Q&A: Consider tactical investing strategy

July 9, 2010

Tactical investment strategy is defined.

Q: I've heard a lot of talk recently about tactical investing over strategic or buy and hold investing. What is a tactical investment strategy?

A: A tactical investment strategy seeks to limit downside risk and create opportunities for growth in any type of market conditions. It is well suited to times of increased market volatility.

A tactical investment strategy periodically adjusts a portfolio's asset allocation based on perceived market trends, cyclical opportunities, and/or risks in the markets. It seeks to exploit strong market sectors and inefficiencies among different asset classes. It attempts to capture incremental returns through overweighting those classes that are expected to outperform on a relative basis during the market cycle.

You should chart your investment objectives and goals to decide what type of strategy is right for you, so that you and your financial professional can custom build a plan for achieving them. As with any investment strategy, there is no guarantee that these objectives will be achieved, and investment losses can occur.

Send your money management questions to medec@advanstar.com (please include your regular postal address). Answer provided by Joe Arnold, founder and president of Foundation Wealth Advisors, LLC, Westlake, Ohio.