If we have learned anything from the past two years it is this: you can’t count on anything. The changes in our world have shown us that none of us has a crystal ball, but there are ways to prepare for or even anticipate a shift in the marketplace. How we react to change is different for us all and now, as the world decides to surprise us again, we have choices to make.
When we know a storm is approaching, we look for ways to feel secure. We prepare. Knowing the unpredictable nature of a storm helps us to make preparations for multiple situations. We look to the horizon and try to predict the path of the storm knowing deep down we have no guarantees of its path. We can guess or we can look for signs, such as wind direction or barometer readings. After all, we can see it with our own eyes, it is sure to come.
Volatility is both a friend and a foe, but as it is sure to make a comeback, some steps must be made to stay ahead of the storm:
Security comes in all forms. We lock our cars, we alarm our homes, and we do our best to manage our risk. Having an idea of how to protect ourselves gives us peace of mind. When do we decide that it is time to protect our investments? Is it when the seas are calm, with a blue-bird sky? Or is it when the wind picks up, and the clouds roll in?
Never before, has it been so important to go into a mode of protection. Our world is giving us signs.
Currently, the financial landscape is showing us a few things. We anticipated greater stock market volatility, due to inflation, a Fed tightening cycle, and potential geopolitical friction. (Check out our commentary here) There are many factors to consider, but one data point to keep an eye on is the Golden Dragon China Index (HXC):
It very well could be the next storm to blow in. This index is displaying the extreme capital flight from China, and may point to a possible future geopolitical storm with Taiwan, and it serves as an important reminder to prepare for what might come with it.
Risk Management is more than changing a few positions. It is protecting what has been earned from a steep and treacherous drop. It provides a safe harbor, because the preparations ensure less clean up after a storm. The recovery will be quicker. It is the difference between preparing or reacting. Knowing there is a plan in place to address risk gives us peace of mind, helping us to avoid costly emotionally-driven decisions when volatility strikes. It’s what we do at VGA, we prepare, and we protect assets during the storm, but as the clouds clear and the waters recede we help to rebuild. It is a comfort to know that risk can be cushioned, gains can be captured, and storms can be predicted with the right team in place.
Are you prepared for the storm? Learn more here.
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. Contact us to learn more.
