What You Need to Know about Investing in the Market of Coronavirus: Delta Variant Edition
In 2020 coronavirus hit the stock market hard, causing the fear of a recession or financial crisis similar to what we had seen in 2008. Who would've guessed by 2021 after an economic recovery, we would have the same concerns due to the resurgence of the Delta variant. In the 2008 financial crisis, many investors are suffered from the dramatic downturn of the market. This especially hurt those without financial advisors to provide active management, cushioning high losses in the downturn.
Here are 5 questions you should be asking yourself about your portfolio in the market of coronavirus.
1. Is Your Portfolio Diversified?
Your assets should be distributed across many different classes and categories in order to minimize the overall losses your portfolio could take in the market. Safe and stable investment do well in downturns. People selling their stocks at the bottom will cling to these types of investments, making them more valuable for those already holding these assets.
2. Do You Own Bonds?
You should also have exposure to both stocks and bonds, these markets preform separately from one another providing lower total losses when one underperforms. In the market of coronavirus, we have seen the stock market fall, while the bond market did well. If you don’t own bonds or you don’t own the right kind of bonds you may be increasing your losses in the event of a downturn.
3. Are You Rebalancing?
Rebalancing your portfolio to match certain sectors that are doing well is imperative to minimizing losses in a downward market. In order to fend off losses, your portfolio should be reweighted to overemphasize sectors that will do well in a downward market and lessen your holdings in the sectors that will get hit with losses. By minimizing the sectors facing loss in your portfolio, you are working towards minimizing your own losses.
4. Are You Actively Trading?
We have all heard the message: when you invest put your money in and don’t check on it for a long time after. The coronavirus market may not be the best time to do that. If you are not actively managing your assets or having someone do that for you, you are most likely missing out on trading opportunities that could decrease your overall losses. Volatility means opportunity, while the stock market may go down it will eventually go back up; That's the time to be looking at how you can buy low to reap the benefits of a post-pandemic market.
5. Does Your Portfolio Sound Like the Media Coverage?
The media has been giving worst case scenario messaging around the coronavirus market. Thus, if you are seeing similarities between the media and your portfolio, your portfolio may not be designed to minimize losses in the ways stated above. Do not panic if this is your situation, instead schedule a call with us so we can talk more about how Camelotta Advisors may be able to help.
If you were unable to answer any of the questions above, we recommend that you speak with an investment advisor who can give you personalized advice based on your financial situation. If you have an investment advisor, we recommend talking to them about each of these questions and sharing your concerns.
Our Methods for Investing:
Camelotta Advisors is committed to putting our clients first and minimizing their losses to maximize their gains. We are a macroeconomic globally focused investment advisor with over 15 years of experience.
We believe public markets are generally efficient and therefore it is best to diversify broadly to hedge against event risk. That said, we do believe in tilting portfolios based on macroeconomic factors capturing aspects of the economic cycle.
On the fixed income side, we establish a target for duration, credit quality and tax exposure. Each fixed income portfolio consists of individual bonds, held to maturity, chosen specifically for each client. We shy away from bond funds because they hinder our clients’ natural advantage of being long term investors that can hold bonds to maturity. This is particularly valuable in times of high market volatility because it enables a more effective rebalancing system.
We implement a systematic set of rebalancing rules for each client. This system places a passive “buy low/sell high” function in each portfolio that enhances returns and codifies smart investing rules that have historically been the bedrock of long-term wealth creation.
We encourage clients to look at the quality of returns and not just absolute returns, and to consider their risk adjusted returns. In this way, our clients’ investment performance is most relevant to their financial plan. We want clients not to ask, “how much return can you get me,” but rather, “can you get me a better than market risk adjusted return?”
When investing, losses are bound to happen, at Camelotta Advisors we focus on designing portfolios for our clients that will minimize losses in down markets, so they fare better than average investors in up markets.
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Camelotta Advisors is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Camelotta Advisors and its representatives are properly licensed or exempt from licensure. This website is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Camelotta Advisors unless a client service agreement is in place.