As with Game 4, once the losses start to happen it’s human nature to feel shell-shocked at first. So rather than attempt to make a decision in the midst of an event you never hoped would happen, ensure that a solid defensive strategy is in place prior to the event happening.<\/p>\n

Looking at a basketball team, not every player is a forward. A solid team also has guards and a center who can either rebound or take a shot depending on the situation.<\/p>\n

When constructing your portfolio, a similar strategy can apply. A percentage may be in small and mid cap stocks, emerging markets and growth-oriented sectors (often characterized by low to no dividends). Another percentage can be defensive against flat markets and downturns while still potentially able to provide growth in strong markets — for example, dividend-paying blue chips, large caps and developed market investing.<\/p>\n

But what about “long-tail statistical events” — e.g., events that are statistically estimated to happen infrequently such as the 2007 Financial Crisis? Investment managers may plan for low-probability yet high impact events with derivatives (for example, buying puts or writing calls), with low or negative correlation portfolio construction, interest rate\/currency\/commodity\/et al hedges, or even a strategy to get out of certain types of investments or sectors and hold cash if prices fall by 5-10%.<\/p>\n

It’s very easy to buy a portfolio of investment, as is to put together a group of great individual basketball players. But a team with Michael Jordan and Karl Malone may not have done as well over the long term without Scottie Pippen and John Stockton. Be the coach of your portfolio, and ensure that you have strategies in place to withstand the unexpected so that you don’t end up sharing a beer with the Oklahoma City Thunder, wondering what just happened and what could have been.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The Oklahoma City Thunder recently lost a 15-point lead in Game 4 of the Western Conference Finals. What made this newsworthy was the fact that the Thunder’s 15-point lead was wiped out in five […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[19,40],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.pricecapitalcorp.com\/wp-json\/wp\/v2\/posts\/1439"}],"collection":[{"href":"http:\/\/www.pricecapitalcorp.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.pricecapitalcorp.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.pricecapitalcorp.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.pricecapitalcorp.com\/wp-json\/wp\/v2\/comments?post=1439"}],"version-history":[{"count":5,"href":"http:\/\/www.pricecapitalcorp.com\/wp-json\/wp\/v2\/posts\/1439\/revisions"}],"predecessor-version":[{"id":1442,"href":"http:\/\/www.pricecapitalcorp.com\/wp-json\/wp\/v2\/posts\/1439\/revisions\/1442"}],"wp:attachment":[{"href":"http:\/\/www.pricecapitalcorp.com\/wp-json\/wp\/v2\/media?parent=1439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.pricecapitalcorp.com\/wp-json\/wp\/v2\/categories?post=1439"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.pricecapitalcorp.com\/wp-json\/wp\/v2\/tags?post=1439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}