SAM All-Weather
What is All-Weather?
The All-Weather strategy offered by Stansberry Asset Management, LLC (“SAM”) seeks to produce superior risk-adjusted returns through the full investment cycle with an emphasis on capital preservation. This strategy is designed to have less volatility than the stock market.
We aim to reduce portfolio risk in All-Weather by looking for opportunities across several low-correlation asset classes.
All-Weather is an actively-managed strategy. We will be opportunistic—shifting to capitalize when market conditions change, and also actively moving to protect our clients from market drawdowns.
The Benefits of Low Correlation
Low correlation is meant to shelter your portfolio from stock market volatility. Correlation measures how assets move in relation to each other. If your investments have a high correlation to the stock market, they will basically move in lockstep with each other. In other words, you are on the stock market roller coaster ride.
We aim to reduce portfolio risk by looking for opportunities across several low correlation asset classes.
Precious Metals
Biotechnology and Biopharma
Merger Arbitrage
Real Estate
Event Driven
Special Situations
Capital-Efficient Investments
Distressed Debt
Commodities
Preserving and Growing Wealth
The All-Weather strategy from Stansberry Asset Management, LLC (“SAM”) is designed with a clear objective: preserving and growing wealth across all market conditions. Designed to perform through every phase of the investment cycle, this strategy focuses on risk mitigation and consistent returns while maintaining lower volatility than traditional equity markets. This actively managed strategy adapts as conditions shift, seizing growth opportunities while also moving defensively to help shield portfolios from drawdowns.
Understanding Low Correlation in Simple Terms
One of the core principles of the All-Weather strategy is investing across assets that don’t all move in the same direction at the same time. This is called low correlation.
Think of it like packing for a trip where the weather could change without warning. You wouldn’t just pack shorts and T-shirts—you’d also bring a jacket and an umbrella. That way, you’re prepared for whatever comes your way. Similarly, investing in low-correlation assets helps your portfolio stay balanced through different market conditions.
Here’s a quick example:
When the stock market drops, like during a recession, stocks usually go down together. However, certain assets, like government bonds or gold, often hold their value or even increase during those times. These assets don’t follow the shift, and that’s the benefit. By mixing these types of investments, the All-Weather strategy helps reduce overall risk and protect your wealth during market downturns.
The Benefits of Low Correlation
In volatile markets, diversification alone isn’t always enough. That’s why the All-Weather strategy from Stansberry Asset Management focuses on assets with low correlation, investments that don’t move in lockstep with the stock market.
Below, we break down the key components of this strategy and explain why each one is critical to promoting wealth preservation while aiming for long-term performance.
Precious Metals
Precious metals serve as a hedge against currency debasement, inflation, and systemic financial risk. Historically, during periods of high inflation or market distress, precious metals tend to outperform traditional equities.
Biotechnology and Biopharma
The biotech and biopharma sectors offer high growth potential driven by innovation, scientific advancement, and demographic trends such as aging populations. These industries tend to operate independently of broader economic cycles, as demand for healthcare remains constant.
Merger Arbitrage
Merger arbitrage involves investing in companies that are the targets of announced mergers or acquisitions. This strategy seeks to profit from the difference between the current market price and the acquisition price. As this “spread” narrows, merger arbitrage investing provides returns that are typically not dependent on the broader market returns.
Real Estate
Real estate investments, including REITs and direct property holdings, can offer consistent income and long-term appreciation. They are also a natural hedge against inflation since property values and rents tend to rise as prices increase.
Event-Driven Investments
Event-driven strategies focus on opportunities created by corporate actions such as spin-offs, restructurings, bankruptcies, or legal settlements. These events often create temporary mispricing’s that can be exploited for gain.
Special Situations
Special situations are unique investment opportunities arising from non-recurring circumstances, such as regulatory changes, insider buying, or mispriced assets due to public sentiment.
Capital-Efficient Investments
This investment strategy involves investing in well-run, durable businesses that require relatively little capital to grow. Such businesses also tend to have enviable profit margins and strong balance sheets, and often use broader economic downturns to improve their competitive position while weaker players retreat.
Distressed Debt
Distressed debt investing involves buying the bonds or credit instruments of companies seemingly facing financial trouble — often at a deep discount. The upside comes from restructuring success or eventual repayment at higher values.
Commodities
Commodities such as oil, natural gas, agricultural products, and industrial metals are sensitive to supply and demand dynamics and often move differently than traditional financial assets.
With Stansberry Asset Management’s All-Weather strategy, you get a carefully constructed, actively managed investment approach built for resilience. Whether you’re preparing for retirement, managing a family legacy, or just want a smarter way to grow and protect capital, this strategy puts wealth preservation at the center.
A Strategy That Evolves with the Market
Why Adaptability Matters
Markets aren’t static. Inflation rises and falls. Interest rates change. Geopolitical events unfold. Sectors rotate in and out of favor. A rigid investment model can’t navigate this complexity effectively, but an adaptive strategy can. That’s what makes the All-Weather strategy so valuable for long-term investors focused on wealth preservation.How the Strategy Adapts
Rather than sticking to a fixed allocation, the strategy continuously evaluates macroeconomic indicators, market trends, and asset class performance. When leading indicators suggest a shift in economic conditions, such as moving from expansion to contraction, the portfolio is rebalanced to reduce exposure to vulnerable assets and increase exposure to more resilient ones.For example:- In rising interest rate environments, the strategy may rotate out of long-duration bonds and into floating-rate instruments or commodities.
- In anticipation of or during a recession, allocations may shift toward defensive positions such as gold, treasury bonds, or distressed debt, which are historically known for their capital preservation qualities.
- When markets rally, the strategy can move more aggressively into growth-oriented opportunities like biotechnology or special situations, aiming to maximize the upside without exposing the portfolio to excessive risk.
Real-Time Risk Management
Adaptability also means identifying emerging risks early and moving quickly to protect capital. This could include reducing equity exposure when valuations become stretched, increasing cash reserves during market instability, or reallocating into low-correlation assets when volatility spikes.Balance Between Offense and Defense
The All-Weather strategy is built to be dynamic, leaning into growth when conditions are favorable and leaning into protection when storm clouds gather. This balance between offense and defense gives investors a smoother ride and increases the odds of long-term success.The Result: Durable Performance Through Market Cycles
Stansberry Asset Management’s All-Weather strategy supports wealth preservation not just through diversification but also through smart, real-time decision-making. This agility is key to thriving in uncertain markets and helping clients maintain confidence regardless of what’s happening in the headlines.Frequently Asked Questions About the All-Weather Strategy
What is the All-Weather strategy?
The All-Weather strategy is an actively managed investment approach offered by Stansberry Asset Management. It is designed to perform across all market environments, whether the economy is expanding, contracting, or facing unexpected shocks. The strategy aims to deliver superior risk-adjusted returns by investing across various asset classes, each with different risk profiles and correlations. By maintaining broad diversification and dynamically adjusting to market conditions, the strategy seeks not only to grow wealth but also to provide downside protection—helping investors preserve capital during periods of heightened volatility or market declines. This diversified and dynamic approach aims to help investors grow and protect their wealth over the long term.
How does the All-Weather strategy protect my wealth during market downturns?
Wealth protection, also known as wealth preservation, is one of the cornerstones of the All-Weather strategy. During downturns, traditional portfolios heavily weighted in equities tend to suffer steep losses. The All-Weather strategy mitigates this by holding a mix of low-correlation assets, such as Treasurys, commodities, distressed debt, and precious metals, which have historically performed better when stocks decline.
By rotating out of high-risk positions and into defensive or counter-cyclical assets when indicators suggest increased volatility, the portfolio aims to reduce drawdowns and maintain capital during difficult periods.
What does 'low correlation' mean, and how does it benefit me?
Correlation refers to how similarly two assets move in response to one another. An asset with a lower correlation to stocks means that it tends to behave and move differently than the overall stock market. It may increase when stocks drop or remain flat while other risky investments are volatile.
This matters because low-correlation assets provide a form of insurance within a portfolio. If all your holdings move together, you’re more exposed to market swings. However, with low-correlation investments, some assets can offset losses in others, reducing overall volatility. This smoother ride is exactly what the All-Weather strategy aims to deliver for better long-term wealth stability.
How does the All-Weather strategy perform in different market conditions?
The All-Weather strategy is built to adapt and perform in any market condition. In bull markets, it may tilt toward growth-oriented assets like biotechnology, real estate, or capital-efficient investments. During recessions or corrections, the strategy may shift toward precious metals, distressed debt, or event-driven investments that can produce returns independent of market direction.
The All-Weather portfolio is flexible because it doesn’t rely on a single asset class or macroeconomic trend. This adaptability helps it stay resilient through inflation, deflation, high interest rates, low interest rates, and everything in between.
Can I expect high returns with this strategy?
The All-Weather strategy is not designed to chase the highest returns in any given year. Instead, its goal is to produce consistent, risk-adjusted returns over the long run. While it may underperform aggressive equity portfolios in surging bull markets, it tends to outperform them during downturns or extended periods of volatility.
The emphasis is on reducing large drawdowns, which is key to long-term wealth growth. Recovering from a 10% loss is easier than recovering from a 40% loss. By minimizing the impact of significant declines, the All-Weather strategy supports steady compounding, which is an essential ingredient in wealth creation and preservation.
How is risk managed within the All-Weather portfolio?
Risk management in the All-Weather strategy is proactive and multi-layered. First, diversification across uncorrelated asset classes helps reduce overall portfolio volatility. Second, the strategy is actively monitored and rebalanced based on economic indicators, valuation models, and real-time market trends.
Stansberry Asset Management also manages position sizing, ensuring no single investment can cause outsized damage to the portfolio. In addition, exposure to traditionally “safer” assets such as government bonds or precious metals increases during economic stress. All these tactics work together to control risk without giving up growth opportunities.
Who should consider the All-Weather strategy?
The All-Weather strategy is well-suited for investors who want to grow their wealth while minimizing risk. It’s particularly valuable for:
- Retirees or near-retirees focused on wealth preservation
- High-net-worth individuals seeking to reduce volatility in their portfolio
- Long-term investors who want a smoother ride through market cycles
- Anyone concerned about inflation, recessions, or systemic shocks
In short, the All-Weather strategy could be a strong fit if you’re looking for a plan that isn’t overly reliant on stock market performance and values capital preservation as much as growth.
What assets are included in the All-Weather portfolio?
The All-Weather strategy invests in various asset classes chosen for their low correlation and long-term return potential. Some of the holdings include:
- Equities of enduring, world-class businesses to provide a solid foundation
- Precious metals, like gold and silver, to hedge inflation and market stress
- Biotechnology and biopharma, for growth and innovation exposure
- Merger arbitrage and event-driven strategies to profit from specific corporate actions
- Real estate and REITs for income and inflation protection
- Special situations for opportunistic upside
- Distressed debt, which can perform well through recessions
- Commodities to diversify and protect against global economic shifts
Each asset class plays a role in helping the strategy stay resilient across various economic scenarios.
How frequently is the portfolio adjusted?
The All-Weather portfolio is actively managed and continuously monitored. Adjustments are made as needed based on changes in the market, economic indicators, or asset performance. This could mean rotating into more defensive assets during turbulent periods or shifting toward growth assets in strong economic environments.
Unlike static or index-based approaches, the All-Weather strategy doesn’t wait for quarterly or annual reviews. It adapts as often as necessary to align the portfolio with its risk and return objectives.
What makes this strategy different from traditional asset management approaches?
Most traditional portfolios follow a “set-it-and-forget-it” model based on fixed allocations between stocks and bonds. This can leave investors vulnerable when markets shift dramatically or specific asset classes underperform for extended periods.
The All-Weather strategy, on the other hand, is built for flexibility. It dynamically allocates capital across various asset classes and sectors, focusing on low correlation and active risk management. Its goal isn’t just to match the market; it’s to protect and grow your capital through all types of weather. That’s what sets it apart.