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Alternative Market Briefing

Other voices: Boys and Men

Monday, March 16, 2020

From Christian Armbruester, Blu Family Office

Why crashes are a wonderful way to discern good investment strategies from bad managers.

Separating the proverbial "men from the boys" is a great exercise in times like these. When markets come under duress, is when you really find out who has got a good handle on their risk management. To be fair, the bull market that has propelled financial markets to all-time highs, meant that countless managers have enjoyed record returns through no fault of their own. Better to be lucky than smart I suppose, but thankfully as of March this year, we can finally get a better picture as to who offers real value. So here is what to look for as you purvey the carnage and listen to all the commentary from those esteemed financial professionals.

No one beats the market. Although performance looked rosy all around up until this year, the S&P 500 slaughtered all in its path and according to research from the Financial Times, 99% of all active managers underperformed the index to the upside. That clearly begs the question: did 99% outperform as the markets dropped? It is a very simple analysis to perform at the moment and will clearly indicate whether you go active or passive going forward.

Ignore the rhetoric. Countless are the excuses and particularly when it comes to strategies that are supposed to deliver returns independent of what the markets do. The first sign that all is not well is when you hear "well the market was down 14......................

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