Downside Protection in an Equity Portfolio

Advice to the Advisors

sheaff brock investment advisors dave gilreath downside risk protection investment risk measurement

Downside Protection in an Equity Portfolio

“Downside risk is an estimation of a security’s potential to suffer a decline in value if the market conditions change,” is the way Investopedia.com explains what no investor wants—the chance to lose money. “In general,” Investopedia authors observe, “many investments that have a greater potential for downside risk also have an increased potential for positive rewards.”

In an interview with our Institutional editor, Managing Director Dave Gilreath explained key risk management tactics employed by the firm’s portfolio managers. In fact, Gilreath quipped, “If you don’t have low downside risk, you don’t make it to the Sheaff Brock ‘party’ in the first place,” meaning that our firm’s stock selection process begins with measuring downside risk.

In summary, Gilreath observes, beginning the research process with an evaluation of individual companies’ downside risk, and only then applying fundamental research—that’s the Sheaff Brock way!

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