Carla Zevnik-Seufzer • Greenfield, WI
ClearStep Financial Partners • Harbour Investments Inc.
The concept of active investment management can be a new one for most clients.
I start with a brief history of the stock market, explaining the cyclical nature of markets and the frequency with which bull, bear, and sideways markets tend to occur.
In this context, one of the most important points to explain about active management is that it should be judged over a full market cycle. This might mean a time period of five to seven years and would preferably include both a bull and bear market.
Why is that? Active management is designed to manage risk and volatility. As such, it may underperform during strong bull markets, but it may minimize losses during down markets. I show clients a series of exhibits, including the expected range of performance and the maximum drawdown that similar portfolios have historically experienced. The key is emphasizing performance over time and against their own expected benchmarks, not the market’s one-year returns.
Disclosure: Securities and advisory services offered through Harbour Investments Inc., member FINRA/SIPC, There is no guarantee that active management will outperform a buy-and-hold approach to investing. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be considered an opinion/example.
Photography by Sara Stathas
