Being Poised and Ready to Profit From Unexpected Downturns

Being Poised and Ready to Profit From Unexpected Downturns

”It may be an awkward concept to grasp, but just focusing on an investment strategy or strategies to make money from positive upward market movements over time may not be enough. Even if you diversify those investments across different areas of the markets and over different investment styles, there is a major component of investing reality that is not being proactively addressed - all markets will have guaranteed periods of declines, bear trends, and severe downturns.

What seems to be needed today, due to the increased volatility, uncertainty, and complexity of our modern investment markets, is a purposeful pairing of strategies that are designed to achieve different outcomes - hiring investment managers with core strategies to manage the upside and long term, paired with, a manager you hire whose mandate is to specifically focus on and profit from the daily, short-term market declines and negative trends. These latter downturns happen all the time but are regularly dismissed as something to be tolerated, which is problematic since declines represent risk and they test investors' resolve and ability to capture the long-term compounding effects that investing offers.

To explore this further we reached out to Institute member Eric Dugan, Founder and Chief Investment Officer, of 3D Capital Management - an investment management firm that positions itself exclusively as an active, defensive, equity manager for investors who are seeking a proven solution to stock market declines. We asked questions to better understand their different perspective on managing equity risk and to have them illustrate how they apply their unique, problem-solving investment strategy. - Bill Hortz.”

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If you manage risk in your clients' portfolios and have nothing that specifically seeks to profit from stock market declines, we'd love to speak with you. Please get in touch with us.

The stock market will move up and down forever; being prepared for both outcomes is necessary.