If you are a business owner and have ever taken an investment risk assessment, chances are you landed on aggressive risk tolerance.

On the surface, this categorization makes sense.

Being a business owner already defines you as a risk-taker. However, it does not necessarily mean aggressive investing is the right decision for you. At LotusGroup Advisors, we know there are many more factors that go into choosing an appropriate investment strategy, and we work hard to help you understand the implications of each one.

Let’s dig into what we mean just a bit more.

Below is a high-level illustration of the economic cycle which most business owners follow, performing better at the peak than at the trough:

High-Level Illustration of Economic Cycle*

*Source:  Pirnack, Nick (2020)
Economic cycles are unpredictable, and the chart is for illustrative purposes only.

So, what does this mean for you?

This means you could be saving the most at the peak (“buying high”) and asking for money back out of your portfolio at the trough (“selling low”).

… and isn’t that the opposite of what successful investors are supposed to be doing?

At LGA, we believe it may be better for business owners to have a counter-cyclical investment strategy to smooth out volatility.

With counter-cyclical investing, one attempts to buy recession-resilient assets to hedge when the economic cycle is overheating and to get more aggressive at market bottoms.

Utilizing a strategy that can give business owners greater access to cash in downturns may also allow them to:

  1. feel more secure when business gets tough
  2. pull the cash from their portfolio to help make ends meet
  3. possibly take advantage of the situation if using an investment account to purchase such troubled businesses, is a good fit for them

We believe there are only but so many downturns a business owner can take advantage of in a lifetime.

When they come, and if appropriate, we want you to be ready for the opportunities available to accelerate your goals.   Please call us to discuss if this strategy is one that may be right for your portfolio.

Let’s make them all count!

Best,

Nick Pirnack

 

This blog expresses the views of the author as of the date indicated, and such views are subject to change without notice and may not be updated.  Investment advisory services are offered through LotusGroup Advisors, a federally registered investment adviser. LotusGroup transacts business only in those states where it is appropriately registered or is excluded or exempted from registration requirements. The information contained within is believed to be from reliable sources.  However, its accurateness, completeness, and the opinions based thereon by the author are not guaranteed – no responsibility is assumed for omissions or errors.   Nothing in this document should be construed as investment, tax, financial, accounting, or legal advice. Each prospective investor must make their own evaluation and investigation of any investments considered or of any investment strategies described herein (including the risks and merits thereof), should seek professional advice for their particular circumstances, and should inform themselves as to the tax or other consequences of any investments or services considered or described herein. LotusGroup’s advisory clients will be required to execute an Investment Advisory Agreement and related Account opening documents (collectively, “Agreements”).  If any of the terms or descriptions in this presentation are inconsistent with the terms of the Agreements, such Agreements shall control.  Prospective investors should maintain the financial capability and willingness to accept the risks associated with any investments made, and should consult the relevant investment prospectus or legal documents, and should their Advisor Representative before making investment decisions (including but not limited to an examination of the investment objectives, risks, charges, and expenses of any investment product(s) considered).  To better understand the nature and scope of our advisory services and business practices, readers are encouraged to review via the SEC’s website @ www.adviserinfo.sec.gov, the adviser’s Form ADV Disclosure(s), and the Form ADV 2B Brochure Supplement of each LotusGroup Investment Professional.  Additional important disclosures can also be found at www.lgadvisors.com, by calling us at 720.217.6863, e-mailing us at [email protected] or by visiting us at our offices located at 1005 South Gaylord St., Denver, CO. This blog, including the information contained herein, may not be copied, reproduced, republished, or posted in whole or in part, in any form without our prior written consent.