Top Money Manager During 2007-2010 Crisis Offers Advice for Turbulent Times

Tanglewood CIO says 'Always keep some money in equities'

Mar 15, 2011, 10:00 ET from Tanglewood Private Family Office

FREDERICKSBURG, Texas, March 15, 2011 /PRNewswire/ -- "I never completely sold client portfolios out of the stock market during the economic crisis, and I do not recommend doing it now," says Andrea Olsen-Condon, President and Chief Investment Officer of Tanglewood Private Family Office, headquartered in Fredericksburg, Texas.

"When the crisis began to unfold in 2007, all I knew for sure was that something was very, very wrong.  All you had to do was look at the faces of Ben Bernanke and Hank Paulson to know that.   Even though I didn't know how long it would last or how bad it would get, I did expect that at some point it would be over and great buying opportunities would present themselves.  The goal was to develop a strategy to protect my conservative clients' assets during a downdraft but, at the same time, be positioned to benefit when the worst was over.  Getting completely out of the market only addressed the first half of that goal."

As Ms. Olsen-Condon explains, "I individually manage a very small number of client portfolios, overseeing the asset allocation and equity selection myself.  With the flexibility and control that provided, I raised some cash by selling the long positions that seemed most vulnerable to the Great Recession, keeping or adding to the equities that I felt would most benefit when the recovery began.  But the key to our success was that I used the cash to add S&P 500 and NASDAQ index hedges to broadly contain the downside of the long positions until I felt the bottom was formed.  The long positions were always in place, so I didn't have to 'guess' if or when to start buying again. We didn't trigger unnecessary capital gains tax by selling everything at once.  And, taking the hedges on or off involved nothing more than a simple trade. Throughout 2009 and 2010, I found it necessary to continue using this strategy periodically as geo-political and/or domestic economic turmoil came and went."

Today, as QE2 winds down, worldwide economies sputter, and our domestic debt remains unresolved, Ms. Olsen-Condon says she is continuing to use this strategy.  "After the losses suffered by most over the past several years, it is natural for many investors to want to stay largely or even completely on the sidelines until they are convinced it is safe to invest again. But how will you know for sure when that time has come? You won't.   And you can be fairly certain that when you do decide it is time, you will be too late."

Ms. Olsen-Condon recommends, "For those concerned investors wanting risk-managed growth, I suggest keeping at least 25% invested in a diversified stock portfolio, and use the sideline cash for periodic hedging, if necessary.  With difficulty comes a commensurate level of opportunity.  The goal now is to be ready for anything. New opportunities may come in surprising forms."

SOURCE Tanglewood Private Family Office