WITTER & WESTLAKE INVESTMENTS offers investment advisory services through unique, low-risk investment programs designed to address the needs of our clients in today's market environment.
The firm is always prepared and willing to answer questions/concerns of our clients or prospective clients. We are committed to plan an investing approach that will match your investing objectives. Helping our investors achieve their financial goals is the exclusive purpose of our existence.
Witter & Westlake Investments is an independent firm, controlled by the people who run it day-to-day. We are not affiliated with any brokerage or other securities firm. This independence allows us the flexibility to serve our clients and keeps our focus on managing your portfolio.
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The firm is always prepared and willing to answer questions/concerns of our clients or prospective clients. We are committed to plan an investing approach that will match your investing objectives. Helping our investors achieve their financial goals is the exclusive purpose of our existence.
Witter & Westlake Investments is an independent firm, controlled by the people who run it day-to-day. We are not affiliated with any brokerage or other securities firm. This independence allows us the flexibility to serve our clients and keeps our focus on managing your portfolio.
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PRINCIPALS
LON L WITTER, CEO, Witter & Westlake Investments; BA, Duke University, 1967; MS, Indiana University, 1970; JD, University of Texas Law School, 1974; Trust Investment Officer, First Alabama Bank of Huntsville (now Regions); 1978-1988. President and Treasurer, Witter & Lester, Inc., Huntsville, Alabama, 1988-2005. NASD Series 7. April 1976; NASD Series 63. September 1992RODNEY S WESTLAKE, President, Witter & Westlake Investments; BA, University of Michigan, 1995; ND, Bastyr University School of Medicine, 2003; Research Assistant, Witter & Lester, Inc., Huntsville, Alabama, 2004-2005. NASD Series 65. Feburary 2005.
Lon L Witter
Rodney S Westlake
FROM THE END OF WORLD WAR II until 2008 the United States and the World in general was experiencing credit and leverage expansion in all facets of the economy from governments to banks, businesses to consumers. In 2008, world economies and financial markets began a period of credit contraction and deleveraging that will last several years in order to purge the system of the excesses built over the past half century. All financial and economic roadmaps are obsolete because there are no rules for investing in a world experiencing credit contraction. Investors must learn that it is far more important to control losses than to maximize gains. Investment programs based on market volatility will be more successful than investment programs dependent on market direction. Portfolios must be diversified by investing in non-correlated assets; this is quite different from what investment managers believed were non-correlating assets in 2008. Lack of truly understanding diversification cost their clients between 30-50% of their account values.
Witter & Westlake Investments believes that “true” diversity is the answer to the changing market environment. True diversity means that your assets will build money in all types of market conditions. This is in contrast to most funds that make money only in a down market or only make money in an up market. Witter and Westlake’s philosophy is to make money in all market conditions with minimum risk to the client. The firm uses “Daily Mean Reversion” (see Strategies) to achieve this goal. Daily Mean Reversion significantly reduces the risk of investing and improves returns over time.
Witter & Westlake Investments applies “daily mean reversion” to its programs. In simple terms, daily mean reversion means buying low and selling high every day. This means that anytime a fund or index has a daily appreciation, the firm will sell some of the fund or index; conversely, anytime a fund or index has a daily decline, the firm will buy some of the fund or index.
The firm cannot scale into positions as stated above if we do not have a cash allotment. This, in affect, significantly reduces the risk involved in a volatile market. Unlike many funds or commodities, there is no charge to the investor for these daily exchanges.
The firm cannot scale into positions as stated above if we do not have a cash allotment. This, in affect, significantly reduces the risk involved in a volatile market. Unlike many funds or commodities, there is no charge to the investor for these daily exchanges.
All transactions are implemented on an equal percentage basis. This means that all clients have the same percentage invested in the components of the program each and every day. Therefore the larger your portfolio, the larger the dollar amount invested.
Witter & Westlake Investments practices daily mean reversion in all of its programs. Daily mean reversion will increase the return of the index or fund over a market cycle and substantially reduce the risk.
It is more important to keep losses to a minimum than to focus exclusively on gains. For example, if an investor loses 50% in a market downturn, he/she must earn 100% to return the loss. Simple math shows you why. If an investor invests $1,000.00 in the market that loses 50%, they will have $500.00 remaining. It would take a 100% gain ($500.00) to return their investment to their original investment of $1,000.00. If daily mean reversion holds the loss to 8%, the investor needs to make only 9% in the rally to return to break even.
Witter & Westlake Investments practices daily mean reversion in all of its programs. Daily mean reversion will increase the return of the index or fund over a market cycle and substantially reduce the risk.
It is more important to keep losses to a minimum than to focus exclusively on gains. For example, if an investor loses 50% in a market downturn, he/she must earn 100% to return the loss. Simple math shows you why. If an investor invests $1,000.00 in the market that loses 50%, they will have $500.00 remaining. It would take a 100% gain ($500.00) to return their investment to their original investment of $1,000.00. If daily mean reversion holds the loss to 8%, the investor needs to make only 9% in the rally to return to break even.
OUR PROMISE TO YOU . . .
TO HAVE your interests come first at all times and develop an investment strategy to meet your needs.
TO PROVIDE clear, candid communication and advice
TO HELP our clients become better informed and more successful.
TO PROVIDE 100% transparency of your account at all times.
TO INVEST the majority of our personal assets alongside yours.
TO HAVE all transactions implemented on an equal percentage basis.
TO CONTINOUSLY ADAPT our programs to meet the financial times.
TO ADHERE to the highest standards of ethical behavior and fiduciary responsibility.
The power of daily mean reversion
Significantly increases the return of a fund or index over a market cycle
Cuts the annual risk of the index or fund by 40%-60%
Rarely, if ever, employ all available cash
Significantly increases the return of a fund or index over a market cycle
Cuts the annual risk of the index or fund by 40%-60%
Rarely, if ever, employ all available cash
Witter & Westlake Investments has an investment strategy called Daily Mean Reversion (hereafter referred to as "DMR") that can be applied to any equity index. It is a simple, effective and reliable investment strategy. DMR gives investors a low-risk, long-term plan for reaching their investment goals.
Daily Mean Reversion solely relies on two immutable, inviolate rules of investing.
RULE 1. It is more important to control risk than to capture gains.
- To accomplish this goal, DMR is never fully invested in the benchmark index.
- risk reduced by half.
RULE 2. An equity index tends to have an equal number of up and down days
- a bullish or bearish market in a given decade has litle influence on the number of up days.
- buy down days and sell up days.
Daily Mean Reversion solely relies on two immutable, inviolate rules of investing.
RULE 1. It is more important to control risk than to capture gains.
- To accomplish this goal, DMR is never fully invested in the benchmark index.
- risk reduced by half.
RULE 2. An equity index tends to have an equal number of up and down days
- a bullish or bearish market in a given decade has litle influence on the number of up days.
- buy down days and sell up days.
Daily Mean Reversion will outperform a benchmark index with half the risk over a market cycle.
Compounding does not work when you have losing years. If a program loses 50%, you have to earn 100% to get back to even. If a program loses 66.7%, you have to earn 200% to get back to even. Even though the benchmark had two out of three 50% years, the -50% year destroyed the compounding effect. The key to a successful long-term investment strategy is to control losses.
W&W practices DMR on 18 indices; all which show similar performance & risk characteristics. DMR is neither computer generated nor back tested; it simply follows the two immutable, inviolate rules of investing; therefore, future returns are predictable.
| Y1 | Y2 | Y3 | AVG Annual Return | return of $1 investment | |
| Benckmark Index | 50% | -50% | 50% | 16.67% | $1.125 |
| Daily Mean Reversion | 20% | -20% | 20% | 6.67% | $1.152 |
Compounding does not work when you have losing years. If a program loses 50%, you have to earn 100% to get back to even. If a program loses 66.7%, you have to earn 200% to get back to even. Even though the benchmark had two out of three 50% years, the -50% year destroyed the compounding effect. The key to a successful long-term investment strategy is to control losses.
W&W practices DMR on 18 indices; all which show similar performance & risk characteristics. DMR is neither computer generated nor back tested; it simply follows the two immutable, inviolate rules of investing; therefore, future returns are predictable.
Witter & Westlake Daily Mean Reversion Programs:
Ultra S&P 500 Index
Ultra Short S&P 500 Index
Dow Jones Industrial Average
S&P Midcap 400 Index
Russell 200 Index
Nasdaq 100 Index
Short Nikkei 225 Stock Average
Ultra China (Mellon China Select ADR Index)
Ultra Short China (Mellon China Select ADR Index)
Ultra Emerging Markets (Mellon Emerging Markets 50 ADR Index)
Ultra Short Emerging Markets (Mellon Emerging Markets 50 ADR Index)
Ultra Short International (MSCI EAFE)
Dow Jones US Basic Materials Sector Index Dow Jones US Biotechnology Index
Dow Jones US Oil & Gas Index
Dow Jones US Financials Index
Dow Jones Precious Metals Index Short Dow Jones US Real Estate Index
Witter & Westlake Investments provides comprehensive advisory services to help our clients incorporate our Daily Mean Reversion "DMR" program into their portfolios. We are committed to working alongside you to design an investing approach that will match your investing objectives.
STEP 1 Determine Investment Strategy DMR can be applied to an existing portfolio as a hedge or can be applied to any equity index as a stand alone investment. Witter & Westlake will review your investments and make recommendations to help you achieve your investment goals. DMR is ideal for non-taxable IRA's. Taxable accounts can choose high-cost, first-out as an accounting method to reduce taxes.
STEP 1 Determine Investment Strategy DMR can be applied to an existing portfolio as a hedge or can be applied to any equity index as a stand alone investment. Witter & Westlake will review your investments and make recommendations to help you achieve your investment goals. DMR is ideal for non-taxable IRA's. Taxable accounts can choose high-cost, first-out as an accounting method to reduce taxes.
STEP 2 Choose Custodian Witter & Westlake uses ProFunds as the custodian for client accounts < $1 million. For accounts over $1 million, Interactive Brokers may be used
STEP 3 Design a Portfolio Witter & Westlake currently trades DMR on the following 18 indices at ProFunds. We will help you design a portfolio to include one or a combination of these indices. You may also choose to trade DMR on any other ProFunds index. Any ETF can be traded at Interactive Brokers.
STEP 4 Negotiate Fees
STEP 5 complete Paperwork
1. ProFunds paperwork can be completed online at www.profunds.com. Interactive Brokers paperwork can be completed at www.interactivebrokers.com.
2. Witter & Westlake paperwork can be printed online at www.witterwestlake.com.
STEP 3 Design a Portfolio Witter & Westlake currently trades DMR on the following 18 indices at ProFunds. We will help you design a portfolio to include one or a combination of these indices. You may also choose to trade DMR on any other ProFunds index. Any ETF can be traded at Interactive Brokers.
STEP 4 Negotiate Fees
STEP 5 complete Paperwork
1. ProFunds paperwork can be completed online at www.profunds.com. Interactive Brokers paperwork can be completed at www.interactivebrokers.com.
2. Witter & Westlake paperwork can be printed online at www.witterwestlake.com.
PERFORMANCE. EXAMPLES OF PROGRAM RESULTS
GOLD PROGRAM
EMERGING MARKETS PROGRAM
CHINA PROGRAM
ULTRA BULL PROGRAM
EXPECTATIONS. DMR requires time to see and understand its benefits. For this reason, we do not recommend DMR for short-term traders and market timers because their holding period for an index is likely too short. Over a year, if DMR averages a 50% position in the benchmark index, expect half the return and half the risk of the benchmark. Daily buy and sells should roughly add 6% a year; more in a volatile year, less in a year of low volatility. For a benchmark to outperform DMR, the benchmark will need to average 12% a year with no down years.
Outlook 12.2011 Witter & Westlake expects one major rally based on hope and stimulus and one major decline based on a sovereign default or major European bank insolvency in 2012. The U.S. will fall into a recession if any of the following occur:
1. The United States raises taxes or cuts spending, both are anti-growth in the short term.
2. A major European bank becomes insolvent or a sovereign default occurs. 3. Oil prices spike as tensions with Iran increase.
Strategies Witter & Westlake is unsure which comes first, the 10-20% rally or the 10-20% decline. A general rule of thumb will be our guide: If the S&P 500 can close at a four month high in the first two months of the year, we will become more bullish and reduce or eliminate short exposure. The current four month high for the S&P 500 is 1285.08 which occurred on October 28th. If the S&P 500 does not reach this high, we will maintain our defensive posture.
READ ENTIRE ARTICLE
"Investors who once bought and held stocks or pieces of index funds and rode them higher will need to devise different investment strategies."
NY Times 07/01/2009
NY Times 07/01/2009
The Market Is Bullish Until It Isn't. 04.10.2012. Whenever the S&P 500 can break to new six month highs and rally 30 trading days without a 2% pullback, the momentum of the market begins to feed upon itself, oblivious to market fundamentals and "bad news." The market continues to grind higher and higher until one day it stops. No one can predict that day in advance; it just happens. The stock market is presently in a self-perpetuating rally. The question for today is, "how can an investor tell when a self-perpetuating rally is over?" As a general rule of thumb, whenever the market pulls back 4% from the rally high (S&P 500 cash 1419.04) there is a 50% chance that the rally peak is meaningful and will remain the high for months or years (although it is usually retested at least once). A close below 1362.27 on the S&P 500 cash would constitute a 4% pullback from the 1419.04 high of April 2nd. If the S&P 500 pulls back greater than 6% from the rally high, it is probable (66%) the rally peak is meaningful. A pullback below 1333.89 on the S&P 500 cash should be viewed as a market exit signal for investors. Do not sell on the decline; wait for a market rally or the probable retest of the market high to make your exit. Do not become complacent. Economic fundamentals are worse now than before the 2008 debacle. The United States is trillions of dollars in debt, but still needs stimulus packages and payroll tax holidays to keep the economy growing at 2%. Three years after the last recession, unemployment is 8.2%. Rising energy costs, tax increases, and spending cuts make a recession in 2013 seem inevitable. Banks are still too big to fail. The cancer in our banking system is hidden behind credit default swaps. Southern Europe is in a virtual depression and will soon pull the rest of Europe into recession. This stock market rally is like a runaway train. An exit strategy is of paramount importance. Do not stay on the train too long. We have seen this movie before and we know how it ends.
ARCHIVED News. . .
December 2011
October 2011
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May 2011
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October 2011
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February 2011
Witter & Westlake Investments provides forms for its new clients to start their accounts. Please download any or all forms from the column to the left. If you have questions concerning the forms, please call the offices of Witter & Westlake. They will be glad to assist you.
If you experience problems with your download, please save the file rather than open it. Thank you.
If you experience problems with your download, please save the file rather than open it. Thank you.
After you have opened a ProFunds account, you may access your account 24/7. You will need to set up a userID and password in order to log into your account. The steps for doing this are listed in the column at the right>
If you have any questions feel free to call us at 502.339.8840 or ProFunds Shareholders Service toll free number at 1.888.776.3637.
1. go to https://accounts.profunds.com
2. Account Access Page: Just right of the box click “New user Registration”
3. Check “I am an individual shareholder” and click “Continue”
4. Fill in Shareholder Registration Form and click “Continue” Have the primary account holder’s Social Security Number, ProFunds Account Number and Account statement mailing zip code handy. It is important to write down and save the user ID and password you create
5. Fill in Step 2 (an email address is required) and click “Continue”
6. Fill in Step 3 which is about receiving documents via email. You can click “I consent” if you would like to receive documents this way or click “I do not consent” if you would rather not.
7. Fill in Step 4 of 4. You must accept the terms of the privacy notice and certify that you own the account listed there by checking the boxes. Then click “Complete Registration”
8. Finally, you sign into the account access page (bookmark this page) and begin using your Login and Password that you created.
2. Account Access Page: Just right of the box click “New user Registration”
3. Check “I am an individual shareholder” and click “Continue”
4. Fill in Shareholder Registration Form and click “Continue” Have the primary account holder’s Social Security Number, ProFunds Account Number and Account statement mailing zip code handy. It is important to write down and save the user ID and password you create
5. Fill in Step 2 (an email address is required) and click “Continue”
6. Fill in Step 3 which is about receiving documents via email. You can click “I consent” if you would like to receive documents this way or click “I do not consent” if you would rather not.
7. Fill in Step 4 of 4. You must accept the terms of the privacy notice and certify that you own the account listed there by checking the boxes. Then click “Complete Registration”
8. Finally, you sign into the account access page (bookmark this page) and begin using your Login and Password that you created.
THETA RESEARCH
Theta Investment Research is now monitoring Witter & Westlake’s Original and Gold Programs. Theta Investment Research independently verifies the returns of investment managers by monitoring the daily returns of an actual traded account. Theta is recognized as a leader in the active investment management community and provides services to institutions and individual investors who are looking for money managers to help meet their investment objectives.
If you would like to research our programs on Theta Investment Research site, please contact our office at anytime to obtain the appropriate login information.
http://www.thetaresearch.com
voice 610.495.0180
Theta Investment Research is now monitoring Witter & Westlake’s Original and Gold Programs. Theta Investment Research independently verifies the returns of investment managers by monitoring the daily returns of an actual traded account. Theta is recognized as a leader in the active investment management community and provides services to institutions and individual investors who are looking for money managers to help meet their investment objectives.
If you would like to research our programs on Theta Investment Research site, please contact our office at anytime to obtain the appropriate login information.
http://www.thetaresearch.com
voice 610.495.0180
Theta Investment Research started collecting data on December 31st of 1999 as part of an experiment designed to statistically verify the viability of alternative investment management as an approach to increasing gains and limiting risk in portfolios. Spun off as a stand-alone entity in late 2001, Theta began developing software and protocols for the automated collection of investment account data and the generation of portfolio performance and risk characteristics for alternative managed accounts. Today, Theta is recognized as a leader in the alternative investment management community and provides services to institutions and individual investors who are looking for money managers to help meet their investment objectives.
Witter & Westlake Investments believes that research is the lifeblood of a money management firm. It is unremitting, never ceasing until the management firm no longer exists. Our investment ideas are tested over many years to determine how they will perform in a range of market conditions. The investment programs that demonstrate promise after extensive testing are then funded by the principals of the firm. They will then go through a one to three-year pilot program. If an investment program successfully completes the pilot program, it is subsequently offered to the public. No program is offered to the public unless the principals are willing to make a substantial personal investment in the program. Before the principals withdraw from a program, clients in the program are notified so they may leave the program simultaneously or before.
"The economic trends that smoothed our ride are behind us." Money Magazine 6.2010
"The economic trends that smoothed our ride are behind us." Money Magazine 6.2010