Broker Check

Risk is the Currency of Investment


There are two main types of investment research - Fundamental Analysis and Technical Analysis. Fundamental analysis studies the behavior of companies and their management. Technical analysis studies the behavior of investors and the trading pattern of securities. The key to remember is that charts are graphic depictions of investor behavior in a freely traded market.

At Headwater Asset Management, we believe that most stock investors are more interested in the performance of the stock rather than the performance of the company and its’ management - hence our use of Technical analysis. Ours looks at price strength relative to risk - what we call Efficiency.

Efficiency is the ability to do more with less. MosaIQ - Headwater’s proprietary investment management process – seeks to identify behaviorally-efficient investments that can generate higher returns for less risk than their peers.

An investment’s risk/reward profile is dynamic and, over short periods of time, infrequently behaves like its longer-term average. The picture you see is not necessarily the true picture of what happening behind the scenes. Just as a Facebook photo may portray a smiling, happy family; it can obscure the hair-pulling, name-calling, and screaming it took to get everyone to smile at the same time.

Similar misbehavior in the markets creates opportunity for outsized returns relative to the risk needed to create them.

To learn more, watch the video below.