Reducing Portfolio Volatility

1. We believe that market conditions will be extremely challenging for investors over the next 12
months and recommend that investors consider a Market Neutral or (Zero Beta) portfolio for the
following reasons:
Many stocks are overvalued and will either trend lower or tread water over the next year.
Markets have entered a long-term period where performance will diverge, with superior
companies being rewarded and the broad market indices showing low single digit returns.
Recent volatility over the past 5 months will accelerate with the heightened geopolitical risk
and disjointed nature of the global recovery.
Europe and Emerging Markets will continue to play catch-up with the U.S., but the upward
trajectory won’t be straight.
Interest rate risk will continue to be a theme and hold both bond and bond surrogate returns
down.
Real estate and most hard asset alternative investments will follow the general market and
move sideways.
These conditions are amongst the most challenging and perplexing for individual investors as it
is difficult to gather alpha or find return if few asset classes are moving up.
Certain Market Neutral or Zero Beta strategies, however, are designed to prosper under these
conditions. Most notably is one in which the manager purchases stocks that they believe will
increase in value, while they simultaneously hold an equal number of stocks that are sold short,
believing those to be overvalued and heading lower.
As a firm, we believe that stock selection is vital. Our selection process is based on the Ad-Star®
System, which is our proprietary financial analytics model. We have used Ad-Star® for the past
ten years (i) to identify lesser known companies early in their growth cycles and (ii) to avoid
those companies that lack the fundamentals to support steep valuations.
Below are examples of companies we acquired before they received wide coverage from the
street and subsequently became staple holdings for many growth managers:
Purchase Purchase Sell Sell Current Period
Company Date Price Date Price Price Divs. Return
Ctrip.com Int'l 10/11/06 $11.45 08/28/15 $69.47 $0.122 507.2%
F5 Networks 03/09/09 $18.857 Held -- $108.41 -- 474.9%
IPG Photonics 04/14/10 $17.306 08/27/15 $84.74 $0.65 393.4%

2. Nevertheless, we have not been exempt from selecting stocks that have declined in value.
Examples of those include the following:
Purchase Purchase Sell Sell Period
Company Date Price Date Price Divs. Return
EZCorp Inc. 2/24/10 19.767 2/25/14 12.512 -- -36.7%
Cliffs Nat. Resources 10/5/11 56.041 2/20/14 21.522 $3.185 -55.9%
Our adeptness at identifying companies such as the “winners” listed above, has earned us
multiple performance awards, measured against our institutional peer universe including:
Award Rating Group Peer Universe SLG Portfolio Yrs. Ending
Best EM Equity Fund AI Hedge Fund Emerging Markets IOP 3 10/31/15
Bull Bear Master PSN Informa Global Equity Div. & Value 3 6/30/13
#2 Overall Return Barclay Hedge Emerging Markets IOP 1 12/31/14
Bull Bear Master PSN Informa Global Equity Div. & Value 3 3/31/13
Top Gun PSN Informa Global Equity High Growth 5 9/30/12
Top Gun PSN Informa EM Equity IOP 1 3/31/13
Bull Bear Master PSN Informa Global Equity Div. & Value 3 6/30/14
In short, our view is to consider rotating Core Assets into a Market Neutral strategy and adding
an Alpha Growth strategy that is driven by stock selection.
The preceding represents the views and opinions of The Stanley-Laman Group, Ltd., a Registered Investment
Advisor serving individual and institutional investors and is not intended to be investment advice suitable for all
investment objectives. The investment strategies above involve the risk of loss of principal and are not intended to
be an investment recommendation or an offer to buy or sell securities. Investors are advised to consult with qualified
investment professionals relative to their individual circumstance and objectives.
• Returns are subject to investment risk and past performance may not be indicative of future results.
• Examples referenced may not be representative of best and worst individual stock performers by manager.