A Different Approach to Tactical Investing
The tactical investment style is a broadly defined category in which asset management techniques vary amongst managers. Generally speaking, tactical managers attempt to miss equity market declines by rotating through asset classes or market sectors, while others short stocks in an effort to hedge. Allocations may be shifted as often as monthly or weekly. The majority of these managers use ETFs as their exposure to the stock market, and primarily rely on systematic signals to make their decisions, also known as algorithms.
At Lyons, we believe in the power of long-term equity value investing, but recognize that a buy-and-hold approach is subject to harmful losses during periods of sustained market declines. In our view, the prudent use of tactical allocation is to maximize the opportunity for investment compounding for as long as possible, and attempt to minimize the impact of only the larger market declines that harm cumulative returns.