Crosswind Advisory, the firm’s Investment Management arm, is a Registered Investment Advisor (RIA). It specializes in tailored solutions based on market insights and the ability to act on them. In addition to our insights, the intellectual capital of the firm includes the access we have to top strategists, economists and research.
Current Environment
Slow economic expansion and rapid changes are inevitable in the coming decade. During the past three decades, economic growth was led by consumer spending and fueled by debt. This leveraged growth has proved unsustainable as evidenced by the recent financial crisis. The financial world has fundamentally changed. Today, growth is slower and more erratic, and market changes more unpredictable and extreme.
The S&P index has not experienced much, if any growth over the last 10 years. Because of this and because that during this period, the markets have experienced two periods of high turmoil–the dot-com crash and the global financial crisis, investors are acutely aware that traditional asset class diversification has largely failed them, just when it was most needed. As a result of these experiences, many people question buy-and-hold stock and bond strategies that in the past were nearly universally accepted as the most sensible way to invest.
Solution
Starting from the premise that emotionally driven market timing is not an effective way to navigate volatile markets, it is important to understand the sources of volatility and its impact on portfolio results. Asset classes and global markets are no longer performing according to traditional norms. Therefore, diversification strategies need to become more nimble and opportunistic. While a long-term view of asset allocation remains at the heart of any plan, strategies must also anticipate and act on market swings. And they need to quickly identify market opportunities—and risks—across and within asset classes. A systematic approach to both capture market advances and cushion the portfolio from market declines is applied by using a full range of strategic, tactical and alternative investment solutions.
White Paper Download: “Navigating Volatility by Combining Diverse Investment Approaches”
Asset Allocation Approaches
Consider four distinct approaches to asset allocation, with different strengths for varying markets. For “sailing markets”, where prevailing winds are driving strong bull market returns, we may want to overweight the “Strategic” or “Tactical ConstrainedSM” allocations, since they attempt to capture as much of the strength as possible.
For “rowing” markets where headwinds and choppy waters require more active management, a “Tactical UnconstrainedSM” or “Absolute Return” approach may be more appropriate. Or, since it is not always immediately possible to recognize the transition from one secular market to another, we may incorporate multiple asset allocation approaches at the same time as part of your long term disciplined plan.