Risk Management is one of the most important and least understood aspects of investing! A whole generation of investors were taught to simply diversify their portfolio across different asset classes, sectors, regions and styles and to hold for the long term. They were told to expect a major drop in the markets every couple of years but if they didn’t let their emotions control their investment decisions, they would achieve their long term objectives. Well, after 15 years of a volatile sideways market, many investors are re-examining their investment process and looking for a more solid foundation for investing that incorporates a more comprehensive understanding of risk management.
The biggest challenge facing most investors is how they incorporate a risk management strategy into their investment process. For most investors defining risk is a very subjective exercise, whether you are looking at fundamental or technical indicators. For many it requires them to predict or forecast overvalued and undervalued scenarios. The problem with this approach is one never knows if they were right until after the fact!
Here we use proprietary programs that define risk by analyzing the price movement of an investment “relative” to the price movements of other investments. This gives us an objective approach to understanding risk that also aligns itself with how the markets actually operate. Markets operate based upon “money flows” from one area of the market to another. It is these “money flows” that are constantly changing the risk profile of every investment, sector, market and asset class. Aligning ourselves with the changing risk dynamics of any investment is how we identify periods of increasing or decreasing risk.
The programs we use are a powerful tool which prevent us from having to subjectively predict or forecast overvalued or undervalued scenarios but rather enables us to effectively align ourselves with the collective opinion of all market participants at any given time.
Moreover, depending on your unique circumstances and investment objectives: he is able to offer “accredited investors” a range of alternative, non-traditional investments that have historically provided superior returns in comparison to their indexes. I.E. Market Neutral and Absolute return strategies.
These strategies are focused on absolute returns with emphasis on capital preservation, long-term capital growth and downside protection through the use of long/short strategies and tactical changes to enhance returns.