The Case For Active Management

We believe our competition, with some exceptions, have become quite lazy with the asset management process.  Indexing, passive investing, robo advisors have been quite popular over the years and understandably so.  With the stock market on one of the longest winning stretches in history, and just a few bumps along the way, it has been easy to throw a passive allocation together and just “be the market.”  I ask you, “Is this truly what you are paying your investment advisor to do?”  More importantly, what happens to that passive allocation strategy when the next downturn is upon us?

BlackRock Asset Class Quilt.pdf

When looking at this quilt, one can see the boxes titled "diversified portfolio" (div portfolio in this asset quilt) and one could say, “Well, if I just stay diversified everything will be fine in the long run, because one cannot time the market, blah, blah, blah.”  My response to this is, “I completely disagree with the notion that markets cannot be timed.  Tops and bottoms are processes, not points in time.”  Besides, all that diversification still lost an investor -22.8% in 2008.

I’m also getting away from the jest of this message and that is, why put a bunch of amateurs on the field <underperforming asset classes> when we are trying to win a championship? Please see previous blog - https://griswoldcapital.net/blog/gcs-asset-management-process-explained-through-baseball-analogy Why own commodities and gold during 2013-2015 when they massively underperformed?  Why own emerging markets when the U.S. dollar is trending higher? Why own long dated bonds when rates are going higher?  Why wouldn’t one own micro-cap and small-cap companies when the U.S. dollar is strong and rates are going higher?  You get the idea.

I implore you to talk to your significant other, children, etc.  Can your future retirement, college funding, philanthropic endeavors….your legacy, be left to a simple, passive allocation strategy? Let us not forget what happened a decade ago (see 2008 above in asset quilt.)  Bear in mind, unless you are a pension fund, endowment, etc. with a multi-decade time horizon, you may not have the time necessary to have your portfolio recover.

"Those who cannot remember the past are condemned to repeat it." – George Santayana

Please feel free to contact me for a complimentary risk evaluation at:  (805) 603-2992 or by email: richard@griswoldcapital.net

Securities offered through Regulus Advisors, LLC. Member FINRA/SIPC. Investment advisory services offered through Regal Investment Advisors, LLC, an SEC Registered Investment Advisor. Regulus Advisors and Regal Investment Advisors are affiliated entities. Griswold Capital Strategies is independent of Regulus Advisors and Regal Investment Advisors..  There are certain additional risks associated when investing in securities through our investment management portfolio strategies. Diversification and asset allocation strategies do not assure profit or protect against loss. Investing in securities (including the strategies advertised herein) involves risk of loss. Further, depending on the different types of investments there may be varying degrees of risk. Clients and prospective clients should be prepared to bear investment loss including loss of original principal. Because of the inherent risk of loss associated with investing, we are unable to represent, guarantee, or even imply that our services and methods of analysis can or will predict future results, successfully identify market tops or bottoms, or insulate you from losses due to market corrections or declines.