Grail's Investment Philosophy

The consistency created by sustainable competitive advantage generates greater investment certainty.

Risk and Return

When it comes to investing in stock markets there are many misconceptions about risk and return. Of course, safety is particularly needed when knowledge and experience is in short supply. In fact, Warren Buffet correctly called it when he defined risk as not knowing what you are doing. The counter-argument of this is surely that knowledge not only reduces risk but is able to generate very high returns, such as those of Warren Buffet himself, Peter Lynch, John Neff, Martin Zweig, Benjamin Graham and other Wall Street legends.

The Grail Equity Management System (GEMS) was developed through many years of research. The findings were encapsulated in 67 research articles, in which every investor concern was addressed from the issue of high returns through to risk management. Thereby it was realized that the conventional wisdom about risk and return was wholly unjustified. For example, the investment in growth stocks, considered to be high risk, tend to have less risk in them than the so-called blue chip companies and offer far higher returns. The research also revealed that standard deviation; the metric used to quantify risk is not a static number as we are led to believe, but changes on a daily basis with prices. These two false assumptions alone have acted as major inhibitors for investors, who are advised to seek the safer haven of less riskier stocks, and then find to their dismay that the resulting lower returns can easily convert into losses on a market turndown.

The latest feature: Buy? and Sell? Signals

A key feature of the Grail Risk Assessment Sub-System (GRASS) is the setting of BUY? and SELL? points. The question mark signifies that these signals are initally informative, because the breakout needs to be identified and the new trend confirmed. The breakout prices on the up and down sides are set at a 4% price movement. Thus once a BUY? price is confirmed, the SELL? price is reset to warn of any price deterioration. As the margin of safety increases the SELL? signal may be widened to provide greater tolerance.

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