Given the volatility of today's stock market, investors can suffer major or catastrophic losses at the worst possible time, and those losses can be compounded by emotion-driven decisions. One of the biggest risks to investors, especially retirees and those about to retire, is called "sequence of return" risk. This is where the market has a dramatic drawdown right before or at the beginning of retirement.
Unfortunately, experiencing considerable losses at the wrong time can derail even a well-thought-out retirement plan. At Disciplined Advisors Group, we help clients minimize this type of risk. The DAG Trend-Following Portfolio is a rules-based strategy designed to reduce risk when the market is trending down and fully invest when the market is trending up.
The goal is to capture the long-term upside of the market with less volatility, reducing the "sequence of return" risk. This approach can serve as a viable strategy to guard against the anxiety of a lower trending market and the financial consequences of catastrophic losses.