Investment Approaches in Volatile Markets

𝐈’𝐯𝐞 𝐬𝐩𝐨𝐤𝐞𝐧 𝐭𝐨 𝐟𝐚𝐦𝐢𝐥𝐲 𝐨𝐟𝐟𝐢𝐜𝐞𝐬 𝐚𝐛𝐨𝐮𝐭 𝐭𝐚𝐫𝐢𝐟𝐟𝐬… 𝐬𝐨 𝐲𝐨𝐮 𝐝𝐨𝐧’𝐭 𝐡𝐚𝐯𝐞 𝐭𝐨 💡 Here’s what they’re thinking. In a word: uncertainty. But not in a panicked, post-Lehman kind of way. It’s more like a collective pause. Markets are recalibrating — not collapsing. And the savvier LPs I speak to are thinking probabilistically, not reactively. One CIO summed it up best after last week’s tariff announcements: “This feels more like a long game with short-term noise. But the real danger is pretending we can predict the second- and third-order effects.” A family office patriarch told me: “I’ve lived through trade wars, oil shocks, and financial crises. You don’t make wealth by panicking — you protect it by staying liquid, staying patient, and betting on resilience, not headlines.” From a matriarch’s perspective: “We’re not making knee-jerk changes, but we are having hard conversations — about values, priorities, and what kind of world our capital is shaping. That matters more than short-term swings.” And from a sharp NextGen principal: “I don’t need certainty. I need transparency. If I’m going to commit capital, I want to know what my partners believe — and how they behave when the playbook breaks.” This reminds me of Howard Marks’ latest memo from Oaktree Capital, Nobody Knows (Yet Again) — a masterclass in level-headed investing: • You can’t analyze the future — it doesn’t exist yet. • Every action in economics has ripple effects — but not all are predictable. • The decision not to act is still a decision — and it deserves just as much scrutiny. The family offices I work with aren’t waiting for perfect clarity. They know: • Waiting for dust to settle often means missing the opportunity. • Volatility creates dislocation — and dislocation creates deals. • Diversification, liquidity optionality, and real alignment matter more now than ever. If you’re fundraising, remember: LPs aren’t looking for clairvoyance. They’re looking for: • Calm in chaos • Logic over noise • And a team that can operate through uncertainty, not around it. Because — as Howard Marks puts it — “When the time comes to buy, you won’t want to.” #realestate #familyoffice #investing #banking #finance #recession

How are Family Offices navigating global trade wars and geopolitical tensions? Family Offices globally are reshaping investment strategies in response to increased global trade tensions and geopolitical uncertainty. According to the UBS Global Family Office Report 2025, 70% of Family Offices rank global trade wars as their top investment risk, with major geopolitical conflicts (52%) and inflation (44%) also significant concerns. Over the next five years, geopolitical issues are projected to become even more critical. To manage these risks, Family Offices increasingly favor active management, selecting skilled managers to maintain stability during market volatility. About 40% prioritize active management, while 31% rely on hedge funds known for mitigating downside risks. Additionally, 27% are boosting their holdings in illiquid assets for market resilience. Precious metals have also regained popularity, now chosen by nearly 20% of Family Offices. Asset allocations have shifted notably toward developed market equities, currently averaging 29%, while developed market bonds have gained attention for their stable returns during uncertain periods. Interest in emerging markets like India and China remains cautious due to geopolitical unrest (56%) and political instability (55%). Additional concerns such as currency volatility and regulatory challenges further complicate investment decisions in these regions. Private market allocations are adjusting as well. Typically strong in private equity, Family Offices are moderately reducing their exposure from 21% to a projected 18% by 2025, driven by rising interest rates and slower exit opportunities. Regionally, investments continue to favor North America and Western Europe, while exposure to Asia-Pacific and Greater China is modestly declining, reflecting evolving perceptions of risk. Succession planning is another key area for Family Offices. While over half (53%) have formal plans, significant challenges remain in tax efficiency (64%) and preparing the next generation effectively (43%). These strategic adaptations offer broader considerations for investors of all types. How might Family Office strategies inform individual and institutional approaches to investing? Could these strategic changes reshape overall market dynamics? Most importantly, how will ongoing geopolitical developments shape future investment opportunities?

Sell or Hold During a Market Swoon? Cash Flow Always Provides the Right Answer   In Fall 1990, I was down to my last few dollars in the bank and facing huge monthly cash outflow. Due to the recent real estate market crash and an economic recession, all my projects were bleeding cash. I eventually lost everything, giving millions of dollars of properties back to the banks or selling them at huge losses. How did others survive?   I would learn: always plan plenty of sources of cash flow.   We are in the midst of a severe downturn in the world stock markets. Most investment professionals are properly advising clients to hold on and not sell their portfolios. History supports this—markets often recover within months. However, this is little comfort to those anxious with seeing plummeting values of their 401(k)s and portfolio balances, especially if retirement is near or they depend upon these accounts to cover monthly living expenses.    The key to surviving any market downturn is to have planned monthly cash flow to survive…BEFORE the dive, not during it.   If you are in a situation where you have adequate cash flow from a job, pension, interest and dividend sources or cash in a savings account, the prudent answer for you is to hold on. You have the cash flow to do so.   If you find yourself not in a good cash flow situation, don’t sell everything in your portfolio—take steps to weather the storm: ·    Cut all unnecessary spending for the coming months. ·    Consider a home equity or personal loan to cover expenses. ·    If necessary, reduce your portfolio, prudently, to cover the gap. ·    If your advisor didn’t guide you properly before or during the dive, find another one. ·    Avoid checking your accounts balances daily.   Once this latest downturn is over and your portfolio has recovered you might ask yourself if you belong in the stock market or if your allocation to stocks is too high. Warren Buffett once stated that if you don’t have the stomach to see your portfolio value drop 50%, you don’t belong in the stock market.   However, having stocks as part of your portfolio is an extremely valuable investment strategy. Have stocks, but your focus should be to make sure you have enough cash-flow the next time the market falls.    During my career as a wealth advisor, I made sure people maximized and had many sources of cash flow. Now, as a co-founder of CakeClub™ (www.CakeClubapp.com), we make sure you are given the education and tools for this.   No one likes to see their portfolio values to fall. But the recipe to survive future swoons is prudently planning cash flow. Follow this recipe… and you will be able to eat all the cake you want during the next drop!   Follow me at Al@AlZdenek.com and CakeClub™ at CakeClubapp.com for my experiences and stories over my career. Help me help others achieve their dreams and live the life they want, now! Please repost. Thank you!

One of the most concerning developments is the growing divergence between professional and retail investors. Institutional investors have quietly reduced risk, shifting toward defensive sectors and fixed income, while retail traders continue chasing speculative trades. Sentiment surveys confirm this imbalance, showing extreme bullishness among small traders, especially in options markets. With these risks building under the surface, prudent investors should proactively protect their portfolios. No one can predict precisely when the market will correct, but the ingredients for a sharp downturn are clearly in place. Savvy investors should use this period of complacency to reduce risk exposure before the cycle turns. Here are six practical steps investors should consider: ▪️ Rebalancing portfolios to reduce overweight exposure to technology and speculative growth names. ▪️ Increasing cash allocations to provide flexibility during periods of volatility. ▪️ Rotating into more defensive sectors like healthcare, consumer staples, and utilities that tend to outperform during corrections. ▪️ Reducing exposure to leverage by avoiding margin debt and leveraged ETFs. ▪️ Using options prudently—not for gambling, but for protecting portfolios through longer-dated puts on broad market indexes. ▪️ Focusing on companies with strong balance sheets, stable earnings, and reasonable valuations. ▪️ The explosion of zero-day options trading is not a sign of a healthy market. It is a symptom of an unhealthy market increasingly driven by speculation rather than investment discipline. Retail traders have moved from investing to gambling, chasing fast profits while ignoring the mounting risks. Greed is rampant, leverage is extreme, and complacency is near record levels. Markets can remain irrational longer than expected, but history tells us these speculative periods always end in a painful correction. Bull markets do not die quietly; they end with euphoric retail excess followed by painful corrections. Investors who recognize the signs early will avoid the worst of the fallout and be positioned to capitalize when value opportunities return.

Have been getting asked a lot about how our institutional and wealth clients have been responding to recent market volatility. Here are a few quick updates from the road: - the more urgent need for market color and content has transitioned to discussions around longer-term implications for the markets. - the TOP three questions we are fielding (thank you Henry McVey and team) are (1) what is the future of the US dollar and will we see a secular decline of the USD as the reserve currency? (2) will we see accelerating inflation and how will the Fed react (and Fed independence)? (3) will we see a reversal of fiscal policy, and even if we do, has the “damage been done” (wrt growth)? - institutional investors are continuing to allocate to private markets, though there are some concerns around monitization activity. this isn’t stopping investors from allocating, but they are refining cash flow models, extending diligence, and rethinking managers / sizing. Managers with consistent deployment / DPI will likely benefit. - some institutions are rethinking US exposure; there is not a wholesale shift away from US markets, but we are seeing greater interest in European and Asian investments. Especially in credit / opportunistic and infra markets. - insurance clients are accelerating capital deployment. these clients view the backup in rates / spreads as an opportunity to drive execution of their private markets investment strategy. high-grade ABF is a focus area (both US and global markets). - private wealth investors continue to steadily increase allocations to evergreen private market strategies. we thought we might see a slowdown given market volatility, but more and more advisors understand the potential benefits of private markets and are adopting them in client portfolios. PE and credit continue to be focus areas. infra is also getting a lot of attention given characteristics of contractural cash flows, etc.

With greater uncertainty, we’ve been thinking about investing for Robinhood Strategies in terms of possible outcomes: three baskets — and we’re putting eggs into each of them. Split between scenarios: -Tariffs end at levels that slow growth but don’t lower inflation or rates → focusing on low-volatility stocks and international exposure. -Tariffs come down soon and growth continues → growth and cyclical stocks. -Tariffs stay elevated for longer leading to slowing growth or a potential recession → leaning into T-bills and dividend payers. I joined CNBC’s Closing Bell to talk through this framework and how we’re approaching investing in today’s environment. We also discussed earnings, market behavior, and U.S. exceptionalism — all of which shape how we aim to build resilient portfolios. The views expressed are for informational purposes only and do not constitute investment advice or a recommendation to engage in any investment strategy. Robinhood Strategies portfolio investments will vary. Investing involves risk, including the loss of principal.

Recent market volatility has many investors on edge, but it's crucial to look beyond the headlines. We believe: -Markets have overreacted to a handful of weaker data points, not a fundamental economic shift -Much of the selloff is driven by technical factors and systematic investors, not deteriorating fundamentals -Quality exposures remain key – companies with strong profitability may fair well amidst this uncertainty   Clients should consider: 1. Staying invested is important, consider quality stocks 2. Consider bonds for potentially improved portfolio diversification as correlations shift 3. Consider potential risk reduction, with buffered strategies, or defensive strategies such as allocations to utilities or minimum volatility   While volatility may persist short-term as narratives dominate, maintaining a long-term perspective is vital. Remember, challenging markets often create compelling opportunities for disciplined investors.  https://lnkd.in/d_j6bTyH

With market volatility surging, #recession talk is everywhere. If you’re checking your portfolio or retirement account, it’s easy to feel uneasy. But while economists aren’t calling a recession a certainty, the odds are climbing—estimates range from 20% to 50%.   So what should investors do? Stay strategic, not emotional.   ✅ Build Cash Reserves – A strong emergency fund is crucial in case of job loss. ✅ Pay Down Debt – Reducing liabilities now can ease financial strain later. ✅ Adopt a Defensive Investment Strategy – Consider diversifying into sectors like consumer staples and utilities, which tend to be more resilient. ✅ Ignore the Noise – Markets will react to policy swings, tariff news, and economic headlines, but basing your investment decisions on short-term speculation is a losing game.   Be long-term, be boring, and don’t panic. Successful investors focus on fundamentals, not fear.

The Savings & Loan Crisis (S&L) of the late 1980s and early 1990s frames how I view real estate investing today. As a new investor in the early 1980's, I believed what everyone told me: ‘This time is different!’ – only to lose everything, including the naïve belief that real estate was immune to market cycles. The S&L crisis was driven by deregulation, rising interest rates, mismanagement, overexposure to real estate, weak supervision, and moral hazard. Today, similar dynamics are emerging: deregulation is loosening oversight (with more to come), rising rates are straining institutions, and commercial real estate valuations, especially in office and multifamily sectors, are declining. Here’s how to learn from those lessons and prepare for 2025: Lessons from the S&L Crisis and Parallels Today • Deregulation: Loosened oversight risks systemic instability, echoing the 1980s. • Rising Interest Rates: Rapid rate hikes are pressuring institutions with long-term fixed assets, similar to the S&L era. • Mismanagement and Fraud: Tight liquidity today is exposing weak underwriting and fraud. • Real Estate Overexposure: Declining CRE valuations mirror S&L vulnerabilities. • Weak Supervision: Regulatory gaps are creating risks, compounded by tech evolution and shadow (bridge) banking. • Moral Hazard: Bridge and other alternative lenders operate with minimal oversight, mirroring unchecked S&L lending practices. How to Prepare for 2025 Opportunities 1. Focus on the Sponsor: Invest with sponsors who have proven downturn experience. 2. Scrutinize Debt: Avoid risky bridge loans; prefer fixed-rate, low leverage. 3. Understand Market Cycles: No asset class is immune - evaluate fundamentals. 4. Demand Transparency: Insist on clear, detailed reporting. 5. Diversify: Avoid overconcentration in one asset class, market, or sponsor. 6. Prioritize Cash Flow: Look for stable income over short term, speculative upside. 7. Monitor Policies: Stay informed on tax, spending, and regulatory changes. The S&L Crisis taught those of us who lived through it some hard lessons. By applying those lessons today, we are better positioned to successfully navigate risk investing in 2025. *** I discuss this and other similar advanced investing topics in more detail in my newsletter. Subscribe using the link at the top of my profile.

Understanding Volatility and Making Better Decisions Events and news drive volatility, but how can trillions of dollars be 'wiped out' or 'created' in days? Let's illustrate with an example: 📉 Nvidia's Price Discovery on August 5th - Price Drop: Nvidia opened at $92.05 per share on August 5th, compared to its previous close of $106.73 on August 2nd, a 13.75% decline, meaning more than $200 billion 'wiped out'. - Price Discovery: This drop doesn't mean all shareholders are sold. It reflects the first transaction of the day, which was $92.05. Market Dynamics: Following the initial trade, Nvidia's stock rebounded as other investors traded at higher prices, showing that price movements can occur with relatively low trading volumes. 📊 Factors Influencing Volatility and Price Discovery: - Market Sentiment: Fear or greed drives rapid price changes, often disconnected from fundamental values. - Liquidity: High liquidity can mitigate volatility, while low liquidity exacerbates price swings. - Algorithmic Trading: These systems can react faster to market changes, adding complexity. - Technical Analysis: Indicators predict price movements, aiding in price discovery. - Regulatory Changes: Market regulations, like circuit breakers, temporarily halt trading to prevent panic selling. 💡 Making Better Decisions: Now that you understand how it works, you can use it to your advantage. Long-term investors can decide on entry points where valuations align with portfolio allocation. Short-term traders can use limit and stop-loss orders to control volatility or even options if experienced. 💭 What are you doing regarding volatility? (Doing nothing is valid, too 😊)