12 Ways to Protect Your Portfolio from Losses

Here’s some investment alternatives to help you sleep at night

By MunKNEE.com

We are currently seven years into a 200% stock market recovery that began in 2009 – one of the longest recoveries on record – so it’s natural to wonder how much further this bull can run. Additionally, we face unprecedented geopolitical and fiscal risks. In other words, most of us are justifiably concerned, but we don’t want to miss out on future potential gains….

Timing is everything…[and] it’s not too late for you…[to implement one or more of the following 12] alternatives for protecting your portfolio… Here are a dozen choices.

  1. Become a student of Dr. Downside

Dr. Frank Sortino is the father of Post-Modern Portfolio Theory (PMPT) that redefines risk as the probability of failing to achieve an objective rather than the volatility measure used in Modern Portfolio Theory (MPT). So called “Absolute Return” strategies are an outgrowth of Dr. Sortino’s work. Dr. Sortino has written two books on managing downside risk.

  1. Buy insurance

Buy puts or other derivatives. The challenge is to buy before the correction, because the cost of insurance increases with risk, as it should.

  1. Time the markets

Timing is very challenging, but a few providers have successful track records. Can they do it again? Most do not get it right twice in a row, namely getting out before the correction and then back in when the recovery starts. Look for the best crystal balls.

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