Special Circumstances

Lastly, the portion of the total portfolio that interests many people the most is Opportunistic Assets or Special Situations. Here, we seek those assets that have the potential to pay a profit well beyond market returns and usually over a shorter time. These are the “high-flyers” that folks like to brag about at cocktail parties. These are the securities with interesting stories. These are the “fun” things to talk about. They are also the most volatile assets with the greatest potential for loss – up to total loss. We believe that such opportunistic assets deserve a place in the total portfolio, but a relatively small place in the portfolios we manage. Also, this is the "pigeon hole"Swing for the Fences where we may place your unsalable family company or the apartment building you own with your brother-in-law. We do not have a specific amount of predetermined allocation to the Special Situations area because it is, well, special.

Let’s recapitulate what we have discussed so far. Investment portfolios, as we manage them, should have at least two major components: Growth assets and Strategies and Moderation assets and strategies. Your portfolio may also have Special Situations.

  • The Growth portion may be made up of the traditional growth-oriented financial market assets; stocks, real estate, commodities, etc.
  • Moderation assets and strategies include everything from Cash and CDs to esoteric assets and actively managed accounts we believe will benefit your portfolio by moderating risk.
  • Special Situations may give you the chance to “swing for the fences.”

But wait . . . There's more . . .

Portfolio Risk Probable beats Possible