Personal Portfolio Management

Personal Portfolio Management

To many, the term "risk" evokes a negative connotation, but it is a natural part of every portfolio, one that can't be eliminated. Instead, risk must be managed correctly. Put simply, risk has been defined as the "measurable possibility of losing or not gaining value," and it's because of the misconceptions regarding this concept that so many Americans decide to keep their money in safe, long-term investments or forego the markets altogether.

Still, the dangers of keeping your money invested in so-called safe equities remain. Buy-and-hold tactics lack adaptive exit strategies that limit losses and protect profits. Using this approach, your funds will be continually tied to certain stocks or ETFs and exposed to risk each and every market day. While effective for some investors, you may not have a long enough investment horizon to weather down markets, and you may be missing out on new opportunities that offer a better risk/reward return by opting to use this strategy.

At SmartStops, our risk analytics engine can help you manage risk by:
� determine when a symbol is in periods of elevated risk
� Enabling timely action when elevated risk is detected in a particular equity
� Informing you when your equities' risk levels have returned to normal.

The SmartStops portfolio monitoring tools continuously watches your portfolio for signs of elevated risk through out the market day. If you receive an investment risk alert on one of your equities, it is a good time to review the position and make a timely decision. There are a number of risk mitigating actions you may choose to take.

Sell the position and go to cash
Investors often become emotionally attached to their positions. They fall in love with their winners, and they hesitate to sell their losers in hopes of making it back to even. Don't fall into this trap. A good trick is to ask yourself, if you had a thousand dollars to invest today, would you buy that stock. If not, it may be time to move on. Selling and moving to cash protects any gains and prevents further loss. It makes your capital available for other opportunities. And you can always buy back should the trend change and you determine that it is an attractive investment. Remember, selling is only the first step to reinvesting. Maximize your return per day in the market by sidestepping periods of elevated risk.

Hedge your position
Instead of selling your long position, you might consider using options to hedge your position. Buying an out of the money put on your long position is like purchasing downside insurance. There is a cost, but it the storm hits, it will be worth it. SmartStops risk states help investors optimize when to put protection on and when to take it off.

Employ sector rotation with alerts from SmartStops
One popular and effective risk management method is sector rotation, or moving from higher risk over bought sectors to lower risk under bought ones. The trick is to know, when to make the move. The SmartStops Market Risk Barometer can help. This risk tool provides a history of risk ratio levels for various market sectors including basic materials, consumer goods, consumer services, energy, financials, healthcare, industrials, technology, telecommunication and utilities.

Rebalance your portfolio with SmartStops
Is it time to rebalance your portfolio by reducing your exposure to some of your recent winners that have grown to represent too large a percentage of your portfolio? The SmartStops market risk barometer and equity risk state reporting can help you pick sectors and equities that are exhibiting favorable risk states. Start your search for new positions by analyzing the risk they represent.

Portfolio diversification with SmartStops
Diversification has come under fire in recent years, as the 2008 market crash showed just what can happen when every sector is hit by the same negative factors. However, diversification remains a strategy that investors can employ to effectively distribute their risk. With SmartStops portfolio risk management tools, you'll be able to assess which strategy you want to pursue for your wealth.

Selling, hedging, holding pat or buying more are all legitimate results of a thoughtful analysis of your position. When risk levels change, the important thing is to be alerted and take the opportunity to make a timely and informed decision.

Why SmartStops?
At SmartStops, the algorithms that drive our analytics engine are based on the tracking and interpreting of the same factors valued by the world's top wealth funds. As such, our methodologies can be valuable assets that enable you to stay informed in a rapidly changing market.

Risk is an important but often neglected part of any investment's performance. The SmartStops risk management tools and alerts can help you better manage risk by enabling timely action to protect gains, limit losses and improve returns. Every day you are long in the market, you are exposed to risk. Be rewarded for the risk you take. Maximize your return per day in the market by sidestepping periods of elevated risk.