Anthony (Tony) Winkels holds an MBA from The Wharton School of the University of Pennsylvania, and is Managing Partner at Fortis Wealth Management

Portfolio Strategy When The Future Is Uncertain

Portfolio Strategy When The Future Is Uncertain

Anthony Winkels Writes on Probabilistic Portfolio Strategy

When constructing a portfolio and selecting investment positions, individuals can make the tempting mistake of trying to predict what the future holds.  This approach is flawed because predicting an occurrence fails to account for the probabilistic nature of the world in which we live.  Political elections, pandemic abatement, weather patterns, and consumer preferences are all variables for which investing based on a definitive prediction can be catastrophic. 

Tail risk events would, by definition, not be a reasonable “prediction” at any given point in time, but they absolutely occur.  The alternative to making predictive investments is to sculpt a strategic portfolio based on a probabilistic assessment of the likelihood and potential impact of possible scenarios in the future.  As Howard Marks notes in this memo, “…we may not be able to predict the future, but that doesn’t mean we’re powerless to deal with it.”

Read more from Howard Marks here

- Anthony F. Winkels is Managing Partner and Wealth Advisor at Fortis Wealth Management

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