Successful investing is not just about what you make when markets rise. It’s about what you keep when markets decline.
By far, your best risk-control mechanism is proper portfolio selection – choosing the diversified portfolio that is right for you. That is precisely why we maintain 16 carefully risk-adjusted ETF portfolios, and why portfolio selection based on your needs will be a major focus during your Investment Suitability Interview with Keith – and thereafter should your personal circumstances change.
In addition to this most-important risk-control mechanism – portfolio selection – exclusively at DCM we will also go completely or partially to cash, or take other defensive actions when circumstances warrant.
Recognizing that each risk-adjusted portfolio has a “normal” historical range of volatility (a single standard deviation), at DCM we may take additional defensive action on your behalf when, in our opinion:
- It is more likely than not that your portfolio will decline outside of a single standard deviation of volatility; AND
- It is more likely than not that your portfolio will not recover to within its historical single-standard-deviation range within 90 days.
Our additional defensive measures may include:
- Taking one or more individual ETFs to cash;
- Taking one or more of the asset classes in your portfolio to cash;
- Moving all clients within one portfolio to a historically-less-volatile portfolio; or
- Going entirely to cash.
But defense is a two-part decision: when to get out and when to get back in. We apply objective, ongoing diagnostics to make that decision.