Stay The Course, Stay Invested, Stay Disciplined

Conventional advice from our industry, but we want you to form your own opinion on the subjet.

Prepared by: Aaron Soderstrom

Omega Squared Capital Management, LLC

Disclosures

This material is distributed or presented for informational or educational purposes only and should not be considered a recommendation of any particular security, strategy or investment product, or as investing advice of any kind. This material is not provided in a fiduciary capacity, may not be relied upon in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. The content contained herein is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation.

This material contains opinions of the author or speaker, but not necessarily those of Omega Squared Wealth Management or its subsidiaries. The opinions contained herein are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. No part of this material may be reproduced or referred to in any form, without express written permission of Omega Squared Wealth Management.

Registered Representative Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Omega Squared Wealth Management are not affiliated. The information in this presentation is confidential.

Have you ever heard the following:

Time, Not Timing, Is What Matters

Trying to navigate the peaks and valleys of market returns, investors seem to naturally want to jump in at the lows and cash out at the highs. But no one can predict when those will occur. Of course we’d all like to avoid declines. The anxiety that keeps investors on the sidelines may save them that pain, but it may ensure they’ll miss the gain. Historically, each downturn has been followed by an eventual upswing, although there is no guarantee that will always happen. Trying to avoid risk could itself be risky, since it’s impossible to know when to get back in.

Notice

This presentation was last updated on May 28, 2024

It makes sense considering the following information:

Staying Invested, Staying Disciplined, Stay the Course

Part of our job as your wealth advisor is to help you stay true to your investment strategy guidelines and discipline, both for your existing investments and for the cash you plan to invest over time. We don’t want to sell out of the equities you already own during this downturn, only to try to decide when to jump back in so we catch the rebound. On the contrary, we want to stay invested, the only sure-fire way to capture a recovery in prices. What’s more, we will want to prudently and incrementally add more to stock allocations as forward-looking returns look more and more attractive. With this strategy, we hope to catch some of the best prices in this market cycle. The potential higher returns should bolster your financial situation in the years to come.

Buying and holding still makes sense because of the impact of missing just the 10 best performing days of the stock market would do to a portfolio.

But wait...

Consider the idea that you were sold a incomplete narrative.

Allowing you to make a more informed opinion.

Without all the data, “Time, not timing” is a sales gimmick…

  • It is true that fund managers may not want investors to leave their fund when the market gets tough, as a large outflow of assets can have negative consequences for the fund and its managers.

  • Fund managers typically earn fees based on a percentage of assets under management, rather than based on the performance of the fund. So you can see why they are incentivized to keep you invested throughout a recession.

  • It reminds me of the saying, “Never ask a barber if you need a hair cut”. Unless you really like paying for hair cuts.

As an investor, it is important to keep an open mind and consider both sides of the story when evaluating investment strategies or decisions. While the saying “it is time in the market not timing” highlights the importance of staying invested for the long term, it is also true that market volatility can significantly impact investment returns.

Next time an advisors shows you how missing the best days will hurt a portfolio, ask them to show you what would occur if you miss the worst days.

Removing both the best and the worst.

The odds of removing just the best days or just the worst days is highly unlikely.

In order to approach this analysis objectively, we sought to test the same logic using various methods, such as combining approaches or excluding the best and worst days. My belief is that in order to make an informed decision about the validity of market timing, it is important to consider multiple perspectives. While market timing can be challenging for individual investors, it may be a useful strategy when properly vetted by professionals. In fact, we have developed a market timing strategy that has shown promise in identifying and avoiding recessions.

In our view, losses are more important than gains, so having a natural drift to the upside in this test makes sense.

Losses are more important than gains

  • First, large losses can have a disproportionate impact on portfolio returns, requiring even greater gains to recover from the loss. For example, if a portfolio experiences a 50% loss, it would require a 100% gain just to get back to even. This can make it much more difficult to achieve long-term investment goals.

  • Second, the emotional toll of a large loss can be significant, causing investors to panic and sell their investments at the worst possible time. This can lock in losses and prevent investors from participating in potential market recoveries.

  • Third, avoiding large losses can help to preserve capital and reduce the risk of running out of money in retirement. As investors get closer to retirement, the need for income stability and protection of assets becomes more important.

  • Finally, avoiding large losses is important from a risk management perspective. Investing involves risk, and minimizing losses can help to reduce the overall risk of a portfolio.

We are different!

Not your typical financial advisor.

We Are Not

  • Beholden to pie chart investment strategies
  • Advisors who will tell you to ‘stay the course’
  • Always bullish or always bearish; we let the market and economy dictate the appropriate actions
  • Salespeople disguised as asset managers

We Are

  • Truly active portfolio managers and thinkers
  • Committed to deep analysis of financial markets
  • Recognize that market work in cycles
  • Persistent and diligent in our advice and investment management process

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