At the time of this submission, and if you’re like me and are tuned into the March Madness basketball tournament, you’ve seen your hopes and dreams of creating the winning bracket utterly shattered. I thought I had the winning strategy this year, evaluating the teams by way of recent wins, free throw percentages, difficulty of schedule, bench points, and so on. I was busily employing logical data points based on reason, not emotion. Fair to think it would work, right? Well, my nine-year-old currently has more correct picks than I do, and she’s absolutely relishing the thought of knowing more than her daddy (wouldn’t be the first time).

Picking winning teams can be very similar to picking winning investments. The difference being, there’s no real end to the tournament of investing and usually the stakes are much higher from an individual perspective. Many times, a complex conversation is had, offering instructions to “pick the winners and avoid the losers” when it comes to portfolio management. Sounds great! Let’s get to work.

Go back to the basketball tournament for one second. How many picked Ohio State to go out so early? Some, but not all. I’m sure those lucky few are sharing their legendary prognosticating process with anyone willing to listen. But for the rest of us, our head is in our hands wondering how such a “sure thing” could go so wrong.

Back to investing. How often have you followed a sector, stock, or “hot fund manager” watched it awhile to see how it would trend and said to yourself, “This is a no brainer. I’m going to win on this and win BIG!” You put your chips on the table and then…wait. Sometimes, the future takes the shape you’d hoped for, other times it doesn’t. Hopefully you get to watch a good trend, but sometimes you don’t. What determined the direction it would take once you were holding it?

When you’re on the losing side of that equation, you’re left wondering why. Often, a period of time passes before you decide to pick yourself back up and try it again. Why does it seem that you’re either hot or cold when it comes to picking “winners?” How, with all of the research and analysis, can it be so difficult to predict which investments will be growth engines? You might be asking, “is there a better way?” YES! It’s diversification, and I’m sure you’ve heard the term a thousand times, especially from financial planners such as myself. Have you really looked at what it is, why it helps, and the many types  of diversification options that exist within portfolio management?

At Sequoia, when we take on the managing of our clients’ assets, we take a BIG look at diversification. We want to make sure that not only do our clients have best options for market participation, but when something doesn’t go as planned, diversification can offer the best chance for recovery from a loss. Not only that, we connect portfolio management to financial planning outcomes specific to our client’s needs. We do that to properly identify desired outcomes, our clients are more than just spectators, their financial wellness involves more than just sitting on the sidelines hoping things will work out. Our goal is to partner with our clients to produce a holistic financial plan that addresses the needs and goals that are unique to our clients’ lives.

Our Asset Management team invests much of their time investigating and evaluating macroeconomic trends, geopolitics, and business cycles along with fine data such as interest rates, inflationary trends, growth rates, and many other points because picking singular winners whether it’s a stock, ETF, or fund is difficult to do on a consistent enough basis when investing long-term. We actively assess all these factors along with the investment vehicles we use to create the best match possible based on our market analysis, but more importantly, what’s going to be best for our clients.

If you haven’t had a conversation about diversification in your portfolio with your advisor, I strongly urge you to do so, especially in our current market environment. Portfolio management today is like playing basketball on a moving floor.

For those of you with a chance at having the winning bracket, I wish you all the luck! But after enjoying that glory, make sure your portfolio is properly diversified.  

 

Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.

© 2021, Sequoia Financial Group, all rights reserved.

The views expressed represent the opinion of Sequoia Financial Group. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Sequoia believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sequoia’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. Past performance is not an indication of future results. Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.

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© 2022 Sequoia Financial Advisors, LLC

Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.

March Madness and Portfolio Construction | Sequoia Financial Group

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