About Risk Control

Risk exists with every activity of our lives, from driving to eating, and it exists with investments.  In whatever we do, the question that we should ask is whether the potential reward outweighs the potential risk.  To assist our clients, MarketCycle Wealth Management practices risk control via the following methods:

  • We utilize a proprietary method of protecting assets during economic recessions; normal market noise is ignored.  We follow our method with complete fidelity.
  • We realize that, on occasion, “cash” is a legitimate strategic position; sometimes it is more important to preserve capital than to make an extra percent of profit.  We don’t always have to be doing something; patience is a virtue.  As that great sage Winnie-the-Pooh pointed out, “Never underestimate the value of doing nothing.”
  • Most assets are held for the long term.  This reduces the volatility in the portfolio and increases gains while dramatically reducing taxes.  Almost all traders make the fatal mistake of holding onto their losers, but selling the assets that are trending in a profitable direction.  All of the noise within a profitable trend should be ignored and assets held for the duration of the trend.
  • All portfolios are diversified amongst assets that have the lowest possible correlation to each other.  There is always a trend somewhere.  Diversification amongst differing global assets is one of the few “free lunches” out there.  It can increase profits while decreasing risk.
  • We use a number of ETFs in our portfolios.  These exchange traded products (ETFs) offer the advantages of a mutual fund, but at drastically reduced fees, no loads, no redemption fees, extremely good liquidity and high volume.  ETFs offer trading opportunities beyond ordinary stocks.  One can now invest in everything from gold to a major multi-stock index like the S&P-500.
  • MarketCycle holds Treasury-Bonds whenever doing so is profitable.  T-Bonds reduce risk by a substantial amount and can make rapid profits at the very times that they are needed most, when the stock market is dropping.  They pay tax-advantaged interest and usually also show capital appreciation.  A proprietary timing method is in place and we switch temporarily into US Government Treasuries-Inflation-Protected-Securities (TIPS) during high inflationary periods.
  • Rather than giving your money to us to hold and then invest, all money is held by a reputable third party:  Interactive Brokers.  They have 24 hour Internet access.  They maintain SIPC insurance on every client’s account.  They deal directly with you with regard to all paperwork and quarterly, yearly and year end tax reporting (which is easily downloaded from the Interactive Brokers website).  Money is never commingled with other client’s money… all accounts are separately held and managed.  All of this helps to avoid fraud.  They know what they are doing and they even seem to answer their phones with a smile.
  • The more un-correlated the assets are that are held in a portfolio, the safer it is.  A portfolio is safer and hardier and more robust if the investing techniques are also diversified… and this is something that MarketCycle routinely does.
  • Hedge funds have limited government oversight.  MarketCycle Wealth Management purposely uses private separate managed accounts which have a high level of government regulation.  Both Federal and state governments are concerned about protecting ordinary citizens.  We applaud this level of citizen/client protection.

Most importantly, we have a substantial amount of our own money invested in MarketCycle accounts (our personal trades are never taken in advance of our clients).  We put our money where our mouth is… we walk our talk.

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MarketCycle Wealth Management | Stephen Aust
MarketCycle Wealth Management, LLC is a Registered Investment Advisor. Information presented is for educational purposes only, is not considered an individualized recommendation or personalized investment advice, may not be suitable for everyone and does not intend to make an offer or solicitation for the sale or purchase of any securities. All investments involve risk and unless otherwise stated, are not guaranteed. Past performance or performance charts are not a guarantee of future performance. Portfolio performance charts are shown net of fees so the management fee, brokerage fees, trading fees and ETF fees have already been subtracted. Current performance may be higher or lower than that shown and differing accounts may show different results. Investment returns and principal value in client accounts will fluctuate. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Be sure to consult with a tax professional before implementing any investment strategy.