Investing Insights

Episode 9: Conventional Diversification Fails…Again (Part 2)

Dan Irvine
Principal, 3Summit Investment, Management, LLC
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Note: If you would prefer the print version click here to read Investing Insights: Conventional Diversification Fails…Again (Part 2).

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This is the second part of a two-part series on the tendency for conventional diversification to fail when your investment portfolio needs risk protection the most. Last quarter, I went into detail into why conventional diversification fails investment portfolios at the worst possible time. This quarter, I am going to introduce powerful risk management strategies that address the shortfalls of conventional diversification, offer protection from large investment losses, and drive the opportunity for higher long-term returns.

Chart 1

Rolling Drawdowns (6/30/2006 – 6/30/2020)
3 Year Rolling Drawdowns Calculated Quarterly

Trend Following Rolling Drawdowns

Table 1

Trend Following Performance Statistics

Trend Following Performance Statistics

Chart 2

Rolling Drawdowns (6/30/2006 – 6/30/2020)
3 Year Rolling Drawdowns Calculated Quarterly

Concentrated Stock Strategy Rolling Drawdowns

Table 2

Concentrated Equity Performance Statistics

Concentrated Stock Strategy Performance Statistics

Table 2

Diversified Risk Management vs. Conventional Diversification Performance Statistics

Diversified Risk Management Performance Statistics

Podcast Disclosure:

3Summit Investment Management is a registered investment adviser and the opinions expressed by 3Summit on this show are their own. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice.

Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and unless otherwise stated, are not guaranteed. 

Information expressed does not take into account your specific situation or objectives, and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation.  Past performance is not indicative of future performance.

3Summit Investment Management, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Copyright © 3Summit Investment Management, LLC, All rights reserved.

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