S2 E26: What should your portfolio manager be doing in the grips of a black swan event like a pandemic or natural disaster?

Blue Chip FM

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In our conversation, we unpack the steps and strategies to take to protect investments when the markets get crazy, and how to leverage the opportunities that come with a crisis. It's crucial for portfolio managers to take these events seriously to protect against possible significant losses. In this episode of Blue Chip NOW!, Chief Investment Officer, Daniel Dusina CFA®, Senior Advisor Matt Mondoux CFA®, CMT, CFP®, and Managing Partner, Daniel Seder CFA®, CMT, CFP® take a deep dive into what a portfolio manager would do in the case of a black swan event or global crisis.

Gain an understanding of portfolio exposure and pinpointing risks, navigating uncertainties to manage portfolio risk efficiently, and employing scenario analysis to visualize both the best and worst outcomes. Discover vital factors for managers when tweaking portfolios, the advantages of a balanced approach, and the role of an investment committee. Explore the reasons to disregard media influences in investment decisions, real-world examples of black swan events, market upturns the Federal Reserve would not be able to fix, and more. Tune in to stay ahead of the curve and turn market chaos into opportunity!

Key Points From This Episode:

(0:01:28) Getting an overview of portfolio exposure and identifying risks.

(0:03:09) Navigating the unknowns to mitigate portfolio risk effectively.

(0:04:23) Using scenario analysis to highlight best and worst-case situations.

(0:05:18) Important considerations for managers when adjusting portfolios.

(0:07:04) Taking an aggressive investment approach during a black swan event.

(0:11:57) Playing the middle ground and the benefits of an investment committee.

(0:15:09) Reasons to ignore media sources when making investment decisions.

(0:16:30) Examples of black swan events and utilizing probability to prepare.

(0:19:50) Recognizing success and failure to improve decision-making capabilities.

(0:21:06) Building a financial reserve to leverage the opportunities of black swan events.

(0:23:16) Final takeaways we have for listeners.

Quotes:

“One of the first things I do is look explicitly at revenue exposures.” — Daniel Dusina [0:02:07]

“That is what makes investing hard is you have to make assumptions, you have to make estimates, and you don’t know if you are right or wrong until potentially years later.” — Daniel Dusina [0:03:43]

“A partial decision is a great way to guarantee [the client will] be mad at me.” — Daniel Seder [0:11:57]

“The actual outcome of each of those black swan events, from a portfolio manager’s perspective, will be different. What should not be different are the inputs to decision-making.” — Daniel Dusina [0:19:23]

Links Mentioned in Today’s Episode:

Check out the Federal Reserve’s website: https://www.federalreserve.gov/

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