"Gradually, then suddenly." penned Ernest Hemingway in The Sun Also Rises. That is how many things happen in life. Humans often fail to act despite warning signs until circumstances force a reaction. Reading the signs along the way and adjusting strategy to accommodate are hallmarks of excellent foresight and planning.
This is also true of long-term investment decisions and managing risk. An investment risk management strategy is critical to hedging losses, leveraging gains, responding to market movement, and achieving financial goals.
When it comes to investing, failure to plan is planning to fail. More importantly, failure to recognize the shifts and trends in market conditions along the way can result in losses.
Markets will inevitably rise and fall. Therefore, it is essential to have the right strategy in place to leverage gains when the market is up and protect against loss when it is down. This requires careful attention to shifting market conditions. When losses occur, we often realize that the outcome was predictable had we paid attention to the signs along the way.
Unfortunately, many investors miss or ignore the warning signs. It is not until significant shifts occur - when we spot the risks - that we are most motivated to act. This is what separates conservative investors from their daredevil counterparts. Conservative investors understand that protection from down markets comes with a certain degree of upside sacrifice. Yet, steadier returns over time are the result of responsive, conservative strategies.
Sudden market movements are quite noticeable. But the micro-movements along the way are what should demand our attention. When we pay attention to the details and take emotion out of the equation, we can react based on observation and data and adjust accordingly.
What if there is a fire? What if there is an accident? What if I get sick? Those are questions that occupy the minds of all careful planners. There is a reason we buy insurance for our homes, health, and life. It provides protection and gives us peace of mind, knowing there is a plan in place for the “what-ifs.”
Long-term planning is key.
Vineyard Global Advisors believes in focusing on our client's goals, knowing that a certain degree of risk comes hand in hand with opportunity. Without it, an investment portfolio would have little potential for growth. Conversely, poor risk management can keep you from reaching your goals.
Risk management is how we pay attention to the 'gradually's' and put a plan in place for times of uncertainty and fluctuating market conditions. Having a partner can help to protect you from the emotional rollercoaster of a volatile marketplace and provide peace of mind.
VGA (Vineyard Global Advisors) employs a dynamic risk management process that adapts to what the current environment requires - seeking to protect and position as markets move.
There is an argument that we should pay more attention to performance rather than sticking to a particular investment philosophy. But having a specific strategy serves many investors well, especially when encountering market extremes. Philosophy, we are told, should be strictly followed and never abandoned, especially in times of volatility.
Adaptability is where the difference lies, and a flexible strategy can shift when conditions require change. Of course, money is made and lost in the extremes, but the essential priority is the protection of gains through smart investment strategies.
Hindsight always offers the clearest view. It is easy to recognize the things we failed to notice along the way while looking back in the rear-view mirror. Instead, we should strive for forward-thinking awareness. Paying attention to the gradual shifts and having an action plan in place to manage market risk will help to achieve steadier gains over the long haul.
Sunday driving can be pleasant and quiet. But sometimes, it is best to let someone else who knows the route better take the wheel. At the very least, find a co-pilot to help map the route to get you safely to your desired destination.
To find a co-pilot for your investment journey or to discover all the ways Vineyard Global Advisors empowers clients with investment solutions and unparalleled advice, check out our firm presentation here.
What this means for our investors is less of a decline or “drawdown” in their accounts to recover from once the bear market runs its course, which will pay big rewards over time. It also means a smoother and less emotional ride on the way toward achieving their financial goals.
VGA Investment Team
Vineyard Global Advisors offers a range of investment strategies designed to allow participation in the market's growth within a dynamic, risk-managed framework that seeks to offer protection during significant market declines. Our goal is to give our clients greater peace of mind by generating steadier returns over time.
Learn more about Vineyard Global Advisors’ investment strategies or discuss themes in this post, 
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Investment advisory services are offered through Integrated Advisors Network, LLC (“Integrated), a registered investment advisor. Vineyard Global Advisors is a DBA of Integrated.
