The ETF Strategist’s Socratic Oath
I swear to fulfill, to the best of my ability and judgment, this covenant:
I will respect the important financial innovation of the ETF structure and the repeatable investment processes of those successful ETF strategists whose steps I walk.
I will endorse an asset allocation process that is not backward-looking and purely statistically driven but that is forward-looking and informed by a top-down, macro world view.
I will apply, for the benefit of client portfolios, all available and known behavioral finance controls, avoiding those persistent twin traps of greed and fear.
I will remember that there is art to portfolio management as well as science, and that low costs, tax efficiency and suppressed turnover can outweigh the benefits of active management.
I will not be ashamed to say "I know not" and remain broadly diversified, nor will I fear the career risk of contentious investment postures in the name of outperformance or downside protection.
I will respect the privacy of my clients, for their portfolios are not disclosed to me that the world may know. If it is given me to steward a person’s life savings, all thanks. But it may also be within my power to cause large portfolio losses; this awesome responsibility must be faced with great humbleness and awareness that, in the short run, asset values are based on ephemeral opinions, herding and momentum, and not efficient market theory.
I will remember that I am not working with just secular and cyclical investment concepts, but individuals whose financial outcomes will impact their family, economic stability and life experience.
I will prevent capital losses whenever I can, for the way to win in this business is to avoid large, singular portfolio drawdowns. ETF strategists know that success requires a near-fanatical avoidance of the big mistakes.
I will remember that I remain an advocate of the democratization of global investing (made possible by the ETF vehicle), with special obligations to all my fellow human beings, including both the privileged 1 percent and the remaining 99 percent.
If I do not violate this oath, may I enjoy life and art, respected while I live and remembered with affection thereafter. May I always act so as to preserve the finest traditions of the ETF strategist industry, and may I long experience the weight of responsibility and privilege of stewarding the assets of those who seek my help.
June 2015, Tyler Mordy
Tyler Mordy, president and co-chief investment officer of Hahn Investment Stewards, is an expert in the design and application of global macro ETF managed portfolios. He is interviewed by the financial media for his global investment strategy views, as well as ETF trends. CNBC has called him one of the “best independent ETF experts.” Contact Hahn at hahninvest.com/contact.