How Do You Pivot Portfolio Strategies in Volatile Markets?


    How Do You Pivot Portfolio Strategies in Volatile Markets?

    In the face of market volatility, even seasoned finance professionals must adapt their strategies. We've gathered insights from financial planners, CEOs, and other finance experts, revealing how they've pivoted their portfolio strategies. From shifting to growth in bear markets to adapting with selective investments, explore the six pivotal moves these experts have made.

    • Shift to Growth in Bear Markets
    • Reallocate to Stable Income Assets
    • Diversify Across Industries and Regions
    • Focus on Stable Sectors and Emerging Markets
    • Pivot to Value Strategy Amid Inflation
    • Adapt to Trends With Selective Investments

    Shift to Growth in Bear Markets

    It is always a good idea to keep some form of stable investment within your portfolio. A case came up for a few of my clients when the market dropped 20% during COVID. We were able to sell out of their short-duration bond funds in order to invest into growth and value large-cap funds to capitalize on the lowered value. It won't impact their entire net worth drastically, but it could lead to overall outperformance by moving from conservative, stable investments to higher-risk/return investments in bear markets.

    Stephen Boatman
    Stephen BoatmanPrincipal & Financial Planner, Flat Fee Financial

    Reallocate to Stable Income Assets

    During the market downturn created by COVID-19, we had to make a strategic pivot in our portfolio management to protect our clients' assets. Recognizing the heightened volatility and uncertainty, we swiftly moved a significant portion of our investments to cash. This action provided a safe harbor amid the storm, preserving capital and providing liquidity.

    Additionally, we reduced our exposure to high-growth-focused themes, which were particularly vulnerable during this period. Instead, we reallocated resources into more stable, income-generating assets and sectors with better resilience to economic shocks, such as healthcare and utilities.

    This pivot minimized potential losses and positioned our clients' portfolios to recover more steadily as the market began to stabilize. This proactive adjustment underscores the importance of flexibility and responsiveness in investment strategies during unprecedented times.

    Chad Harmer
    Chad HarmerSenior Financial Planner & Managing Director, Harmer Wealth Management

    Diversify Across Industries and Regions

    As a finance expert and CEO of Sterlinx Global, I've navigated through numerous periods of market volatility. One pivotal moment stands out, where the power of diversification played a critical role in stabilizing our portfolio amidst turbulent times.

    The COVID-19 pandemic caused the markets to go haywire during the early months of 2020. World markets collapsed, and uncertainty was rife. Our portfolio, which was heavily weighted in travel and hospitality stocks, received a big blow. What we did, however, was to follow one fundamental investing rule: Avoid putting all your eggs in one basket.

    We had to reconsider our asset positioning first. Instead of being too exposed in sectors amenable to the effects of the pandemic, we invested across various industries. This entailed growing our interests in technology, healthcare services, as well as basic consumer products. They were strong during this time; they even showed signs of being robust when there seemed no hope at all. As a result, by diversifying our assets, we safeguarded them from any slump that targets just one sector.

    Additionally, geographical diversification was also taken into account. Initially targeting North American and European markets only, we started looking for opportunities in Asia and emerging markets that displayed faster recoveries and growth potentials. Our risk is diversified globally, and we have new growth options open to us through it. It highlighted the need for a balanced portfolio that can withstand regional economic shocks.

    Ariful Islam
    Ariful IslamFinance Expert, Sterlinx Global

    Focus on Stable Sectors and Emerging Markets

    As the founder and finance expert at Leverage, I’ve had my fair share of market turbulence. One unforgettable moment was during the 2008 financial crisis. At that time, I had a lot of money tied up in banking and real estate, and when things started to go south, I knew I had to act quickly.

    First, I sold off some of my riskier bank stocks. It wasn’t an easy choice, but I knew it was necessary to protect my investments. Then, I shifted my focus to more stable areas like consumer staples and healthcare. People always need groceries and medical care, so these sectors are usually safer during tough times.

    I also explored emerging markets like Brazil and China, which were doing better than the U.S. and Europe back then. Diversifying into these markets helped balance out my losses.

    Rhett Stubbendeck
    Rhett StubbendeckCEO & Co-Founder, Leverage Planning

    Pivot to Value Strategy Amid Inflation

    Coming out of the pandemic, we had to respond to the market volatility caused by rising inflation. This prompted us to pivot from a growth strategy to a value strategy across all our client portfolios. The S&P 500 dropped 19% in 2022, but our clients were protected from the pivot earlier that year.

    Jay Srivatsa
    Jay SrivatsaCEO, Future Wealth LLC

    Adapt to Trends With Selective Investments

    When COVID-19 first hit, the markets were a mess. I was managing money for a retired couple who depended on their investments for income. They were really worried.

    To help them, I had to make some quick changes. I looked at what industries they owned and saw ones like travel would really struggle during the pandemic. So, with their approval, I started selling off those investments.

    Instead, I put their money into companies that could benefit from the situation, like Amazon for all the online shopping and telehealth companies for virtual doctor visits. By carefully picking the right companies, I helped this couple avoid big losses and even make some gains during the crazy markets.

    The main lesson is: when the markets are wild, you have to be willing to make changes based on what's happening. As an investor, you need to watch trends closely, research companies thoroughly, and be ready to change strategies as needed. Doing that can protect your money long term when things are unpredictable.

    Lyle Solomon
    Lyle SolomonPrincipal Attorney, Oak View Law Group