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This is an executive summary of a paper authored last year by Thomas Kuntz, CEO of New Jersey-based firm called Polymetis LLC, which offers due diligence, investment research, strategic consulting, and advisory services to sophisticated investors. It discusses decision making strategies in investment management within a tactical framework derived from a process called "situational awareness," largely borrowed from its origins in military applications.

In the 1972 film The Candidate, Robert Redford plays Bill McKay, a young idealistic attorney who is recruited to run for the United States (US) Senate against a popular incumbent. At the climax of the movie, after securing a close and wholly unexpected victory, the confused and surprised protagonist is left to ask his campaign manager, “What do we do now?”

Indeed, that is the precise question investors around the globe are pondering in the face of turbulent and uncertain economic and market conditions. Let us call it the McKay Question.

This is especially relevant for investors in alternative investments like hedge funds. Although the results of alternatives over the past few years have largely underperformed relative to investor expectations and sales and marketing pitches, interest in these investments has never been higher. So, how should investors in alternative investments approach the McKay Question?

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