Risk Happens Slowly, Then all at Once
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Risk Happens Slowly, Then all at Once 〰️
It seems the entire investment industry is built to support strategic asset allocation (“pie chart” buy and hold investing). My past investment and trading experiences, over the last 17 years, have led me to believe that there are inherent risks baked into strategic asset allocation that are not properly communicated to investors. We respect the risks associated with investing in the US and World markets and because of our respect of risk we have opted for a process heavily leaning on risk management. To us this means two stated objectives. 1. Don’t have client capital positioned to lose money in a trending way - don’t experience large catastrophic losses. 2. Position client capital to grow and compound over time.
A core aspect of our process is to understand the directional price trend of a market so that we can increase risk or decrease risk appropriately. What is a trending market? Another way to describe a trend is with the word series. With this definition an upward trending market is a series of higher highs and higher lows (like 2017), while a downward trending market is a series of lower highs and lower lows (like 2022). Market direction is a key factor to get right in risk management and helps us determine how much risk is appropriate for clients to be taking at any given point in time. Our process and strategy is built to adapt to the trends of the market.
Using a race car analogy - the way we invest is not a drag race, we don’t always have the gas pedal to the floor. Managing risk in investing involves knowing when to apply more pressure to the gas pedal but also knowing when to apply the brakes and turn without crashing.
If you’re in the market for investment guidance or if you’d like a second opinion, we’d like to invite you to have a conversation so that we can share our strategy and process with you. We believe it has the potential to make a material difference in your life.
Investing involves risk, including the potential loss of principal. Past performance is no guarantee of future results. Investment decisions should be based on an individual's own goals, time horizon, and tolerance for risk. Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact your financial professional for a prospectus and read it carefully.