• Terri Spath has managed mutual funds worth billions of dollars during severe recessions.
  • In her new venture, she merges defensive quantitative techniques with a more traditional approach.
  • Spath told Insider how she evolved her strategy to deliver more benefits to customers.

After years of helping investors thrive by playing good defense, Terri Spath says she’s added offense to the mix.

As a mutual fund and portfolio manager at companies such as Franklin Templeton and Sierra Advisors, where she was also chief investment officer, Spath established a track record of market outperformance during downturns like the dot-com crash. , the global financial crisis and the COVID clearance sale.

Today, as founder and chief investment officer at Zuma Wealth, Spath says she combines the best parts of the approaches she learned earlier in her career, using Sierra’s favorite quantitative techniques as well as the fundamental analysis she learned from previous stops like Franklin Templeton.

She says that helped Zuma post steady returns in April when the S&P 500 fell nearly 9%.

“What I have now as a decision process is this intersection of both fundamental analysis and quantitative metrics to determine if it’s not just the right thing to buy, but is it also a good time to buy it,” she told Insider. “You can find cheap stocks all day, but if you don’t buy them at the right time or sell them at the right time, it can be dead money for a very long time.”

Spath says the marriage of these styles helps him find stocks that are just starting to rise.

In 2020, Spath told Insider that moving averages were the foundation of Sierra’s defense-focused approach, and she used those averages to identify sell signals that tell her when it’s time to get out of the stock market. . Today, Spath says these are still an important tool in his arsenal.

While quantitative analysis is helpful in preventing collapses with a momentum-driven approach, she says it doesn’t answer the vital question of when to buy. As the selling on Wall Street takes hold, it holds large amounts of money and waits for clearer signs of buying.

“There are certain crossovers that make sense for most stocks to help decide if it’s a good time to buy or if you’re just catching a falling knife,” she said. “When does the nine-day moving average, for example, cross on day 18?”

But Spath says there are already bargains, including Home Depot, Starbucks and JPMorgan Chase, while names like Wells Fargo and Charles Schwab may be bargains but don’t seem ready to burst just yet. Using these traditional approaches also allows her to cast a wider net than she could in the past.

“If you sharpen your pencil and start doing your homework, there are top-notch S&P 500 companies that are within 5% of their 52-week lows. They’re paying a decent dividend and they’re in a ideal position for their price/earnings ratio,” said Spath.

Energy companies are very attractive, she adds, but she doesn’t want to overload her clients’ exposure to this volatile sector of the market. Spath also recommended the Invesco DB Commodity Index Tracking Fundwhich tracks a basket of commodities and benefits from the strength of the US dollar.

Some alternatives are also doing reasonably well as she waits for the opportune moment to buy more shares.

“You can put money into merger arbitrage funds right now and you’ll get a nice, steady return,” she said. “And managed futures, believe it or not, has been something we’ve invested money in.”

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