Portfolios adjusted for each phase of the market cycle

The world changes and your portfolio should change to reflect that.

Traditional models work well a lot of the time. But there are decade long periods (and sometimes single years), where they fail the individual investor.

Traditional thinking says to wait patiently or to absorb these losses because over the long run the market rises and it all works out. But this conventional wisdom offers little relief when you don’t have decades to recoup significant losses.

Avalon was one of the first investment firms to create a process for scenario-based asset allocation.

Using this process, the firm taps an investment universe to include assets designed to perform well even when traditional assets do not. We also designed "Ada" (the Avalon Dynamic Allocation process) so that we could position investment portfolios to favor investments that perform well in their respective economic environments.

Our dynamic approach reflects the fact that each phase of the market cycle has favored a different asset class.

Click below to see historical examples

Stagflation
Falling Inflation Ignites Financial Assets
Tech-driven Productivity Boom
Tech Crash + Hangover
China Boom + Bubble in Real Estate
The Great Financial Crisis + Credit Contraction
Late 1970s

Stagflation

Weak economic growth and high inflation (called stagflation) hurt US stocks, bonds and the US Dollar. Cash, International stocks and hard assets such as gold and REITS kept pace with double-digit inflation.

Traditional portfolio diversification, by contrast, allocates 60% stocks and 40% bonds.

Bonds are generally the best mitigator of stock volatility because they often outperform for the same reasons stocks underperform.

And yet many environments can cause both stocks and bonds to perform poorly, sinking a conventional portfolio. We appear to be facing one of those environments now.

How do you reach target returns when both stocks and bonds are overvalued? Consistency of returns requires a more thoughtful approach, one fueled by an historical perspective and driven by dynamism.

Meet Ada,

our engine for managing your wealth

Ada uses a strategic mix of ETFs and weekly rebalancing based on historically verified inputs. This tactical approach selects strong relative asset trends and avoids weak ones. We use Ada to help mitigate portfolio risk by shifting exposure in response to investor behavior.

Here’s what Ada includes in her calculations:

Historical + Current Market & Economic Conditions

Ada looks at 100+ years of historical data and trends to see how asset classes have performed and interplayed over time. We also consider the current environment and adjust your portfolio accordingly.

Broader Portfolio
Selection

Designing your portfolio to work in all economic markets means diversifying beyond stocks and bonds. Ada draws from 6 primary asset classes, each optimized for performance within that data set.

Investor Behavior
& What You Pay

Ada captures indications of investor behavior relative to history. We’re adaptive to current conditions, striving to add the optimal asset at the optimal moment.

Your Risk Level &
Investment Goals

We use your personal benchmarks, not those dictated by industry standards. Ada helps us analyze which investment decisions will support your goal.

See how we work with you for more details.

Harnessing the
power of Ada

We apply her insights to your goals.

Ada is a powerful engine, but she needs to be driven by experienced investors. We combine more than 140 years of investing experience and a deep understanding of strategic asset allocation to make tactical, data-based decisions.

Meet your team

See how Avalon’s approach to wealth management compares:

Conventional Approach
The Avalon Approach
Suitability Standard
“Is this appropriate for the client?”
“Is this the right thing for the client?”
Access to Decision Makers
Low. Clients typically interact with relationship person, not portfolio decision-makers.
High. Clients only speak
with decision-makers.
Internal Products Incentivized
High at large firms.
Never. We choose best in
class solutions only.
Transparency of Fee Structure
Historically lacks transparency.
Simple, transparent structure.
Benchmark Focus
Conventional benchmarks
typically used.
Benchmarks based on your goals. We focus on managing portfolios to achieve them.
Diversification
Traditional, but not true diversification. Equity/corporate bond allocations that, in market breakdowns like 2008, correlate together.
High. Focus on diversifying into asset classes that outperform when traditional asset classes perform poorly.
Suitability Standard
Conventional Approach
“Is this appropriate for the client?”
Avalon Approach
“Is this the right thing for the client?”
Access to Decision Makers
Conventional Approach
Low. Clients typically interact with relationship person, not portfolio decision-makers.
Avalon Approach
High. Clients only speak
with decision-makers.
Internal Products Incentivized
Conventional Approach
High at large firms.
Avalon Approach
Never. We choose best in
class solutions only.
Transparency of Fee Structure
Conventional Approach
Historically lacks transparency.
Avalon Approach
Simple, transparent structure.
Benchmark Focus
Conventional Approach
Conventional benchmarks
typically used.
Avalon Approach
Benchmarks based on your goals. We focus on managing portfolios to achieve them.
Diversification
Conventional Approach
Traditional, but not true diversification. Equity/corporate bond allocations that, in market breakdowns like 2008, correlate together.
Avalon Approach
High. Focus on diversifying into asset classes that outperform when traditional asset classes perform poorly.

What’s Your Destination?

Let’s Talk