If you want to make your portfolio’s risk-adjusted return better consider a tactical asset allocation strategy that will help spread out your risk and manage your portfolio better especially in short-term market conditions that are unfavorable to your business. When you are an investor the has an investment Horizon that is long-term oriented you will decide to go with the traditional mode of compost and diversified portfolio management strategy. With this mode of investment the market hypothesis proves efficient and that volatility of the Returns on the long-term investment is quite stable in comparison to the short-term market conditions. The efficient frontier within the mean-variance optimization Theory has been fronted by most scholars and investors seek to increase and maximize their return every risk that they spread out.
With experience in unknown animal list that cause instabilities in markets that sitting down on market efficiency active portfolio managers move with quick speed to build on a strategy that with replacement buying causes some Returns on the risk that has been spread out already.
With momentum being the most effective anomaly the brings down efficiency in the market study has proven and indicated that for an investor to establish her training within which they can make a quick kill they should study the market performance over a longer version. Another anomaly that affects the market efficiency is a short-term mean reversion whereby the mean rate of return policy reverses every orphan and as such it is difficult for an investor to comprehensively study and predict the performance of an asset over a certain duration of time.
Due to the negative effects that the mean reversion of a short-term durations Cause to long-term market, it is necessary that an investor moves into a volatile market with a strategy of sharp and quick decision-making in which investment to acquire assets and move out as soon as possible.
Active portfolio management brings in the positive attributes of simultaneous and concurrent short-term gains in investment that build up to make huge returns for an investor. Then losing up to 30% of your capital during recurrent recessions which happened at least once every decade you should turn to active management of portfolios that have the ability to spread out your adjusted risk-return and thus protect your capital.
Tactical asset allocation is like keeping your eggs in many different baskets so that if one person suffers huge losses due to fluctuations of market conditions you still have others that bring new returns to cover up for the losses that you made in one. With this information you can move on boldly and make investment choices and decisions that will protect both the capital and you are Returns on investment should anything go wrong in the market today.