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Goodrich.........yes; but the writer failed to mention that the company is likely being purchased by United Technologies. Not sure what the writer is trying to imply with this particular note.
"...we place a lot of emphasis on downside hedging. Investors certainly want to participate in market upside, but, in our view, avoiding losses may have greater impact over the long term. Our belief is that no matter how strategies may perform in strong markets, if they do a terrible job during down markets, investors lose."
My Question:
What are some of these downside hedging strategies we all want to be aware of? I have to agree that losses have greater impact over the long term so how do you participate in the upside while hedging the downside?
Here is what I try to use as strategies:
I try to take profits (10-20% gains) from my temporary "alpha" investments and place these profits into a Total Return, Income or core Investments (PTTDX, TGMNX, USAIX, PFPFX). Most recently I took profits (20% gain) from a Precious Metal & Mining fund (USAGX) and established a position with these profits in USAIX (an Income fund)
I try to take profits (10-20% gains) from my "alpha" investments and place these profits into other out of favor Alpha Investments. Here, I reference other sector investments and its position in the business cycle. There are always out of favor sectors. Some can stay out of favor for a very long time so this reinvestment can feel like drag on a portfolio but if you bought it at an out of favor price with profits you have minimized the downside risk as well as diversified your portfolio. Patience is required to reward you with this investment over the longer term.
Here, I try to educate myself and then make some educated guesses as to what is a good value...out of favor. This could be a fund strategy or EFT strategy that is out of favor. FAIRX comes to mind as a fund (2 segments Banking & Real Estate) and PKN (nuclear power) comes to mind as a EFT. Right now FAIRX can be purchased at a 32% discount to its recent price. It may have some more downside but may be rewarded handsomely over the long term. Nuclear power can be invested in through PKN which is down 33% since the Japanese disaster. It also will be out of favor for the short term but may also be a big energy source for China and other countries.
Comments
Quote From your link:
interestng article for fix income minded investors
http://advisorperspectives.com/commentaries/pimco_92111.php
"...we place a lot of emphasis on downside hedging. Investors certainly want to participate in market upside, but, in our view, avoiding losses may have greater impact over the long term. Our belief is that no matter how strategies may perform in strong markets, if they do a terrible job during down markets, investors lose."
My Question:
What are some of these downside hedging strategies we all want to be aware of? I have to agree that losses have greater impact over the long term so how do you participate in the upside while hedging the downside?
Here is what I try to use as strategies:
I try to take profits (10-20% gains) from my temporary "alpha" investments and place these profits into a Total Return, Income or core Investments (PTTDX, TGMNX, USAIX, PFPFX). Most recently I took profits (20% gain) from a Precious Metal & Mining fund (USAGX) and established a position with these profits in USAIX (an Income fund)
I try to take profits (10-20% gains) from my "alpha" investments and place these profits into other out of favor Alpha Investments. Here, I reference other sector investments and its position in the business cycle. There are always out of favor sectors. Some can stay out of favor for a very long time so this reinvestment can feel like drag on a portfolio but if you bought it at an out of favor price with profits you have minimized the downside risk as well as diversified your portfolio. Patience is required to reward you with this investment over the longer term.
Here, I try to educate myself and then make some educated guesses as to what is a good value...out of favor. This could be a fund strategy or EFT strategy that is out of favor. FAIRX comes to mind as a fund (2 segments Banking & Real Estate) and PKN (nuclear power) comes to mind as a EFT. Right now FAIRX can be purchased at a 32% discount to its recent price. It may have some more downside but may be rewarded handsomely over the long term. Nuclear power can be invested in through PKN which is down 33% since the Japanese disaster. It also will be out of favor for the short term but may also be a big energy source for China and other countries.
What are you downside strategies?
bee