Risk Aware Investing

Many standard measures of risk across our industry assume that risk follows a normal bell curve. Our research suggests, however, that this isn’t always true.

The traditional method of building a portfolio determines a risk tolerance level for a client and makes occasional trades to keep the risk in line with this desired level. For example, a client may decide to invest 60 percent in a higher risk asset class, like stocks. However, the risk of investing in stocks changes over time. Stocks are more risky during a recession, or a negative environment. Likewise, stocks carry less risk as an economy emerges out of a recession, or enters a positive environment. The standard portfolio won’t assess the changing investment environment. We do.

Price movements

  • Trend
  • Momentum
  • Participation
  • Relative strength
  • Money flows
  • Thrust

Investor sentiment

  • Survey/polls
  • Investor actions
  • Absolute valuations
  • Relative valuations
  • Volatility
  • Overbought/oversold

Economic environment

  • Interest rates
  • Yield curves
  • Credit spreads
  • Liquidity
  • Economic activity
  • Inflation

Simplify your financial life today, contact CMR Financial Advisors to get started.

CMR Financial Advisors, Inc.

1003 Bishop Street, Suite 2620
Honolulu, Hawaii 96813
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CMR Financial Advisor, Inc.