Should You Stay in Cash, or Remain Partially Invested in Today’s Market?

Consider your choices:

• Door #1: Remain fully invested— “full steam ahead regardless of market valuations”, with a hodge-podge of mixed strategies, hunches, internet tips, and guesswork.
• Door #2: Try to time the market—believing its possible to know “when to be in” and “when to be out” (even though the best investors in the world like Warren Buffett and Peter Lynch have proclaimed it impossible)
• Door #3: Pull out of the market completely until the next crash, keeping all money in cash or “under the mattress”
• Door #4: Buy and hold the indexes, making no withdrawals, going up and down with the markets, with no clear strategy for capitalizing on downturns, accepting diluted dividend yields, and simply waiting 10 to 20 years for the results. This is a strategy for the extremely patient and optimistic.
• Door # 5: Hire a money manager to try to do all of the above (in the name of diversification)
• Door # 6: Begin a dividend investing strategy that pays the investor to own shares of profitable companies with high traditional valuations, with lower debt ratios, and which are confirmed leaders in their industries. With this strategy you actively require that every company you own is profitable every year, and in fact is increasing its earnings. You require they share their profits by paying steady dividends at predictable intervals in increasing amounts. If not, you trim the company from the portfolio at each quarterly rebalancing. You select companies paying a dividend yield—in relation to their share price—of 3% or higher. However, you do not choose any shares based on dividend yield alone. You require that the companies in your portfolio are those that increase those dividends every year, and have a documentable track record of doing so, for ten years or longer.

If “Door number 6” appeals to you—we invite you to explore our professionally managed portfolios:

Objective: Investing With a Clear Strategy

• Both the Black Diamond and Blue Diamond Dividend Portfolios are comprised predominantly of domestic large cap stocks, with some focus on larger mid cap stocks that exhibit the required dividend performance and history. The Black Diamond Dividend portfolio holds a combination of individual stocks and ETFs. The Blue Diamond holds no individual stocks. It consists purely of ETFs and a small cash position.
• Diversification is primarily derived from holding multiple stock selections at all times, increasing the cash position at certain times, and including the use of Exchange Traded Funds for a portion of the portfolio.
• The ETFs in the Black Diamond are predominantly Dividend “Aristocrats” comprised of stocks which have increased their dividends a minimum of 25 years or longer.   ETFs typically may comprise 12% of the portfolio.

Note: The Black Diamond and Blue Diamond Portfolios are not mutual funds. They are privately managed accounts for our clients only. Each client’s portfolio is managed within a single separate account and not as part of a pooled fund. Each client has 24/7 access to reporting at Fidelity Investments, and is held in it’s own SIPC account with SEC cusip number.

• Prior to selection, all investments are quality assessed and approved based on credit rating, balance sheet, volatility, dividend paying history, yield, and liquidity
• Minimum Investment is $100,000  and can be transferred as cash or ‘in-kind’ securities from current brokerage.
• Suitable for IRA rollover accounts from 401(k), 403(b), 457, or TSP retirement plan.
• Suitable for accounts held by individuals and trusts
• Suitable for SEP IRA’s and employer 401(k) plans

Methodology and Supervision: Addtional Notes

Thanks to healthier lifestyles, new prescription drugs and medical technology, people are living longer than ever before. However, one drawback to a longer life is the greater possibility of outliving your savings—creating all the more reason to develop a retirement income plan designed to last a longer lifetime.

TheIntelligent Quant By Beratung Team Management investment philosophy is to start with income planning and work toward more opportunistic investments only after the income gap is filled on a solid basis.
A significant investment loss in the years just prior to and/or just after you retire can have a damaging impact on the level of income you receive over the course of your life. In fact, research has shown that the earlier a loss occurs in retirement, the greater the chance of depleting your retirement savings.

We can help you design an income plan which integrates insurance, annuity and investment vehicles to create opportunities for long-term growth as well as to guarantee income throughout your retirement—in a tax favorable manner.

Neither the Company nor its agents or representatives may give tax, legal, or accounting advice. Individuals should consult with a professional specializing in these areas regarding the applicability of this information to his/her situation.

Portfolio Construction: Black Diamond

Under our current philosophy and rules, a fully invested portfolio generally will be allocated with 88% individual dividend-paying equities and 12% dividend exchange traded funds (ETFs).

As the PE ratio of the S & P rises above 20, management may choose to reduce the percentage committed to equities.

For example, with PE ratios on the S & P at the 25 level, the equity commitment may roll back to 85%, partitioning 15% to cash. Management believes this is a prudent step that may reduce volatility and  keep “dry powder” available to accumulate more shares in the event of a pullback.

After a correction in the market, the objective of management is to remain fully invested.

Black Diamond Equity Holdings

The portfolio will typically hold 15-30 individual equities, with a target of 22 holdings. There are two primary screens for selection:

• In order to select a stock, a current dividend yield of 3% or greater.
• A dividend-paying history of 10 consecutive years or more, of stable or increasing dividends. An interruption, suspension, or cutting of a dividend will exclude a stock from the portfolio.  No tobacco, oil, or master limited partnerships (simplifies taxes–no K-1s.   Investment grade credit rating.

The preferred length of time for stable or increasing dividends is 25 years. Stocks with this characteristic are known as “Dividend Aristocrats.”  Stocks with at least 10 consecutive years of dividend growth are known as Dividend Achievers, and qualify for the portfolio.

It is our objective that Dividend Aristocrats will comprise a minimum of 30% of the individual securities. Exceptions may be made but only in the instance that we deem it necessary to add more stock selections for diversification.

Securities that meet the initial two screening criteria are then evaluated on the following fundamental information:

• Normalized Price/Earnings: We look for companies with a current price below the valuation indicated by normalized earnings, as evaluated by the calibrated software system.
• Debt/Equity: A ratio of 50% or less is desired.
• Debt Coverage: A ratio of 3:1 or greater is preferred.
• Earnings Growth: Target 5-10% or greater.
• Dividend Growth: 1% or greater (4%-12% dividend growth preferred)
• Payout Ratio: Objective, less than 60%.
• Cash Flow Per Share: Equal to or greater than the industry average.
• Credit Rating: Investment grade only.
• Subjective Factors: Include industry and company outlook; competitive advantages; management quality.

Exchange Traded Fund (ETF) Core Portfolio

In addition to pure equity positions, the Black Diamond Dividend Portfolio™ includes a core portfolio of dividend paying ETFs. The underlying securities in these ETFs consist of companies that have raised their dividend for 10 years or more. The ETFs selected represent various asset classes to provide portfolio diversification. The ETFs include S&P 500, mid-cap, small-cap, and European Dividend Achievers. These ETFs are chosen for the purpose of broadening the diversification of the portfolio. They often may not meet the 3% dividend yield minimum which is a focus on individual equity selections.

Quarterly Rebalancing

While the Black Diamond Dividend Portfolio and its holdings are continuously monitored, rebalancing takes place on a quarterly basis. If an individual equity’s dividend yield has fallen below 3%, it is scrutinized to determine the cause of the decline. If the fall is due to a lowering of the dividend, it is removed from the portfolio. If the decline is due to an increase in price, the holding may remain in the portfolio for a maximum of two quarters. We would prefer to take profits when rising share value leads to a falling dividend yield.

Dividend Investing: How To Grow Your Wealth and Address Inflation With The Best Dividend Investments

When looking for investment management firms in Scottsdale, AZ, look no further than the team At Intelligent Quant By Beratung Management. We specialize in a range of investment portfolio management strategies that show demonstrated results, offering you the ability to build wealth consistently. As part of a precision financial plan which we provide for our clients, you gain the opportunity to own a comfortable financial future while taking the hard work out of the process.

How Your Investment Portfolio Advisor Takes the Hard Work Out of the Process

AtIntelligent Quant By Beratung Team Management, we specialize in providing outstanding investment portfolio management services in Scottsdale, AZ that help you build wealth. TheIntelligent Quant By Beratung Team team offers a range of solutions that cater to your specific needs and risk tolerance.

Through research, discipline, experience, and time tested tactical and strategic methods, we help our clients protect what they have already made, while working to increase future income, take on inflation, and continue to grow capital for more financial security.

You will benefit from the active, proprietary approach we use in selecting the stock of companies offering consistently growing dividends. Any company that does not raise its dividend in any year is eliminated, no exceptions, no excuses. In addition, Intelligent Quant By Beratung offers top tier technology-focused investments that we believe may provide long-term growth and potentially out-sized returns.

A Wealth Managed Portfolio Firm that listens to our clients, and knows what to do after we listen. Your advisor will take the time to discover your goals, clarify and define your options, and then help you choose a portfolio that matches your needs.

Important Information from Intelligent Quant By Beratung

The portfolio is not a mutual fund but rather a separately managed account focused on a systematic method of equity selection. The Team uses quarterly rebalancing to maintain portfolio standards. The goal is that no trades will be made between the quarters unless a company in the Portfolio announces an earnings or dividend decrease, or the Team deems an increase in the cash position is warranted due to extreme economic conditions. Consultation with an experienced, qualified financial adviser is recommended before investment. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment strategy will be profitable. The use of IQWM offered investment models and strategies may be appropriate for certain investors as part of their overall investment strategy. An investment should be made only after a financial advisor has reviewed the prospective investor’s risk tolerance, time horizon, and investment objectives.

A security’s indicated yield is the most recently announced dividend, annualized based on the security’s dividend frequency, then divided by the Security’s current market price. These distributions are not guaranteed and can fluctuate. A dividend yield is not an interest rate. It is a percent of the share price. The total annual return of the portfolio is a combination of annual distributions and price fluctuation which can be positive or negative.

There are no “loads”, front or back end, to the portfolio, and no 12B1 fees on our services, due to the fact that the portfolio is not a mutual fund. The ETFS in the portfolio, which make up 12% or less—will have their own internal fees over which we have no control. Past performance of any security or index should never be relied upon to predict future results. Stock markets and individual stocks may be subject to large price fluctuations. Diversification cannot guarantee to protect an investor from these fluctuations. Although the portfolios seek low volatility and principal protection, asset allocation decisions may not achieve these goals in all cases. There is no guarantee a portfolio will meet a target return or investment objective. The investor is investing in the stated methodology, not past performance. Client has 24/7 access to view the selections in real time and may cease the portfolio if he or she so chooses.. If the client believes that any change to the portfolio falls outside the stated rules for selection, the account may be terminated, typically the next trading day, without a load or surrender charge. There may be a nominal fee of not more than $75 to close the account.. (Messages left on our answering system do not constitute an order to trade. Email or written instructions are required.)