We're aware of the dynamic nature of today's market, so we're reaching out to discuss how we are implementing a proactive strategy centered on agility. This involves refining positions to adapt quickly to evolving conditions.
We've been diligently discussing the market's current climate and the potential scenarios ahead. As you know, we don't predict the future, but we do focus on quickly adapting to what's happening based on preparation, VEST analysis, and scenario discussions. We are proceeding cautiously, adjusting our strategy as needed.
Currently, we're prioritizing companies with strong cash flow and the ability to gain market share during challenging times. We're utilizing hedges to protect the portfolio's value during potential downturns. (Hedge: A hedge is designed to gain value when another investment loses value, providing balance)
We're implementing steps 5 through 7 of our strategy: consolidating holdings and upgrading the core portfolio. This means streamlining our investments and focusing only on top-tier companies. We're actively trimming and selling anything that doesn’t meet our highest standard.
Here's a reminder of our tactical market cycle strategy:
Reduce risk: Manage stock and sector exposure, and utilize market buffers. (When our alerts trigger)
Adjust on breaks: Trim/Sell low-conviction holdings as key levels fail.
Exit laggards: Reduce or sell underperforming sector exposure, building cash/fixed holdings.
Cut losing trades: Eliminate or reduce trades that break down.
Consolidate: Streamline holdings, and reduce investment count.
Research: Continuously seek opportunities, uncorrelated drivers, and high-conviction investments.
Upgrade portfolio: Capitalize on dips with high-conviction, quality buys.
Observe & wait: Patiently watch for oversold signals, noting valuation, environment, sentiment, and technical shifts (VEST).
Reallocate: Strategically implement client-specific risk/reward as the market turns.
Shift to growth: Transition some stable holdings to opportunities.
Repeat: Cycle back to risk management.
We’ve built a significant position in cash/bonds, and alternative/hedge investments – around 60% of the portfolio, and growing. We see a compelling opportunity in bonds, with yields at multi-year highs. Should the economy slow down, we anticipate bond values to appreciate or continue to be ranged.
Our goal is to maintain a balanced approach. We're currently experiencing minimal losses on down days and capturing some gains on up days, prioritizing capital preservation. We aim to reach a point where our portfolio is neutral or positive on down days, further enhanced by dividends and bond interest.
Agility is key. We're prepared to capitalize on opportunities as the market stabilizes. We have the resources and flexibility to adapt and position the portfolio for the future.
Financial agility is defined by proactive work: preparing before uncertainty, and ultimately, thriving after it. This is the basis of our firm. We are poised to face any challenge, using our expertise to navigate and create long-term opportunities.
We understand these times are uncertain, but we're confident in our approach. We're here to navigate these market conditions with you, and we believe this tactical approach will position your assets for long-term success.
One last note: You made the prudent decision to hire us for 1. Planning, being prepared prior, and 2. Agile management during volatile times, so that you can continue living, turn off the news (limit) and enjoy the things that make you happy and healthy. Be assured, this is all we focus on, rather than worrying about a calendar full of marketing events or new product demos, we are over here working on our craft, in your best interest.
We're here to discuss any further questions or additional modifications that need to be made on your behalf so please do not hesitate to reach out.
Thanks for reading The Agile Investor and remember folks this is not investment advice. If you want to learn more reach out about our process. Subscribe for free to receive new posts and support my work.
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