From the desk of Willie Delwiche.
- Adaptive exposure can stay in harmony with market environment
- Risk tolerances are dynamic, moving with the market
- Indicators & investors operate across multiple timeframes
The word perspective has multiple definitions. The dictionary we have at our house lists eight. For me, the most relevant of those have to do with seeing the interrelationships of relevant facts and ideas as well as those that deal with distant time frames & horizons.
When it comes to investing, keeping perspective is the difference between success and failure. A successful approach to portfolio management can be built on a sturdy three-legged stool of perspective focusing on:
- Market Environment
- Investor Risk Tolerance
- Portfolio Time Horizon
We need to keep in mind how we are making sense of incoming information, how our preferences are changing in light of that information, and how far out in the future we are looking when it comes to how we are positioning our portfolios. When we lose track of any of these, the stool topples and the noise of the market can crescendo to a deafening din. This seems especially to be the case in the current environment, which offers many compelling arguments that reach starkly different conclusions.