Interview with the President
WHO IS CLAUSEN CAPITAL MANAGEMENT
I created this company to first and foremost address what I believed was a form of investing which was missing in the Market Place. I believe risk managed investing is the only way to invest my personal assets as well as those of clients. I have never been enamored with Buy and Hold investing nor with MPT.
Clausen Capital is a boutique investment company which has developed a proprietary methodology to measure risk in the markets. When market risk is viewed as being in our favor, we invest our assets in a more aggressive manner. When risk is not in our favor, we move to a defensive investment posture with the focus on protecting assets. This active management of assets is what sets us apart from our competition.
Clausen Capital is firm comprised of professionals dedicated to focus our attention on our client’s accounts daily as well provide superior customer service.
HOW DID CLAUSEN CAPITAL MANAGEMENT GET STARTED?
Over the past 20 years, I have managed my own financial accounts and to that end, studied and learned about investing. I grew to understand the importance of risk managed investing and always kept the idea open to start my own financial services firm if the opportunity presented itself.
That opportunity arose in 2002 and I jumped on it. A business plan was created and I set out to start Clausen Capital Management which included passing the required certifications, I hold a Series 65, am a member of FINRA and the company is state registered in North Carolina and Florida. Additional details are in the CCM ADV Part II.
Through client referrals, we now have clients in nine states.
WHO WERE YOUR ORIGINAL CLIENTS?
I started Clausen Capital managing my own assets as well as assets of my family. What better way to prove to yourself that your investment style works than to have all your own and family assets committed to your plan and self managed? It help me place a real focus on risk managed investing since I had my personal assets committed to my investment style.
To this day, almost 100% of my personal assets remain in the same exact portfolios as my clients.
WHAT DID I ENVISION WAS MY INVESTMENT STYLE?
By nature, I am conservative. Over the years, I found I was sensitive to market declines also known as market draw downs. I spent considerable time searching for an investment methodology which would help me participate when the market were moving higher and protect my assets when the market were in significant decline. Through research, I found there were specific investment methodologies and software applications which would help identify periods of high market risk or lower market risk.
Further research and model development refined my ability to define these various periods of market risk.
As we moved into the first major market decline in March of 2000, as an individual investor, I was able to move my assets into a defensive posture and side step those major market decline. During the period between 2000 and late 2002, the S&P dropped almost 50% and the NASDAQ declined almost 75%. My personal assets remained almost level. While I did not make appreciable gains during those two year, more importantly, I did not loose a large portion of my holdings as many investors did. In a very real sense, I did not have to make up potential losses to “Get Back To Even”.
What this confirmed for me was as we I don’t have to “beat the market” every year to out perform the market over a longer period of tiem. Not participating in a significant market decline means you don’t have to re-earn those lost dollars. For my retirement accounts, and those of my clients, it becomes very important not to loose your assets in a declining market as they may not or cannot be easily replaced.
ARE YOUR MARKET MODELS THE SAME TODAY AS IN 2000?
No, the models have changed, the portfolios are different but so is the market environment. The markets are constantly changing and we have to adapt our models and portfolios to address those changes.
The models and portfolios we employ today are vastly improved over those we used back in 2002 when we started Clausen Capital. In comparison, back during the start of the decade, we were creating market models as if we were in First Grade. Now we have researched, learned, adapted and matured to the point we are consider ourselves to be Technical Market Grad Students. . That said, while we have improved our capabilities over the years, our single overriding objective has be, and still is, to participated and protected client assets during all market cycles.
WHAT WERE MY INVESTMENT GOALS?
Using one of several stock indexes as a general indicator of the market, over any 5 year period, I want to achieve annual returns in excess of that market index but limit the losses of my assets during declining or bear market periods. It is our goal to grow client assets in line with the annual market gains but not subject those account to potential double digit losses which are common during bear markets.
Since the start of this decade, we have now experienced two bear markets and the end result is all gains achieved in the major indexes evaporated. Under a Buy and Hold approach, most investors also have seen substantial portions of their investments evaporate. Our clients have not been subjected to this level of market volatility and have the majority of their portfolios intact.
WHAT IS THE BIGGEST DIFFERENCE BETWEEN CCM AND MOST ADVISORS?
CCM manages for consistent growth but let me emphasize we will not let our client assets take significant losses. We will trade off some of the potential gains to protect our client’s assets.
We manage the risk (declines) of all accounts in the same manner
Please understand this is not to say Clausen Capital is risk-averse but I am saying my company is risk-aware. Market volatility is a fact of life. There is no way to escape the continuous ups and downs of the market but there are ways to limit the amount of the declines inside of managed portfolios.
Many brokers and managers tell you when and what to buy. However, they don’t watch your portfolio on a continuous basis to limit the losses during the inevitable steep declines in the markets. They will tell you, as I’ve been told, “don’t worry, hang on, the market will always come back”. I do not subscribe to that way of doing business. In my company, we review every portfolio, every day. We actively manage our diversified portfolios using our time tested risk models and technical analysis.
Let me define the active management of a client account. Our market risk models are designed to trade an average of three times a year. This does not mean we are day traders or gunslingers nor are we long term (multi year) “buy and hope” mutual fund investors. Rather I like to define ourselves as intermediate term portfolio managers. We use our models, we use a defined discipline, and we use common sense to manage our client assets. I will not allow my assets, or client’s assets, to decline without a stop limit to losses. If the markets break down to a point we can not control the draw down, we will exit all positions and move to cash.
THANK YOU FOR TIME
I have enjoyed talking with you. As you can see, I am very passionate about Clausen Capital Management and my clients. I believe we are offering the very best way to invest for the future and I can only say, this is the only way I would want my personal assets to be managed.
Thank you for talking with me. I hope we can do this again sometime!
