Market Upside Down: How to Invest Profitably in a Shrinking Economy

11. Beyond the Traditional

“Absolute return” means risks of losses are managed. It’s not that the management of risks is always successful or that losses never occur. But risks are not left to the vagaries of the global markets or the inexorable certainties of pundits’ predictions of a strong recovery, a new bull market, or ever-rising equity prices. If they are wrong, it is us, the investors, who will pay the piper. With the absolute return approach, we want to make sure that our needs for liquidity and income are reasonably assured to be met. For some of us, it may very well mean that fixed income is the only viable investment. For others, mixing in hedge funds with a risk-controlled focus presents opportunities to enhance return while managing ...