Foxhall Accounts include both US stocks, international stocks and exchange traded funds (ETFs), mutual funds and US bonds, US bond funds, and international bond funds in an individually managed investment portfolio. This investment strategy allows the investment manager to actively manage market and portfolio risk. Many of Foxhall's clients primary investment goal is to limit the loss of their principal. This is why Foxhall Capital has developed an investment discipline that includes two distinct investment strategies.

• Defensive Investment Strategy: The first is a "defensive investment strategy" that protects an investor's principal when the stock market is going down. Foxhall's primary goal is to manage risk in a way that limits an investor's losses. When there is a broad stock market decline, Foxhall will aggressively shift the investment portfolio into cash (money market funds) and/or fixed income securities or bond funds to protect the investor's principal in a declining market. Foxhall also manages risks and limits losses by internationally diversifying the overall investment portfolio, so individual country risk (including country risk in the US), is minimized.
  
  
• Offensive Investment Strategy:  When there is a sustained movement up in the stock market, we invest the portfolio in market leaders in terms of exhibiting strong risk adjusted relative strength.  This means that we select holdings that are outperforming alternatives, in light of the volatility each security dispays.  We regularly 'rotate' holdings as new leaders emerge with changes in market and economic conditions.
   
  Standards Used In Implementing A "Defensive" or "Offensive" Investment Strategy
  
  
• Objective Standard: How does an investment manager know whether the stock market is experiencing a broad market upswing or decline? Foxhall uses a proprietary computer model that measures the risk adjusted relative strength of our entire universe of stocks, bonds, ETFs, and mutual funds and compares them to a standard money market fund.  The money market establishes our Offense/Defense line.  Individual holdings must rank higher than the money market to qualify for purchase.  When individual stocks, bonds, ETFs, and mutual funds start to underperform a money market fund, or if they decline by more than a predetermined amount, they are sold.  When a large number of individual portfolio holdings start to underperform the money market fund at the same time, this is usually an indication that the stock market is entering into a major market correction or an economic recession. It is at this time that Foxhall implements a “defensive investment strategy” and aggressively moves the portfolio to safer investments like money market funds, bonds or bond funds. Foxhall uses this unemotional, objective standard to increase the cash and fixed income (bond) percentage of its various investment strategy portfolios to manage risk in market declines and to increase exposure to equities in market upswings.
  
  By comparing the risk-adjusted performance of a (virtually risk free) money market fund with the risk-adjusted relative performance of our database of stocks, bonds, ETF’s and other Funds we have an unemotional, clear, unambiguous guide with which Foxhall managers can implement the appropriate Offensive or Defensive investment strategy. Foxhall investment managers don’t have to think or guess—we simply follow this clear guide as to the health and direction of the financial markets.
  
  In short, we seek to invest only in (1) stocks, bonds and index mutual funds that are outperforming the S&P 500 Index in terms of risk adjusted relative strength, and (2) only in stocks, bonds and index mutual funds that are outperforming cash or a money market fund.

This is a strategy that has worked over a long period of time and has been successful, especially in down markets. The reason Foxhall's investment strategy works in both good and bad stock market environments is the implementation of a "defensive investment strategy" when the market is experiencing a sustained decline, as well as an "offensive investment strategy" when the market is having a sustained rise.

Tax Consequences: It should be noted that this strategy may increase the possibility of short-term capital gains in a client’s portfolio.