Shadowridge distinguishes itself from many investment advisors you will encounter by our risk-managed, tactical approach to investing. We do not believe in passive, buy-and-hold portfolios. We believe bear markets are an inevitable result of combining human nature and financial markets, and they can hurt much more than many investors realize. If your portfolio loses 50% to a bear market, it doesn’t take a 50% gain to recover, it takes a 100% gain and several years to get back to your earlier net worth. A single bear market can erase years of saving. Recovering to prior portfolio values can take longer, during which the investor is missing opportunities to achieve real growth.
When a bear market heads our way, we want the ability to climb the nearest tree and get out of its way. Then, with our clients’ capital intact, we have the opportunity to make money while others are focused on digging their way out of a loss position. Minimizing losses also makes it much easier for our clients to take a long-term approach to investing, which we believe is one of the most important elements of building wealth.
1. Know the Market
There is nothing random or efficient about today’s financial markets. There are periods of increased risk and periods of exuberance; there are uptrends and downtrends; there are historical patterns of good and bad times to be invested.
At Shadowridge, we are students of the financial markets, continually monitoring, analyzing and adapting to where the market is today.
The strategies designed by Shadowridge are best blended in the investment portfolio to meet the individual’s risk parameters and investment goals. No one strategy will be right 100% of the time nor will one strategy fit everyone. By combining strategies which complement each other and adjusting those strategies for risk tolerance, portfolios are customized for each investor.
Each Shadowridge strategy is composed of holdings based on what we believe are areas of the greatest potential or most suited to the strategy objective. By using mutual funds, each of these positions is further diversified* with respect to the individual securities held in the mutual fund.
3. Maximize the opportunity, manage the risk
We believe that taking advantage of opportunities for above market gains and managing risk requires an active investment approach. Shadowridge uses a highly quantitative, momentum-based approach to selecting investments and making decisions on when to hold or replace positions in each strategy. By using technical analysis of market trends, we strive to reduce market noise and remove emotions from the decision process.
“The essence of investment management is the management of risk, not the management of returns.” -Benjamin Graham, “The Dean of Wall Street”
* Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment loss.