Over the past two decades, there have been two serious economic recessions in 2000-2002 and 2008-2009. During each recession, typical buy and hold investors may have experienced significant decline in the value of their holdings. We believe that some of those losses could have been avoided or minimized. We regularly identify the economic and market threats to investments and seek shelter from the storm. When the clouds pass, we pursue opportunities that have the greatest potential value.
Our philosophy does not eliminate temporary loss in value. Markets always have expansion rallies and contraction corrections. We see these normal market fluctuations as opportunities. They prevent markets from getting “too high or too low”, but most importantly, they open opportunities to buy investments when they are on sale. And, at Compass Rose, we love a good sale!
We also realize that geopolitical, economic and market events can result in very large declines. These “Black Swan” events require that clients have a Plan B to switch to lower risk assets until normal market conditions return. Whatever the investment, the goal is simply asset preservation in those cases.