The Portfolio Approach

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street.

There’s a concept on Wall Street called the multi-strategy hedge fund. It’s very simple to explain.

You know diversification is your friend in the long term. A multi-strategy fund applies this principle by investing in multiple distinct asset classes designed to move in different directions.

Then, rotation does its work. Some strategies will rise while others fall. And some will require more time to deliver big returns while others will simply grind out small amounts of profit from day to day.

It is why I run so many different trading services. Cannabis investors can apply something similar to cushion the volatility we see in this end of the market.

This week, for example, one of the cannabis stocks in my IPO Edge is up 33%. The other is down 23%. Add them both up, we’re beating the market by a wide margin.

And more broadly, while my proprietary cannabis index is down a bit this week, those who held all the stocks in the group are doing a lot better than those who simply picked a few names.

The group as a whole is up 50% so far this year. Stocks like OrganiGram Holdings Inc. (NYSE:OGI) have doubled over that period, even though they’re down a bit this week.

Week by week, leadership rotates. This week, Tilray Inc. (NASDAQ:TLRY) is up big, while fellow cultivators Canopy Growth Corp. (NYSE:CGC) and Aurora Cannabis Inc. (NYSE:ACB) are down.

Next week, money may well flow in the other direction. If you’re only looking week to week, you’re probably feeling a little dizzy.

But take the long view and remain exposed to all the angles in the group, and you’ll do well. Some stocks will climb and others will fall. Your portfolio is what generates your ultimate rewards.

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On the surface, the market has everything it needs to be afraid of the future. Economic progress is slowing. Inflation is elevated and taxes probably will go up. Add it all up and you have a recipe for malaise, if not outright misery. So, why did Wall Street cheer this morning’s announcement that the job market isn’t as hot as it needs to be to keep the economic engine from stalling? You need to look between the headlines for clarity. The ‘Good Enough’ Recovery:

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