At TFA, we believe the very same approach should be applied to one’s investing portfolio. Instead of just sitting there and “taking it” during severe “bear market” cycles, TFA employs risk management strategies across the board.
The Least Loss Principle
It is important to understand that no investor is immune to declines in their account values during severe bear market environments. However, unlike the blindly implemented “buy and hope” approach, TFA strives to limit the degree of pain that the grizzliest of bears inflict on portfolios.
Let’s take a moment to be clear on this concept. Should you expect a tactical manager to sell all positions at market tops and buy at the bottoms of every market cycle? Of course not, TFA believes such an effort is a fool’s errand.
Next, it is important to understand that TFA’s managers are unlikely to avoid the entirety of bear market declines.
The overall objective is to lose the least amount possible when the bears come to call at the corner of Broad and Wall.