The Portfolio Approach

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.

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. The Financial Times describes Ms. Kramer as “A one-woman financial investment powerhouse” and The Economist distinguishes her as “one of the best-known investors in America”. Ms. Kramer is often quoted in publications such as the Wall Street Journal, New York Post, Bloomberg, and Reuters. She is a frequent guest commentator on CNBC, CBS, Fox News and Bloomberg, providing investment insight and economic analysis. Ms. Kramer was an analyst and investment banker at Morgan Stanley and Lehman Brothers. Ms. Kramer founded and ran a long-short hedge fund and has been chief investment officer overseeing debt and equity portfolios. Since 2010, Ms. Kramer’s financial publications have provided stock analysis and investment advice to her subscribers. Her products include GameChangers, Value Authority, High Octane Trader, Triple-Digit Trader, 2-Day Trader, IPO Edge and Inner Circle. Ms. Kramer, a Certified Fraud Examiner, has also testified as an expert in investment suitability, risk management, compliance, executive compensation, and corporate governance. Ms. Kramer received her MBA from the Wharton School at the University of Pennsylvania and her BA with honors from Wellesley College. Ms. Kramer has provided testimony regarding investment policy to the U.S. Senate and is a frequent speaker on the markets, portfolio management and securities fraud and compliance. Ms. Kramer is also the author of “Ahead of the Curve” (Simon & Schuster 2007) and “The Little Book of Big Profits from Small Stocks” (Wiley 2012).