A. Description of the Firm:
Strategic International provides automated, discretionary portfolio management
services to individual and institutional investors through its interactive
website. A small number of investors receive traditional, face-to-face advisory
services.
1. Length of Time the Firm Has Been in Business:
Strategic International has been in business since 2017.03.22.
2. Principal Owners:
Strategic International is wholly owned by Mr. Taylor Lovell Shockey. As such,
the Firm is not owned by a parent company nor any publicly-held intermediate
subsidiaries.
B. Description of Advisory Services Offered:
1. Specialization in Particular Types of Advisory Services:
Strategic International specializes in quantitative analysis. It uses
quantitative analysis to construct and maintain efficient portfolios in
accordance with the basic tenets of Modern Portfolio Theory. Tolerance for risk
is initially quantified using methods derived from Prospect Theory and
Behavioral Economics. The following paragraphs from Investopedia.com describe
quantitative analysis, Modern Portfolio Theory, Prospect Theory and behavioral
economics in greater detail:
a. Description of Quantitative Analysis:
In general terms, quantitative analysis can best be understood as simply
a way of measuring or evaluating things through the examination of
mathematical values of variables. The primary advantage of quantitative
analysis is that it involves studying precise, definitive values that
can easily be compared with each other, such as a company's
year-over-year revenues or earnings. In the financial world, analysts
who rely strictly on quantitative analysis are frequently referred to as
"quants" or "quant jockeys."
Governments rely on quantitative analysis to make monetary and other
economic policy decisions. Governments and central banks commonly track
and evaluate statistical data such as GDP and employment figures.
Common uses of quantitative analysis in investing include the
calculation and evaluation of key financial ratios such as the
price-earnings ratio (P/E) or earnings per share (EPS). Quantitative
Strategic International ~ Form ADV Part 2A: Brochure ~ 2024.03.295
analysis ranges from examination of simple statistical data such as
revenue, to complex calculations such as discounted cash flow or option
pricing. (
http://www.investopedia.com/terms/q/quantitativeanalysis.asp)
b. Description of Modern Portfolio Theory:
Modern Portfolio Theory (MPT), a hypothesis put forth by Harry Markowitz
in his paper "Portfolio Selection," (published in 1952 by the Journal of
Finance) is an investment theory based on the idea that risk-averse
investors can construct portfolios to optimize or maximize expected
return based on a given level of market risk, emphasizing that risk is
an inherent part of higher reward. It is one of the most important and
influential economic theories dealing with finance and investment.
Also called "portfolio theory" or "portfolio management theory," MPT
suggests that it is possible to construct an "efficient frontier" of
optimal portfolios, offering the maximum possible expected return for a
given level of risk. It suggests that it is not enough to look at the
expected risk and return of one particular stock. By investing in more
than one stock, an investor can reap the benefits of diversification,
particularly a reduction in the riskiness of the portfolio. MPT
quantifies the benefits of diversification, also known as not putting
all of your eggs in one basket.
(http://www.investopedia.com/walkthrough/fund-guide/introduction/1/moder
n-portfolio-theory-mpt.aspx)
c.
Description of Prospect Theory:
Prospect theory assumes that losses and gains are valued differently,
and thus individuals make decisions based on perceived gains instead of
perceived losses. Also known as "loss-aversion" theory, the general
concept is that if two choices are put before an individual, both equal,
with one presented in terms of potential gains and the other in terms of
possible losses, the former option will be chosen.
For example, an investor is given a pitch for the same mutual fund by
two separate financial advisors. One advisor presents the fund to the
investor, highlighting that it has an average return of 12% over the
past three years. The other advisor tells the investor that the fund has
had above-average returns in the past 10 years, but in recent years it
has been declining. Prospect theory assumes that though the investor was
presented with the exact same mutual fund, he is likely to buy the fund
from the first advisor, who expressed the fund’s rate of return as an
overall gain instead of the advisor presenting the fund as having high
returns and losses.
(http://www.investopedia.com/terms/p/prospecttheory.asp)
d. Description of Behavioral Economics:
Strategic International ~ Form ADV Part 2A: Brochure ~ 2024.03.296
Behavioral economics explores why people sometimes make irrational
decisions, and why and how their behavior does not follow the
predictions of economic models. Notable individuals in the study of
behavioral economics are Nobel laureates Gary Becker (motives, consumer
mistakes; 1992), Herbert Simon (bounded rationality; 1978), Daniel
Kahneman (illusion of validity, anchoring bias; 2002) and George Akerlof
(procrastination; 2001).
(http://www.investopedia.com/terms/b/behavioraleconomics.asp)
2. Financial Advice Limited to Particular Types of Investments:
Strategic International does not limit its advice to particular types of
investments in its face-to-face service. It does, however, currently limit
itself to stocks in its online service.
C. Tailoring Advisory Services to the Individual Needs of Clients:
The automated advisory service is tailored to the individual needs of clients in the
sense that it is selecting and rebalancing securities in clients’ accounts based on
the unique risk tolerance level of each client. That being said, however, as of the
date of this brochure, important portfolio considerations like time horizon, liquidity
needs and tax situation are not programmed into the automated service and are
therefore not weighed when making automated portfolio management decisions.
Traditional, face-to-face clients receive these additional portfolio considerations.
1. Client Imposed Restrictions on Securities Selection:
Clients using the online, automated advisory service are unable to impose
restrictions on investing in certain securities or types of securities.
Traditional, face-to-face clients may impose such restrictions.
D. Wrap fee programs and portfolio management services:
Strategic International does not engage in any wrap fee programs.
E. Managed Client Assets Amounts Disclosure - Discretionary and Non-Discretionary:
1. Date of Calculations: The following amounts were calculated as of 2024.03.29.
2. Method of Calculations:
The method Strategic International uses for calculating client assets under
management is the same it uses for calculating regulatory assets under
management as required for Item 5.F in Form ADV Part 1A.
3. Discretionary Assets Under Management: $7,126,219.00
4. Non-Discretionary Assets Under Management: $0.00
Strategic International ~ Form ADV Part 2A: Brochure ~ 2024.03.297