Reacting to market volatility could hurt your chances of reaching your long-term investing goals. The trouble is that many people don’t understand stock market volatility and how it impacts their portfolio strategy.
These are typical questions you may be asking yourself. The truth is that there's no easy answer but simply some principles that we can all apply in order to improve our chances of surviving any market environment and maximizing our investment returns.
We believe that this comes down to meaningful diversification in the form of investments or strategies that have low correlations to stock and bonds and/or passive investments and that are not dependent on the stock market or the bond market to rise in order to see a positive return.
The truth is that "Buy-and-Hold" or as we like to call it "Buy-and-Hope" is too simplistic of an investment approach and has little to no risk management as part of its investment process.
In order to create more stable returns it is necessary to add investment strategies that can make a contribution when passive investments struggle. Alternative type strategies have the potential to achieve that through more sophistication and greater levels of risk management in the investment process.