What Investors Want

I’ve spent a “work lifetime" listening to investors about what they want from public market investing. Interestingly, average investors and ultra-wealthy investors are not very different in their goals.  Some want to preserve what they have (e.g., have market performance with limited potential losses).  Others want market outperformance without losing their shirts. Still others fall somewhere in between on the spectrum.

Financial advisors are taught to educate investors that with reward comes concomitant risk, and the equation is inescapable. This is true, but only up to a point. I’ve been working with risk reduction strategies since 1988 (after the infamous Market Crash of October 19th, 1987).  Listening to investors and giving them what they wanted is what saved my career, quite frankly.  As my clients aged, risk reduction became even more important. But beating the market remained a critical element nonetheless. Can you really have it both ways?

After 30 years of working with risk management strategies that sometimes worked, and sometimes didn’t, I came across structured products.  These were closer to what my clients wanted than anything I had seen previously, and I embraced them. But I was curious as to how they worked—how the results were actually achieved.  

Once I understood the simplicity of the underlying mechanics, and how it was similar to options work I had done since I was literally in college, the lightbulb went off:  this was how I could give investors what they really desired:  to have it both ways—confidence of outperforming the market (based on contracts with other investors, not manager-performance-dependent), and confidence in reducing potential losses in downturns.  

With Structured Positions, I believe I have what my clients and I have longed for.