What We Offer
Assessment of your risk tolerance and risk capacity.
Investors notoriously do a poor job assessing their risk tolerance, and for very good reason. First, our perceived risk-tolerance vacilates as we move through phases of fear and greed. Second, we often have to consider the risk tolerances of more than one decision-maker or stakeholder. Third, there is an important distinction between how much risk we find acceptable to take (tolerance) vs. how much we can responsibly handle (capacity). Investors often discover after it is too late that they have risked more than they can afford, which requires them to scale back exposure at inopportune times.
We help you to get out in front of these kinds of issues by first analyzing your risk-taking capacity. How much can you afford to lose? Once that figure is established, you then have the ability to think more clearly and cohesively about the financial risk you are prepared to take.
Determining which risk factors most closely correlate with your life.
Perhaps you frequently travel internationally, have plenty of real estate holdings, or you are starting a business. The particulars of our lives offer insights as to what kinds of innate risk exposures we hold. Some discussion can help you to gain a sense as to what kinds of market opportunities you should be taking, and which you might wisely avoid.
Construction of an Investment Policy Statement.
A well-crafted Investment Policy Statement establishes who the financial decision-makers are, who the stakeholders are, and what approaches will be used when determining the asset allocation and risk management techniques. In other words, the IPS is a document (though not a legally binding one, per se) that establishes who makes the decisions, how decisions are made, on what scale, and with what frequency.
Creating a system that allows you to plan in advance for how you respond to present and future risk in your portfolio.
Developing a plan that helps you to take action in a collected manner during episodes of market stress and prolonged downturns can make all the difference between knee-jerk reaction and defensible responses to market volatility. Your asset allocation should act as your first major decision-making block when examining your preparation for sound risk-management.
Beyond building an asset allocation that suits your needs, we consult with you on how to keep your portfolio within your predetermined risk limits. We work alongside you to craft a reasonable approach to incremental adjustments to your portfolio holding that you can follow and abide by on an ongoing basis. Think of it as a commitment to yourself on how you will manage portfolio risk.
Estimating the current volatility in your portfolio of interest, as well as determining which holdings are generating which share of the systematic risk.
Not all assets contribute equally to market risk in your portfolio. Our techniques calculate the realized volatility within your current basket of assets. Our customized tools also shine a light on the degree to which each holding contributes to the systematic volatility of the portfolio as a whole. This service also creates the opportunity to assess the risk impact of a reweight to your existing holdings, or of adding new positions to the mix.
Coaching and consulting on the inclusion of derivatives for hedging purposes, as well as selection of low-risk assets in your holdings.
Not only do we bring professional experience from the world of portfolio management and derivatives trading, The Balance of Trade was largely born from the owner's passion for teaching at the undergraduate and graduate levels. We will hold your hand, answer your questions in a way that is clear, concise, and intelligible. We are less focused on showing off what we know than we are in empowering you to make informed decisions.
Whether it means learning the first steps in trading an option to defend your portfolio, or showing you how to construct a custom ladder of Treasury instruments, we will guide you through the process, providing a strong mix of theory and practice.