Risk Management Archives - Page 2 of 2 - Cadence Wealth Management

Nov 13

Ask Cadence: If I haven’t participated in the stock market gains over the last couple of years, will my retirement be negatively affected as a result?

By Cadence WM Blog

Put simply – no, and here’s why. Think about it this way: Stocks at any point in time can be ranked on a scale of one to ten based on how expensive they are. The vast majority of the time, they’ll score somewhere between 3 and 7 where they’re neither cheap nor expensive. This is where one can have a traditional exposure to stocks based on the timeframe of their goals and risk tolerance. If stocks are scored below 3 and considered cheap, one might take a little more “risk” since over time prices stand a much better chance of…

Oct 16

Warnings Can Take Time To Play Out

By Cadence WM Blog

For an activity that is supposedly best done using pure logic, investing can be incredibly emotional. There will inevitably be times that test one’s intestinal fortitude and to expect otherwise is envisioning a path that has never existed in financial markets. But to some extent, investors do get to choose which type of volatility they are willing to accept. Since the price we pay is the primary determinant of future returns (over longer periods of time), if we invest in something that is expensive relative to its historical norm, there’s a very good chance we’ll take losses eventually – in…

Sep 12

Thoughts from the Investment Team – This is Where Mistakes Are Made

By Cadence WM Blog

John Pierpont Morgan was known to have said, “Nothing so undermines your financial judgement as the sight of your neighbor getting rich.” Understanding the bigger picture can help us avoid unrealistic performance extrapolation (both up and down) and stay focused on those things that truly offer the most opportunity for lasting gain. There’s no more important time than now to look forward rather than backward. This year has been particularly dangerous, not because markets have imploded, but because the way they are moving exposes our psychological vulnerabilities as investors. After a strong 2017, U.S. stocks ran up very aggressively in…

Aug 23

It Pays To Understand The Indexes

By Cadence WM Blog

There’s an old business axiom “You Are What You Measure” and when it comes to investing, there is no shortage of things to measure: returns, risk, alpha, beta, tracking error, and so on. Each has its purpose. Measuring investment performance is frequently a two-part process comprised of measuring returns over a designated time period, and then comparing that performance to something. The first part determines your absolute performance, and the second part determines your relative performance; the first part tells you what you did, the second part tells you if it’s good or bad relative to something else. That second…

Aug 10

What’s Up With Gold?

By Cadence WM Blog

The last few weeks have been very unkind to gold investors with the rather choppy upward trend since the beginning of 2016 being called into question with a seemingly day after day drop in price. From a technical standpoint, gold has definitely broken through a couple more recent support levels and is beginning to threaten longer term support. The reason for this drop has been attributed to everything from the stronger dollar to rising rates. There are also those who feel there may be some manipulation at work in the futures markets in an effort to keep gold prices depressed….

May 24

Is There a Bear at the Door?

By Cadence WM Blog

On March 22nd we sent a special edition of our monthly Cadence Clips entitled “Was January 26 the Bull Market Peak?” After that S&P 500 peak of 2,873, the index’s value closed at ~2,581 twice: on February 8th and April 2nd. From top to bottom, that’s around a -10% decline. That special edition went on to discuss the existing conditions, like the unhealthy amount of debt-fueled growth over the past nine years, the small number of large company stocks propping up the indices, and the smaller number of stocks making new highs versus those making new lows, which all point…

May 09

Ask Cadence: If I am not invested in the stock market, am I missing out on these returns forever?

By Cadence WM Blog

Any investor who has not been 100% invested in the stock market since March 9, 2009 has missed out on some amount of stock market returns. However, everyone knows very few people should ever be 100% invested in the stock market. Therefore, we are going to miss out on some amount of returns during any period where the stock market outperforms other investment areas. Whether it’s the U.S. stock market or something else, there will always be an investment that outperforms what we own – this is an important concept for investors to grasp. If the risk of an investment…

Apr 12

Ask Cadence: Where are the safe places to invest if I’m nervous about the stock market?

By Cadence WM Blog

As a reminder, there are no completely safe places to invest, as nearly all investments have the potential to lose value at times, but there are almost always some investments that are relatively safer than others. The first step in the process is to identify those places that are most expensive and therefore present the most risk of loss over longer holding periods. Currently those are the world’s stock markets, particularly the US stock market. The next step is to identify those places that offer more value from a risk/reward standpoint and that have a better chance of holding their…

Mar 15

Ask Cadence: If the only way to earn a meaningful return on my investment is to take risk, how do I balance the different types of risk within my portfolio?

By Cadence WM Blog

The most important thing to understand when building an investment portfolio is that all investments worth considering can and most likely will lose money at some point. Unfortunately this is just how it works. The key is to make sure that the different components of a portfolio possess risks that are unique and somewhat uncorrelated. This way, we decrease the chance of any one type of risk doing significant damage to our investment nest egg. By keeping this approach in mind, we’re less likely to fall into the trap of chasing returns and building a portfolio with more loss potential than…

Risk Management

Ask Cadence: If I haven’t participated in the stock market gains over the last couple of years, will my retirement be negatively affected as a result?

Warnings Can Take Time To Play Out

Thoughts from the Investment Team – This is Where Mistakes Are Made

It Pays To Understand The Indexes

What’s Up With Gold?

Is There a Bear at the Door?

Ask Cadence: If I am not invested in the stock market, am I missing out on these returns forever?

Ask Cadence: Where are the safe places to invest if I’m nervous about the stock market?

Ask Cadence: If the only way to earn a meaningful return on my investment is to take risk, how do I balance the different types of risk within my portfolio?

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