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  • “Fat Tail Risks” refers to the rare chance of experiencing extremely large losses, far beyond what is normally expected in the market. When we look at how many 20% pullbacks occurred in the S&P 500 Index throughout the years, we can see that it happens around 0.35 times per year. This translates to at least one bear market every 3-4 years, more often than some might expect.


  • This highlights the importance of managing downside risk, even if we know these drops happen occasionally, no one knows exactly when they will happen next. Our RiskFirst® process prioritizes being ready for any market environment, aiming to help our clients handle these inevitable downturns without exceeding their comfort level.


Frequency of “Fat Tails”

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Source: Bloomberg, Redwood. Data as of 2/23/2024. Date Range from 1/1/1927 - 12/31/2023.



  • We believe capital preservation is key to consistent, long-term investment success.
  • Our investment approach is grounded in economic theory and backed by quantitative analysis.
  • Managing drawdown risk is a pillar from which we build our portfolios.



Allgood Financial


Disclosure: This piece is for informational purposes only and contains opinions that should not be construed as facts. Information provided herein from third parties is obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness. Charts and graphs are for illustrative purposes only. Discussion of any specific strategy is not intended as a guarantee of profit or loss.  Past performance is not a guarantee of future results. The objectives mentioned are not guaranteed to be achieved. Investors cannot invest directly in any of the indices mentioned above. RiskFirst® is a registered trademark of Redwood Investment Management, LLC.


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