Our Philosophy


Investors have been led to believe that the stock market will give them superior long-term returns if only they stay the course through thick and thin.

The Wall Street crowd telling this story leave out certain vital pieces of information. They fail to point out that the "thin" part of the story can last far longer than anyone expects. Investors who believe that they may have to endure 10-15 years of poor or negative returns would certainly approach investing in the stock market with more caution. Yet dry spells like this have happened several times in the past and could happen at any time in the future.

S&P 500 Peak 5-Year 10-Year 15-Year 20-Year
Peak Year Valuation Real Return Real Return Real Return Real Return
1901 25.2 X Earnings 3.4% 4.4% 3.1% -.02%
1929 32.6 X Earnings -13.1% -1.4% -0.5% .04%
1966 24.1 X Earnings -2.6% 1.8% -0.5% 1.90%
2000 44.3 X Earnings ? ? ? ?

During such periods, the market suffers through a sequence of down years, followed by up years, recurring several times with the down cycles canceling out the gains of the up cycles. In the past, these long periods of investor frustration have finally ended when the market returned to under-valuation. At that point, all but the most dedicated investors have thrown in the towel. This sets the stage for the next secular bull market, during which a new generation of investors accumulates stocks for the long-term.

Alpha's investment philosophy is simple: Take our fair share in bull markets, and don't give profits back in bear markets. Our duty to our clients is to deliver superior long-term results without the heart-stopping volatility that often accompanies traditional equity investments. While no one can guarantee the future, Alpha's distinguished performance history during an extremely harsh market environment is evidence that our risk management disciplines are working.