2011 lows in the S&P 500 were hit only 5 days ago, but with the market (despite being down today) up 5% from that point, the collective sigh of relief out of investors is nearly audible. However, with Europe’s Great White Hope (also known as Angela Merkel) creating uncertainty over the extent of losses to be accrued as the continent unravels, and the U.S. struggling over a potential jobs bill with thousands in protest chanting in the background, there is no guarantee this bounce will stay around in the coming month… or week… or 15 minutes.
In other words, if this bounce has helped you, now may be the time to consider ways to try and protect your capital in case it’s a short-lived burst and we head back down to new lows. Do not be that person who looks back and says, “If only I’d diversified when…” We actually gave this advice earlier this year– back in March before things started coming unhinged.
We’re here to recommend you not be the average investor who looks back after a sell off and says, “I shoulda/coulda/woulda diversified before this mess.”It’s like buying insurance for your cell phone. It doesn’t seem necessary when you first buy it… until your new phone gets dropped into a puddle and you’re paying for replacement out of pocket. You’ll probably buy the insurance the second time around, but how nice would it have been had you just purchased it before?
That being said, diversification isn’t going to protect you from everything. There’s no guarantee of profits in managed futures or any other investment out there (unless you’re buying a scam, that is). In an uncharted economic climate especially, past performance is not necessarily indicative of future results. However, from what we’ve seen, the investors that have been most successful in the past are the ones who diversified when everyone else was out designing rally caps.
It is not often in life that we get a second chance, or a third, or a fourth. So if you were one of the people wishing you had diversified during the ’08 market crash, or after the current nonsense hit in August – now may be a time to consider doing it for real this time – just in case it’s worse than before.
The performance data displayed herein is compiled from various sources, including BarclayHedge, RCM's own estimates of performance based on account managed by advisors on its books, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.
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