"Returns are a byproduct of good risk management” says Jon McCardle, president of Summit Financial Group of Indiana. And good risk management means knowing when to buy and when to sell.
According to McCardle, buy and hold is the standard investment strategy during a bull market. Active management during this type of market can disrupt a growth-oriented strategy. “But bear markets are more like heartbeat monitors: ups and downs,” he says. “They require an active allocation approach that includes more frequent interactions: selling on the ups and buying on the downs.”
The trick, he says, is to understand there can be opposite rallies within each type of market. For instance, he says bear markets historically last 18 to 21 years. But there are often bull rallies lasting two to four years within that bear market.
“It takes an advisor with a strong knowledge of market history and solid analytical skills to know when the tide will turn and to act accordingly,” McCardle says.
Earning Clients’ Trust Through Technology and Communication
McCardle credits the firm’s technical analysis for the fact that Summit clients weathered the turbulent markets of 2008 much better than average investors, many of whom lost nearly 50 percent of their investments. Summit leveraged its technical analysis to evaluate merits versus risks and, on average, its clients lost just 5 percent of their investments that year.
“We take a comprehensive approach to examining market trends. Our indicators look at market sentiment over the short term and midterm and also examine a long-term global outlook to determine where we need to go with our investment strategies,” says McCardle.
The firm excels at communicating those strategies to its clients. “We have a high degree of touch and service,” he continues. “Clients can expect 51 to 75 points of contact with us over the course of a year. And what really sets us apart is that clients talk directly with their money manager. There’s no third-party salesman involved, which helps keep costs low.
“We take a very simple approach to client communication,” McCardle explains. “We believe in candor and in making complex ideas simple to understand. Our clients tell us they appreciate that we go out of our way to make sure we’re not confusing or overwhelming them with technical jargon, that we take an intimidating topic and make it understandable."
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