ASYMMETRY® Observations are Mike Shells observations of investor behavior causing directional price trends, global macro, tactical ETF trading, momentum stock trading, hedging, volatility trading, and risk management that creates asymmetric investment returns. An asymmetric return profile is a risk/reward profile with a positive asymmetry between profit and loss. Mike Shell is the founder of Shell Capital Management, LLC and the portfolio manager of ASYMMETRY® Global Tactical
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Simple technical trading rules and the stochastic properties of stockreturns
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Asymmetric Taxation of Business Gains andLosses
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In Absolute Return: The Basic Definition, I explained an absolute return is the return that an asset achieves over a certain period of time. To me, absolute return is also an investment objective.
In Absolute Return as an Investment Objective I explained that absolute return is an investment objective is one that does not try to track or beat an arbitrary benchmark or index, but instead seeks to generate real profits over a complete market cycle regardless of market conditions. That is, it is focused on the actual total return the investor wants to achieve and how much risk the investor will willing to take, rather than a focus on what arbitrary market indexes do.
Absolutereturn as a strategy: absolute return is sometimes used to define an investment strategy. An absolute return strategy is a plan, method, or series of maneuvers aiming to compound capital positively and to avoid big losses to capital in difficult market conditions. WhereasRelative Returnstrategies typically measure their success in terms of whether they track or outperform a market benchmark or index,absolute returninvestment strategies aim to achieve positive returns irrespective of whether the prices of stocks, bonds, or commodities rise or fall over the market cycle.
Whether you think of absolute return as an objective or a strategy, it is a skill-based rather than market-based. That is, the absolute return manager creates his or her results through tactical decision-making as opposed to taking what the market is giving. One can employ a wide range of approaches toward an absolute return objective, from price-based trend following to fundamental analysis. In theASYMMETRY®Managed Accounts, I believe price-based methods are more robust and lead to a higher probability of a positive expectation. Through my historical precedence, testing, and experience, I find that any fundamental type method that is based on something other than price has the capability to stray far enough from price to put the odds against absolute returns. That is, a manager buying what he or she believes is undervalued and selling short what he believes is overvalued can go very wrong if the position is on the wrong side of the trend. But price cannot deviate from itself. Price is the judge and the jury.
Of course, absolute return and the All Weather type portfolio sound great and seem to be what most investors want, but it requires incredible skill to execute. Most investors and advisors seem to underestimate the required skills and experience and most absolute return strategies and funds have very limited and unproven track records. There is no guarantee that these strategies and processes will produce the intended results and no guarantee that an absolute return strategy will achieve its investment objective.
For an example of the application of an absolute return objective, strategy, and return-risk profile, visit
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ASYMMETRY® Observations are Mike Shells observations of investor behavior causing directional price trends, global macro, tactical ETF trading, momentum stock trading, hedging, volatility trading, and risk management that creates asymmetric investment returns. An asymmetric return profile is a risk/reward profile with a positive asymmetry between profit and loss. Mike Shell is the founder of Shell Capital Management, LLC and the portfolio manager of ASYMMETRY® Global Tactical. For more information, visit
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Investors follow the trend after the fact, count onit.
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Feeling and Doing the Right Thing at the RightTime
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The Stock Market Trend Update: Clearing theLine
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