Risk Management

Stonebrook Capital Management believes that effective risk management in investment portfolios is essential to successful investing. The past decade has taught the world that “buy and hold” strategies are not suitable for many investors. Using both fundamental and technical research we allocate portfolios into the major asset classes: stocks, bonds, cash, and real assets (i.e. gold, real estate, timber, etc.). Studies have shown that this allocation decision has a greater impact on portfolio returns than individual security selection. With a proactive approach we adjust the allocation and use defensive tactics when market trends and valuations are unfavorable. These tactics include reducing overall stock exposure, raising cash & bond holdings, and limiting the loss potential on individual holdings by clearly identifying exit strategies. Our experience suggests that by switching from “wealth accumulation mode” to “wealth preservation mode” when market trends and valuation are unfavorable investors may experience lower volatility, less risk of loss, and ultimately improved results.