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Thursday, Mar 28, 2024

Investment Firm Bringing Its Trend Strategies to Valley

Business partners Dan Ripoll and Kwam?Jackson are convinced their investment strategy is one of the best ways to maximize profits in a bull market and minimize losses when the bear settles-in for a nap. They founded Santa Monica-based Aeon Capital, an investment firm that uses ?rend following?instead of the old school hold and save model of investing. The company has clients in the Valley and is planning to open an office here in the near future. ?he strategy is designed to capture the upsides in a good market and sidestep a lot of the downside,?says Ripoll, a Los Angeles native and graduate of Stanford. ?t? based on a plan that involves timing; how much you?e going to invest; when you are going to get out and where you are going to cut losses.? Trend following identifies and participates in performing assets. The company applies algorithms that monitor price movements and make investments only after a trend has been established. Holdings remain in the portfolio for as long as the trend remains intact. Investments are liquidated once the trend has reversed. Profit potential stems from continuing trends that are significant enough in frequency and magnitude to outweigh losses from trend reversals. In a down market, investment dollars may be held in cash to mitigate losses or invested in other performing markets. ?he system has pre-determined guidelines based on our research,?says Ripoll. ?t? a macro strategy that? very diversified. We?e not looking at company fundamentals but price performance.?Aeon delivered flat performance for clients in 2008 compared to -37% for the S & P; 500, he adds. ?or someone a little more short-term, who? younger and feels they can take on a little more risk, this is a market where you need to trade versus buy and hold,?says Anthony Edson, one of Aeon? clients. The volatility in Aeon? investments has been pretty minimal, he says. The idea is that the trend following will outperform in good years, but underperform ?ith the exception of mitigating losses by re-investing or holding cash- in bad years. Short-term insight ?t? not to say this is a strategy for all markets, because it? not,?says Edson, adding his investments with Aeon are only one part of his larger investment strategy. ?he fundamentals guys may be right over the long run, but trend followers are right for the short-term.? Wells Fargo Wealth Management Group in Westlake Village does not use trend following. It builds wealth by investing client? dollars in a broad diversity of asset classes (stocks, bonds, real estate, etc?, said Paul Wargnier of Wells Fargo. He says trend following is not a new concept, it just gets packaged in different ways. It? likely to generate a lot of short term gains, but it? also going to miss some market movements where investors often make their biggest gains. Regardless, active management is key, especially in today? volatile market, says Wargnier. Investment managers need to hone in on client? goals, what that number is they?e looking for, and the rock bottom they?e willing to go. ?here most people get hurt is an unwillingness to sell,?says Wargnier, adding people need to overcome biases that could expose them to more risk, like believing real estate is always a safe investment. ?e try to take emotion out of it.?

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