Changing with the times

By Jerry Wagner

Paging through the business section of the Detroit Free Press several years ago, I came across an article by business columnist Josh Linkner, a tech entrepreneur and best-selling author. He contrasted Ringling Bros. and Barnum & Bailey’s 2017 closure with the booming success of Cirque du Soleil, which grew from a troupe of street performers, to illustrate the importance of adapting to shifting consumer preferences.

Linkner remarked, “In our current climate of unprecedented change, we can no longer run yesterday’s playbook and expect to win. Animal rights activists didn’t put Ringling Brothers out of business, complacency did.”

Preparing for change

The Linkner article resonated with me deeply, especially when I think about how it relates to our investment philosophy at Flexible Plan Investments (FPI). Since our inception in 1981, we have been committed to active management that adapts to meet the challenges of evolving market conditions rather than simply buying and holding.

Market environments change, and so must the investment strategies designed to navigate them. Although most people understand that principle when applied to, say, a quantitative bond strategy, fewer seem to realize that buy-and-hold and index investing are also strategies subject to changing market conditions.

Meeting investor needs with diverse investment strategies

Financial advisers often ask me two questions: Why do we have so many strategies? And why do we make changes to them?

The answer to both is simple: to keep up with changing times. Investor needs and preferences change. While market timing of stock indexes was what FPI was founded on, investors eventually sought similar responsive strategies for bonds, gold, and other asset classes. When sideways markets hampered momentum-based strategies, we added strategies that used other approaches, such as asset rotation, price patterns, and mean reversion.

Managing change requires constant review and adjustment

Markets evolve. As investors recognize and respond to a market anomaly that a strategy seeks to capitalize on, the opportunity may weaken, at least temporarily. New data may become available that can improve a strategy, or investors may begin responding differently to market stimuli. Regardless of the cause, investment strategists must continually review performance and determine whether strategy rules should be adjusted.

Financial advisers and investors must also adapt. FPI offers numerous investment strategies across several categories, allowing portfolios to be constructed for current market conditions and, through multi-strategy diversification, for future markets whose conditions cannot be known in advance.

FPI makes it easier to move among strategies as conditions or investor needs change, offering a wide range of choices involving mutual funds, ETFs, and other investment vehicles.

Someone who began with a single strategy intended to address a particular need might consider exploring an appropriate profile within one of our core strategies. Investors who want their portfolios to reflect individual preferences, including faith-based or socially responsible principles, can choose from risk-managed solutions. Those who prefer to have strategy selection handled for them can consider one of our turnkey options.

Change is constant, but we’re here to help you navigate it

At FPI, we understand the importance of adaptability. By offering a diverse range of strategies and continuously refining our approach, we seek to help investors navigate changing market environments. Our commitment to dynamic risk management is designed to help portfolios respond to market shifts while remaining aligned with each investor’s objectives and risk tolerance.

Investors interested in building a portfolio that can adapt to changing conditions should consider discussing with their financial adviser how FPI’s investment solutions may support their goals.