Rule #1 Don’t lose money. Rule #2, Don’t forget rule #1.
- Warren Buffett, CEO, Berkshire Hathaway
At Global Macro, our overriding concern and the primary risk we are concerned with is not reaching your financial goals.
Your tailored portfolio design begins with an in-depth analysis of your investments, how they match with current and future needs, along with your understanding and definition of risk. We compare those results to our assessment of the world’s financial markets with our proprietary global investment risk model - GMAP®.
GMAP® combines rigorous analysis of forward-looking economic/fundamental data along with technical analysis of the world’s financial markets. Both Economic and Technical factors must agree before any investment decision, whether an individual stock, bond, mutual fund, ETF, annuity, or CD. Our investment process utilizes the latest advances in investment theory and technology, is rules-based, and draws on the expertise of the brightest and most respected economists and analysts in the world.
What Makes us Different
Most Financial Advisors/Planners or Robo Advisors today, recommend a “passive” investment strategy.
The Oxford Dictionary definition of “passive”:
pas·sive
/ˈpasiv/
adjective
1.accepting or allowing what happens or what others do, without active response or resistance.
"the women were portrayed as passive victims
Origin
Late Middle English (in passive (sense 2 of the adjective), also in the sense ‘(exposed to) suffering, acted on by an external agency’): from Latin passivus, from pass- ‘suffered’, from the verb pati.
Passive investing is usually described as a “buy and hold” or long-term strategy. After the initial consultation, the Advisor will recommend a diversified portfolio of low-cost ETFs that will be tax-managed and rebalanced regularly. “Rebalanced” means if in the original asset allocation 60% of your funds are allotted to equity and 40% to bond ETFs and due to market fluctuation at the rebalancing period, (typically end of the month/quarter/or year), the portfolio became 62% equity and 38% bonds the advisor would buy and sell appropriately to bring the portfolio back to the original 60%/40% allocation. The client is told that markets will fluctuate, and not to worry, focus on the long term. In the long run it will work out.
Our Response:
Yes, diversification, if done correctly, can reduce volatility. Keeping costs low and tax management are good things and approaching the investing process with a long-term mindset is helpful.
Unfortunately, unlike the static “passive” portfolio, markets themselves are not “passive.” Markets can and will move dramatically both in the short and long term, affected by economic, interest rate, and inflation shocks, and … the moves can be long-lasting.
Severe market downturns are especially critical for those who are retired or about to retire. A down market for an extended period in early retirement can be devastating to an investor’s hoped for lifestyle and legacy.
Like the passive portfolios, Global Macro’s are also low cost, tax-managed, and diversified. However, we go a step further and employ prudent active reallocation of assets. We reduce market exposure to expected underperforming assets and countries during unfavorable economic conditions and increase investment in those markets most likely to outperform in a positive environment. Our adaptive GMAP®model attempts to limit volatility and the potential large drawdowns a “passive” portfolio guarantees.
Just as our lives are everchanging and dynamic, so are the markets. They are not static. Why should your portfolio be?
To learn more about our investment philosophy and our flagship strategies - Global Multi-Asset Portfolio GMAP® and our fixed income strategy - Global Absolute Return Debt Strategy GARDS®, click here.