What the Magnificent Seven Tell Us About Risk Management
February 14, 2024
Volatility is ‘Enemy Number One’
February 20, 2024When investing, the simple fact is that if you get the risk right, you’ll get the returns right.
That’s because volatility determines every move that investors make.
In a bull market, everyone wants to be in stocks to capture the most upside. But, when equities slows down, the opposite happens. The knee jerk reaction is always to run to the safety of bonds or even cash to preserve the portfolio.
Unfortunately that belief ensures that an investor is buying at the most expensive prices and selling when prices are at their lowest. It’s a formula for disappointing returns.
The real answer to the Volatility Gap(™) is a portfolio that is:
- Strongly correlated to the markets during periods of growth
- Has a reduced or even inverse correlation during periods of rising volatility or market stress
That way, the risk calculation is taken out of the day to day.
As an investor, you’re covered in bear markets but not missing out when the bull comes roaring back.
That simple fact underscores what we do at Anchor. For more than 20 years, we’ve focused exclusively on our proprietary, research-based approach to modern risk management, offering volatility managed mutual funds that fit within the current allocation of almost every portfolio.