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.