The NASDAQ Composite Index in the 1st Quarter of 2019 was not immune to a nearly continuous series of events that caused quick changes in both direction and volatility of not only the index, but also the underlying components.

As an investment manager, there are countless unforeseen events that will negatively affect a company, industry, or security that must be managed day in and day out.

The good news is, I don’t have to predict those events.  I don’t have to plan for the infinite number of events that could do untold harm.  However, just because I don’t have to plan for them individually doesn’t mean I don’t have to plan.  Event risks, whether they be an act of God, political, industrial, or otherwise, ultimately could all lead to the same outcome — a breakdown in asset correlations and significant real-time losses across all asset classes.  How do I mitigate against that?

My goal is to have a strategy and execute.  Specifically, a strategy that not only profits in favorable markets but also preserves client equity in markets where the strategy does not make profits, be it from the pattern of price movement or event risk.  However, at some point, there could be times for which I’m not fully prepared.

When those times come around and I’m caught in an unexpected position, I make notes for future reflection, and continue to execute my strategy.  I designed the strategy in the calm when I could devote my full mental faculties to thinking through scenarios.  When the storm is raging is not the time to second guess whether my risk management plan is sufficient.  In, fact, what good can come from that?  If I deviate and my plan and would have been successful, I may forever regret that decision.  If my plan would have failed and I deviate, how will I trust my plans the next time something like that occurs?

However, that is easier said than done.  It is only through self-awareness and experience that I’ve learned to handle the emotions caused by unexpected events.  If I never bothered to create a plan, and systematically execute it, how could I reliably expect to learn from the storms that will inevitably come my way?

The first quarter was fraught with event risk.  Nevertheless, the program, which has traded since 2014, turned in a successful and profitable quarter.


Past results are not necessarily indicative of future results.  The risk of trading futures is substantial and may not be suitable for all investors.  This information is being provided to the intended recipient for informational purposes only and may not be considered an offer to purchase any product or participate in any trading program of Balorca Capital.  Such an offer may only be made to qualified investors via the appropriate disclosure and account documentation. 

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