Tag - risk management

Advice to the Advisors

Sheaff Brock Institutional Group | Option Overlays may be Misunderstood

Diversifying Income Sources with Option Overlay Strategies

In a 2010 Songfacts interview, rock songwriter Eric Burdon complained that he’d really been misunderstood: “by my mom, my dad, school teachers, a couple of the women that I married. I’ve been misunderstood all of my life.”In a 2010 Songfacts interview rock songwriter Eric Burdon complained that he’d really been misunderstood: “by my mom, my dad, school teachers, a couple of the women that I married. I’ve been misunderstood all of my life.” Options, Sheaff Brock Managing Director Dave Gilreath laments, [...]

Advice to the Advisors

Sheaff Brock preferred income portfolio strategy - preferreds may perform well in rising interest rate environments

In a Rising Interest Rate Environment, Preferreds are Particularly Apropos

“We find preferred securities attractive today from fundamental, technical and valuation perspectives,” Nuveen’s Doug Baker and Brenda Langenfeld commented back in December, citing preferred securities’ “history of lower sensitivity to rising interest rates.” “Preferred securities are often more sensitive to changes in credit spreads than other types of bonds. So on a relative basis they may perform well during periods of gradually increasing interest rates,” the Nuveen authors explain. And, while “it may seem counterintuitive to expect an asset class [...]

Advice to the Advisors

Sheaff Brock Investment Advisors | Risk Management for Performance Outcomes

Risk Management as Important as Return on Investment

You might say risk management is even more important than return, asserts Sheaff Brock Managing Director Dave Gilreath. In the long run, he believes, risk management can lead to good investment outcomes. And, while nonprofessionals invariably focus on return, expecting their advisors to “beat the market,” that expectation, he feels, is essentially flawed. As a recent BlackRock study on market upside/downside demonstrates, “the preponderance of evidence suggests that market timing is difficult and rarely adds value.” Instead, emphasizing “low capture [...]

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, [...]

Advice to the Advisors

preferred portfolio strategy preferred stocks rising interest rates Sheaff Brock Institutional Group

Preferreds Continue in a Starring Role

In the ever increasing search for income, preferred stocks continue to play an important role for companies and investors alike, with the Standard and Poor’s Preferred Index ETF (iShares: PFF) trading at an average share volume of 2.3 million/day as of May 23, 2017. By way of quick review, preferreds are hybrid securities, blending traits of both stocks and bonds. Like common stock, preferreds represent ownership in a company, but without voting privileges; like bonds, preferreds are issued at a [...]