Astoria’s Quarterly Investment Committee Insights

April 6, 2020

The risk/reward for buying stocks during a recession can be favorable. Ironically, the stock market is one of the few instances where when things go on sale, people run for the exit. Credit to whoever invented that phrase (it was not us) because it’s generally true.

 

We are not market forecasters and we don’t think you can time the market. Instead, we believe it is more valuable to create a framework for how we allocate client capital and manage risk. This is, after all, Astoria’s 'True North'.

 

In short, our framework is as follows:

 

  • Are valuations attractive on a per unit of risk basis?

  • What is your opportunity cost (i.e. should you buy high quality US stocks, high yield credit, private equity, real estate, private credit, etc.)?

  • What is your investment time frame?

  • How much risk can you take (this helps determine how much we hedge the portfolio, which factors to utilize, etc.)?

 

If a) valuations are cheap b) you can’t time the market c) the opportunity cost for owning stocks is low d) you hedge portfolio risk appropriately e) have a long term time horizon (12 months or longer is ideal), then debating whether stocks have hit a bottom is irrelevant in our view.

 

Click here to read the full research report

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