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Tactical Investment Management Philosophies

Tactical Investment Management Philosophies

1. Control the process

Tactical investment management adjusts portfolios to meet changing market conditions, allowing the investor to remain in control. When applying standard asset allocation, the investor often hopes that the market will conform to his plan, leaving the market in control. It’s not what the investor wants; it’s what the market does.

2. Protect and respect capital

While some fluctuation in value cannot be avoided, guarding against large long-term loss is possible. Growth is important, but it’s also crucial to protect against large long-term loss. A 25% loss requires a 33% gain just to break even.

Tactical investment management respects your capital. It considers moving to cash or a cash equivalent during major bear markets and always strives to protect against large long-term loss.

3. Recognize the major market trends

It is important to be aware of the market trends that are in favor in the market. The goal of tactical investment management is to analyze the underlying patterns and identify the trends behind the current market condition.

4. Move assets upon verification, not prediction

Tactical management makes changes in portfolio allocations only when major market trends dictate, not on hunches or predictions. The technical speculation of typical market timing approaches are not the most conducive to the two goals of tactical management stated previously, to: 1) grow portfolios, and 2) not lose money.

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