Tactical Investment Strategy
In high-risk markets, a tactical investment strategy attempts to protect capital by reducing equity exposure and investing in cash and cash equivalents.
Why Tactical Investing?
A Bear Market can have a deep impact on a portfolio. As losses grow, the return needed to break even compounds at an even faster rate. If you invested in the S&P 500 during the Financial Crisis Bear Market, you would have suffered losses of over 50%, which means you would need a 100% return in order to break even. Thus, a Tactical Portfolio aims to be lightly invested during Bear Markets.
On the other hand, a Tactical Portfolio aims to be invested in equities for significant price appreciation when risks have subsided.
If you suffered losses of over
you would need a
return in order to break even
Implementing a Tactical Approach
Our research team daily evaluates numerous technical, fundamental, and sentiment indicators to determine risk vs. reward within the market. Through this evaluation, we seek to reduce exposure prior to high-risk periods, such as the 2000-2002 Tech-Bubble and the 2008 Financial Crisis, while growing capital during low-risk markets.
Through the use of technical and fundamental research, we aim to identify investments that we believe have the most potential for growth within our clients’ portfolios.
Typical Market Cycle
Our Tactical Investment Strategies
Premier Wealth Tactical Core’s percentage invested in the stock market may vary substantially depending on Management’s judgment of the prevailing risks in the market.
When Management believe risks are low, it may increase equity exposure to take advantage of growth opportunities. When Management believe risks are high, all or a portion of the equity exposure may be moved to more stable short-term fixed income instruments and/or cash equivalents to protect capital.
In sum, Premier Wealth Tactical Core aims to protect your assets against the devastating impact of a Bear Market.
*Mutual funds may be purchased within this strategy if it is considered to be in the best interest of the client due to account size or to acquire money market alternatives.
The strategy combines a group of stocks and exchange-traded funds (ETFs) from the entire universe of domestically traded investments. If the indicators dictate that risks are such that accounts can be fully invested, the strategy first looks to find individual stocks to purchase. If the strategy’s indicators do not identify enough stocks to purchase to be invested to the percentage level it is suggesting, then ETFs may be utilized to do so. Similarly, as the strategy identifies risks and a determination is made to decrease exposure to the equity market, individual stocks and ETFs may be sold.
While at times cash and cash equivalents may be utilized for a portion of the account with the goal of protecting capital, a portion of the equities typically found in the S&P 500 universe will typically stay invested at all times. Securities may be sold if they are not technically performing, potentially with the use of a trailing stop-loss.