Philosophy

Hollencrest Capital Management employs an investment philosophy that relies heavily on the conceptual underpinnings of Modern Portfolio Theory. Modern Portfolio Theory is an investment discipline that studies the investment returns and risk profiles of different asset classes, and in particular, how those investment returns and risk profiles behave in relationship to each other. Certain asset classes behave differently depending on certain macroeconomic variables: Are interest rates rising or falling? Is the economy growing or contracting? Is the dollar strengthening or weakening? Are trade balances widening or contracting?

Some asset classes that have historically been perceived as risky are in fact quite suitable for even conservative investors if they are blended with other asset classes that behave differently in given market environments. Advances in software technology now enable investment managers to study the inter-relationship (or “correlation”) of returns between different asset classes over time.

Portfolios can now be constructed in order to maximize the returns that they generate relative to the risks that they present. Alternatively, we can look at a prospective client's existing portfolio to determine if it is efficient, which is defined as generating the maximum return per unit of embedded risk.

The world is a smaller place today than it was just 10 or 20 years ago. Clients have a broader array of investment vehicles to choose from and certainly a wider array of geographic regions in which to invest. Investing is no longer a simple choice between stocks, bonds and cash. We believe that investors need to work with advisors who use state of the art analytical and statistical tools to properly construct global portfolios to optimize their returns.