, University of Chicago Professor of Finance and Kenneth French, Dartmouth College Distinguished Professor of Finance confirmed in their 2008 academic paper "Dissecting Anomalies" that momentum truly is "the premier market anomaly" that is "above suspicion." It's a very powerful statement considering Eugene Fama developed the Efficient Market Hypothesis and now acknowledges momentum is an exception.
Claude Shannon, Bell Labs, National Medal of Science, Kyoto Prize, Medal of Honor-IEEE, Alfred Noble Prize. In his legendary papers of 1948 "A Mathematical Theory of Communication," and 1949 "Communication in the presence of Noise" Shannon proved that signal-to-noise ratio determines a system's probability for making a good decision. This fundamental electronics communications principle is also the primary contributor to better strategy performance.
J. H. Van Vleck, Nobel Laureate, National Medal of Science, Harvard Dean of Engineering, showed in his 1946 paper "A Theoretical Comparison of the Visual, Aural, or Meter Reception of Pulsed Signals in the Presence of Noise" that a matched filter design produces the optimum signal-to-noise ratio when extracting a signal from a noisy source. It turns out that the optimum momentum filter is quite different from any of the SMA filters academic researchers use.
Samuel H. Christie, Royal Society Fellow, first described his "diamond method" of measuring in his 1833 paper "The magneto-electric conductivity of various metals." Its value was later recognized by Sir Charles Wheatstone and become known as the Wheatstone bridge. Differential signal processing reduces common mode system noise. While seemingly arcane, the strategy design implications are profound for the decision framework and its candidate funds.
These signal processing innovations have become the technology backbone that has enabled Ethernet, Wi-Fi, and smart phones to perform so well. Newport Capital Advisors algorithms incorporate this same technology to better extract the momentum signal from noisy market data to improve the probability of making a better investment decision. Additionally, our Automated Momentum algorithm was developed to automatically adapt the momentum filter's shape and duration to (1) the character of the ever changing market, and (2) the character of the strategy's candidate funds -- bonds, treasuries, sectors, countries, and commodities are clearly quite different from one another.