Many great fortunes throughout history have been created through concentrated positions in a single company. However, diversification is as close to a free lunch as we are going to get in the investment world and it makes good sense to make use of it as a tool when allocating investments.

Time and time again, we see investors and advisors make the same mistake of not taking advantage of the multitude of strategies available to them. Diversification is not just for asset classes, but strategies as well. A diversity of approaches to the markets can yield differentiated results.

Fundamentals matter, and by knowing how and when to deploy new tools on top of the fundamentals, we believe investors can go deeper to uncover both opportunity and risk. The ability to hedge and take short positions enhances the tools we have to reduce volatility and smooth out the investment experience.

It is our belief that markets are generally efficient in the long run. However, markets are prone to periodic dislocations in the short run, which can be tactically designed to benefit investors if they have the appropriate strategies in place and the stomach to weather market volatility.

 By treating cash or cash equivalents as an asset class, we are able to better diversify and preserve principal in times of market stress. Buy and hold is a time-tested strategy when owning companies with solid fundamentals, but can be enhanced by treating cash as an asset class and having the ability to allocate a portion of a portfolio to it. 

Wall Street has proven to be an efficient and profitable distribution channel. The end investor should be wary of new products and sales pitches in order to fully understand how they are approaching the market and in what way a product or strategy is going to help them achieve their goals and objectives.