When evaluating the performance of a manager, it is easy to get caught in the trap of judging them on their average annual return over a 3-, 5-, or 10-year period. It seems intuitive that we would want to hire the manager with the highest average annual return, right? It turns out, that is not always the best way to evaluate potential investments. We also need to consider the volatility of that return set.
Volatility has returned and if it seems like a jarring wake up; blame it perhaps on a market that lulled investors into a deep sleep.
By nearly any measure, stocks enjoyed one of their most tranquil periods in history between 2013 and 2017. A byproduct of the lullaby market is that many investors came out of it groggy and have been slow to react to the more normalized volatility regime that emerged last year. The good news: there’s still time to respond.
Toller has been helping advisors implement financial products and strategies into their portfolios for a decade and has earned his CIMA professional qualification, administered by the Chartered Institute of Management Accountants.
The views expressed are those of the author at the time created. These views are subject to change at any time based on market and other conditions, and 361 Capital disclaims any responsibility to update such views. No forecasts can be guaranteed. These views may not be relied upon as investment advice or as an indication of trading intent on behalf of any 361 Capital portfolio.
This 361 Capital blog is not intended to provide investment advice. This blog should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security by 361 Capital or any third-party. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your legal or tax professional regarding your specific situation.
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Toller has been helping advisors implement financial products and strategies into their portfolios for a decade and has earned his CIMA professional qualification, administered by the Chartered Institute of Management Accountants.