A Quantitative Approach to Tactical Asset Allocation

INVESTING IN RISKY ASSETS

“…2008 was a devastating year for buy and hold investors. The classic barometer of stocks, the S&P 500 Index, declined 36.77%. The normal benefits of diversification disappeared as many non-correlated asset classes experienced large declines simultaneously. Commodities, REITs, and foreign stock indices all suffered losses over 35%.

“..The unfortunate mathematics of a 75% decline require an investor to realize a 300% gain just to get back to even – the equivalent of compounding at 10% for 15 years…” Mebane Faber

While many global asset classes in the twentieth century produced spectacular gains in wealth for individuals who bought and held those assets for generation-long holding periods,1 most common asset classes experienced regular and painful drawdowns.2 All of the G-7 countries experienced at least one period where stocks lost 75% of their value. The unfortunate mathematics of a 75% decline require an investor to realize a 300% gain just to get back to even – the equivalent of compounding at 10% for 15 years…”

Continue reading Mebane T. Faber’s paper here: A Quantitative Approach to Tactical Asset Allocation

At SQR, we provide tactical models, for Investment Professionals (IP’s), that can be implemented for up to 95% less than traditional outsourced channels. Our mission is to provide solutions which address the primary struggles of portfolio management – position, profit, and preservation of capital.

We take a quantitative approach to selecting markets, constructing models and managing risk. SQR’s models are index focused, systematically driven and rooted in a trend following philosophy –  adapting to market risks and trends.

Our goal is to eliminate opinion, bias, and emotion from the investment process –  to deliver returns which, over cycles, consistently beat the market. Each model is designed for growth of capital in bull markets and preservation of capital in bear markets.

Contact us today to learn more.

Andrew –

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