High Probability ADVISORS

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Unprecedented

MICHAEL E. JONES, CHIEF INVESTMENT STRATEGIST


www.HighProbabilityAdvisors.com


March 2020


I’ve watched more television news in the past few weeks than I’ve seen in the past few years. One word that keeps popping up is “unprecedented.” Undoubtedly, we’ve not been in similar circumstances to the current environment. However, the sensational rhetoric dominating the news channels might make investors think that the current crisis is entirely different than prior bear market experiences. In my view, there are some novel circumstances but many clear precedents for these times.

 

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An Ounce of Prevention

JOHN G. ROMAN, JR., PRESIDENT—FOXPOINTE SOLUTIONS
JEFFREY S. COONS, PH.D., CHIEF RISK OFFICER—HIGH PROBABILITY ADVISORS


www.HighProbabilityAdvisors.com


JANUARY 2020


Investment risk management is ultimately about protecting and growing your assets over your time horizon. This involves addressing the aspects of your investment program that can be controlled and then minimizing your exposure to what cannot be controlled. Information Technology (IT) risk management is also about protecting your financial assets. The majority of cyber-attacks have one purpose – to steal your money. The culprits may seek access to your credit card, bank account, or investment account numbers. Or, they may infect your system with viruses to gain control of your computer and encrypt all of your files, then charge you a ransom to allow you to regain control. Along the way, they may also hijack your contact information and use it to attack your unsuspecting acquaintances. Managing these risks is accomplished by educating ourselves on vulnerabilities, taking steps to eliminate preventable risks, and reducing exposure to those external risks that are out of our control. Given the growing importance of information technology in our lives, both personally and in business, we felt that a joint article on cybersecurity could help readers improve their overall risk management practices.

 

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The SECURE Act’s Call to Action

MICHAEL E. JONES, CHIEF INVESTMENT STRATEGIST


www.HighProbabilityAdvisors.com


JANUARY 2020

On the eve of an election year, Congress has found time to pass the SECURE Act to expand and enhance retirement savings in the U.S. The SECURE Act, which is far catchier than its formal name of The Setting Every Community Up For Retirement Enhancement Act of 2019, has tax and regulatory changes that may impact your retirement plan and your retirement planning. In particular, small business owners who are “would be” plan sponsors may benefit from several steps taken in the legislation to lower the start-up costs and administrative burden of offering a defined contribution plan. For current plan sponsors, the SECURE Act provides “gives and gets,” but with an overarching theme of fostering automatic enrollment of participants and lifetime income as a plan option. While some aspects of the SECURE Act may take a few months to finalize, it is worthwhile to reach out to your third-party administrator, accountant and financial advisor, as applicable, to determine how the various provisions may affect you.


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DR. JEFFREY COONS JOINS HIGH PROBABILITY ADVISORS AS CHIEF RISK OFFICER AND DIRECTOR OF INSTITUTIONAL SERVICES


www.HighProbabilityAdvisors.com

 

September 10, 2019

Rochester, N.Y., September 10, 2019 — High Probability Advisors (HPA), an investment advisory firm based in Pittsford, New York, has added a partner, Jeffrey S. Coons, Ph.D., as Chief Risk Officer and Director of Institutional Services. Dr. Coons brings more than 30 years of investment industry experience to HPA, with a career focused on understanding and managing investment risks faced by clients. 

 
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The HPA Factor Series: Momentum 

MICHAEL E. JONES Investment Strategist


www.HighProbabilityAdvisors.com


October 2019

Ahhh…high school physics class…lots of wonderful memories! It was here that we were introduced to the concept of “momentum,” a measure of the rate of change of an object in motion. Years later, the concept of “momentum” popped back into view unexpectedly in the field of finance. For investors, momentum refers to the rate of change (price performance) of an investment relative to competing assets. Studies on investment performance among stocks showed that momentum exists in relative stock price movements. Stocks that outperformed (high momentum) in the recent...

 
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September Stock Market Musings 

MICHAEL E. JONES Investment Strategist


www.HighProbabilityAdvisors.com


september 2019

You’ve probably seen a statement like this in the press in recent months. Considering the U.S. stock market gains near 18% so far in 2019 and 13.4% annually over the past ten years, you might expect exuberance among investors. With these spectacular returns and FANG stocks in vogue, I think back to the technology stock driven “bubble” back in 1999. In those days, everybody wanted a piece of the action. Does the current data show a similar thundering herd of investors pouring their money into stock funds, as suggested in the quote above? Let’s look at the data.

 
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Minimize Your Taxes!

MICHAEL E. JONES Investment Strategist


www.HighProbabilityAdvisors.com


July 2019

Investors want to reap returns from their portfolios, so they measure their performance carefully. Taxable investors know that making money and paying taxes goes "hand in hand." Too often, they look only at pre-tax return, while the more important number is the after-tax return. What you get to keep after taxes is what pays your bills!

 
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The HPA Factor Series - Quality

COLE SMITH, MICHAEL CICERO AND MICHAEL E. JONES 


www.HighProbabilityAdvisors.com


May 2019

What constitutes a “high-quality company”? Among academics and investment professionals, the metrics used to identify quality companies differ. Many financial measures have been researched in the pursuit of a factor premium that “aims to capture the excess return of ‘high quality’ companies vs. the market.”

 
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The HPA Factor Series - Size

MICHAEL E. JONES & MICHAEL J. CICERO 


www.HighProbabilityAdvisors.com


March 2019

Blue Chips, Red Chips… Large Cap, Mid Cap, Small Cap- most investors understand there is a range of different sizes of public companies. Today, the largest companies have stock market capitalizations (the total number of shares outstanding multiplied by the stock price) approaching one trillion dollars, while the smaller stocks in the public realm sport capitalizations less than $50 million. The largest companies are extremely well known, widely held by investors, and heavily researched on Wall Street. In contrast, most investors have heard of only a few dozen of the small-cap companies making up the Russell 2000 Index. Long ago, investment strategies began to specialize in stocks of different sizes. How does the size differentiation matter?

 
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The HPA Factor Series - Value

MICHAEL E. JONES & MICHAEL J. CICERO 


www.HighProbabilityAdvisors.com


February 2019


High Probability Advisors, LLC was created to take advantage of the investment benefits offered through the use of specific “factors” within the construction of our portfolios. Factors are not new; the structure has been used by practitioners for more than 40 years. The combination of several factors in a multi-factor strategy is a more recent development. Each of the five factors utilized by HPA has been identified and supported through academic and industry research as providing an evidence-based approach to enhance return and/or reduce volatility within an investment portfolio.


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Calm, Relaxed and Focused on the Big Picture

Michael E. Jones, Chief Investment Strategist


www.HighProbabilityAdvisors.com

 

December 2018

“How are you holding up in these crazy markets?” In one form or another, this question has been asked by countless friends over the years, especially when stock market declines are in the headlines. During declines, fears about future potential problems come front and center. Doom and gloom on the horizon is a sure way to get everyone’s attention!

 
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FACTOR-BASED INVESTING: PLAIN TALK

Michael E. Jones, Chief Investment Strategist


www.HighProbabilityAdvisors.com

 

AUGUST 2018

Factor-based investing represents an extraordinarily effective and efficient approach to portfolio management. Unfortunately, trying to explain the approach in simple, accurate, and understandable terms is a challenge. The subject is loaded with academic jargon and heavy statistical analysis. In this paper, we will take on the challenge and attempt to deliver an understandable explanation of factor-based investing. In subsequent papers, we will describe the individual factors that the academic world has found useful in building investment portfolios.

 
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Probability

Michael E. Jones, Chief Investment Strategist


www.HighProbabilityAdvisors.com

 

May 2018

Probability is the likelihood that an event will occur, measured by the ratio of favorable cases to the whole number of cases (Wikipedia). For example, consider tossing a coin. There are two possible outcomes, heads or tails. If we toss the coin once, the probability of either heads or tails is ½ or 0.5, usually expressed as 50%. If we toss the coin twice, the probability of getting two heads is 0.5 x 0.5, which equals 0.25 or 25%.


 
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LESS IS MORE

Michael E. Jones, Chief Investment Strategist


www.HighProbabilityAdvisors.com

 

March 2018

Risk and Return: these two related elements of investment assets are the perennial focus of portfolio management efforts. Through observation and academic research, we know that risk and return are broadly linked. However, the relationship between the two is not simply linear. In fact, historically, stocks that have less risk than the market also beat the index returns over time. The utilization of factor-based investing allows us to manage the pattern of returns and the expression of risk to fit specific portfolio goals. Properly applied, less risk can still bring more return to risk-averse investors.


 
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Real-World Risk Management

MICHAEL E. JONES, CHIEF INVESTMENT STRATEGIST
Michael Cicero, Director of Portfolio Research and management


www.HighProbabilityAdvisors.com

DECEMBER 2017
 

Your investment portfolio contains attributes that impact both your future returns and risks. Using current and historical data, we can develop expectations for portfolio returns. Return expectations can be adjusted by altering the portfolio make-up. Would you like to manage your risks also? Of course! But what does that mean?
      

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Investment Strategy:
Tradition and Progress

Michael E. Jones, Chief Investment Strategist


www.HighProbabilityAdvisors.com

 

November 2017

A long time ago (1979), I arrived in a new job: equity research analyst for a registered investment advisory firm. Armed with a science background and a modest grasp of finance, I jumped into the business of picking stocks to provide attractive performance to investors. Decades later, the timeline of my career depicts an interesting story of the evolution of the investment business. Progress and change is found in every industry, including the investment business. I’ve seen plenty of each in the past 38 years.
 
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September Stock Market Musings

Michael E. Jones, Chief Investment Strategist


www.HighProbabilityAdvisors.com

 

September 2019

You’ve probably seen a statement like this in the press in recent months. Considering the U.S. stock market gains near 18% so far in 2019 and 13.4% annually over the past ten years, you might expect exuberance among investors. With these spectacular returns and FANG stocks in vogue, I think back to the technology stock driven “bubble” back in 1999. In those days, everybody wanted a piece of the action. Does the current data show a similar thundering herd of investors pouring their money into stock funds, as suggested in the quote above? Let’s look at the data.
 
Continue Reading