Scared of the Downside: Implications of Fat Tail Risk

By David Geller   |   October 1, 2012

Over the past few months, the stock market’s roller coaster rides have alarmed a number of investors who are convinced that we are headed towards an inevitable repeat of the 2008-2009 market turmoil.  A few weary investors have commented, “I don’t know if I can make it through another 2008 and 2009.”

We believe it is probable that the effects of a significant market decline (should one occur) are likely to be temporary. However, this fear is not inordinate and the challenges underlying today’s volatile markets are substantial.  Investors could take a number of steps designed to help insulate their portfolios from possible short-term market declines, or “fat tail market risks.”

For those who may be seeking an alternative to enduring what they perceive as another gut-wrenching market decline or moving out of equities entirely, we offer an options-based ‘insurance’ strategy designed to offer investors limited protection against some large, short-term market losses.

Of course, like all insurance, these strategies come at a cost and work only as insurance, not as a cure and may not be suitable for all. Our goal is to help you reduce your worries about your portfolio so you can instead focus your energies on creating and enjoying the life you desire.

If you are losing sleep worrying about your portfolio or if you are interested in learning more about fat tail risk, investment considerations for fat tail risk and GV’s options strategy, please contact us.

About the Author

CEO David Geller co-founded the firm in 1991 and led the creation of Behavioral Wealth Management. Recognized on numerous prestigious "top financial advisor" lists, David is an in-demand speaker for professional groups and JOYN workshops. His writings have appeared in The New York Times, The Wall Street Journal and The Huffington Post.

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