At the core of any successful investment approach is the ability to truly understand, identify, and evaluate risk. The key to outperformance is not simply a function of stock picking or a focus simply on the reward side of the equation. If TAM`s 100-Year Market Theory unfolds as we suspect, the investment landscape could become even more challenging in the years ahead. This makes the need for a comprehensive methodology to manage risk all the more crucial for success. Some of the elements of our risk management process include:
- Diversification
- Identification of attractive investments or trades on a risk / reward basis
- Active portfolio monitoring
- Entry and exit rules
- Position size
- Accumulation
- Hedging
- Use of stops
- Selective and controlled use of leverage
- Liquidity requirements