Don't Be DiCaprio: Don't Suffer The Stock Market's Bear Mauling

Don’t Be DiCaprio: Don’t Suffer The Stock Market’s Bear Mauling

Investors and their financial advisors are wrought with anxiety as the markets continue to correct. As the manager of several strategies that employ a built-in defense mechanism against deep market sell offs, our nerves are perhaps slightly steadier than most. Our rules-based investment approach was developed with market volatility and behavioral biases in mind – when markets exhibit a multi-month downturn, exposures are hedged; when markets rally over multiple months, our strategies maintain their long-only exposure.

As our hedge rule is designed, when the S&P 500 closes below its 200-day average, our strategies short an ETF that tracks the S&P 500 index (SPY) to avoid long-term exposure to what could...