Do you manage portfolio downside or is returns the only objective?
Greetings from MoneyWorks4me.com
2017 saw an unusual bull run in equities. Economy was not firing still the stocks were hitting new highs. On one hand, investors who lost money in 2016 market fall got a chance to recover their losses while investors who entered the market post demonetization experienced stellar returns in 2017. Within that, mid and small cap companies were doing exceptional.
Hold on. What has changed now? Has the situation by mid-2019 changed drastically from 2017. Let us have a look.
Cash in Hand
Almost invested fully
*assuming equal weight portfolio
If you look at the table above, you can see that it even though Investors earned fabulous returns in 2017 as they do in any bull market period, they fail to retain those profits in da own market or volatile market. If you fail to manage the downside, it makes a huge negative impact on your overall long term returns. The main reason for this is “Ignorance.”
Business Risk: Avoid low quality business in every market environment
Asset Allocation: How much to allocate to equity given current valuation
Valuation Risk: Holding overvalued stocks as they keep going higher
Market Cap risk: Very high exposure to small and mid-cap companies for quick buck
Concentration Risk: Discipline to rebalance portfolio like professionals.
How Omega portfolio is different than Average Investors now?
At MoneyWorks4me, Our Omega portfolio is:-
Invested almost 60-70% investible corpus in equity both in Direct Stocks and Mutual Fund. Operating Principle: Diversify across fund manager.
Maintaining 30-40% in Liquid which is available to increase in equity if market turns negative and more opportunities to average or buy new equities. Operating Principle: Diversify across asset class.
Mutual funds we hold are well diversified in terms of process too which ensures stead performance in bull, bear and volatile markets. Operating Principle: Diversify across process.
Equity portfolio we hold has highest possible upside versus the market. This ensures reasonable absolute returns over longer timeframe. Operating Principle: Focus on absolute return rather than near term bounce (short term bounce happen in overvalued or low quality stocks).
Some of our Omega customers were disappointed in 2017-18 because it delivered substantially lower returns than the ‘market’. However over a longer period Omega returns were much higher because we are able to manage the downside when markets correct and also deploy the cash held to buy at lower price. This has place the portfolio in a strong position to deliver even better results going forward.
We wanted to draw your attention to this and convince you that your decision to go with Omega was right. However, you need to stay with the process longer to reap the full benefits.
Exclusive review of your portfolio at no cost: - You being our subscriber in the past, we are happy to share our views on your current portfolio. If your current portfolio is updated on your MoneyWorks4me.com, just reply to this email and confirm it. We will study the same and let you know.
If it is not updated, share the same with us. We would like to review the same and help you.