Resources & Investment Updates From Komara Capital Partners

In investing, the principle of non-correlation presents both opportunities and challenges.

While our portfolios may not look drastically different from traditional approaches today, there will likely come a time when they do. Non-correlation means holding investments that don’t always move in sync with the broader market. While this can feel uncomfortable, we think it’s crucial for managing risk, reducing volatility, and enhancing long-term growth potential.

This concept and willingness to look different is key. It’s like carrying an umbrella on a cloudy day, when no one else does — it may seem unnecessary at the time, but when the market storms inevitably come, you’re better prepared. Holding non-correlated assets can feel counterintuitive when traditional investments are performing well, but these same assets often provide the stability needed when market conditions shift. While looking different may be tough in the moment, it’s often the foundation for achieving a more resilient, long-term outcome.

In this month’s Investment Update, we discuss:

• The advantages we see in trend following during unpredictable markets
• How trend following steers us away from the pitfalls of market predictions
• Why a disciplined, systematic approach may reduce risk while helping keep the focus on long-term growth

But first, here’s a summary of the global asset classes utilized in our portfolios and their exposures for October.

From July 16 to August 5, the S&P 500 experienced a decline of 8.5%, culminating in a sharp 3% drop on August 5. During this period, headlines, clients, and pundits alike were quick to declare the end of the bull market. Market shocks often bring out the naysayers, ready to predict prolonged downturns. As we often say, “Price drives sentiment.” Yet, by the end of August, the volatility was largely forgotten, and the purported reasons behind it faded into the background.

When prices fall, emotions inevitably come into play. Fear, greed, and other feelings can drive investors to act impulsively, often to the detriment of their long-term goals. While much has been written about investor psychology, we want to focus on a different concept in this Investment Update: the importance of speed and timeframe in responding to market changes.

Every investor operates within a unique timeframe aligned with their personal goals, and each has a choice in how quickly to react to market movements. Rather than making a binary decision — being “in” or “out” — we encourage clients to think of their reactions as being on a continuum of speeds. Just as you would respond to the first signs of smoke differently than dancing flames, we think it’s crucial to begin adjusting exposure when early warning signs appear. This approach allows for timely, incremental adjustments without overreacting to initial market fluctuations.

In this month’s Investment Update, we review the market volatility of July and August and discuss how our strategies responded. In this instance, waiting for a persistent trend before taking action proved beneficial. However, it’s important to remember that this won’t always be the case. The key lies in steadfastly adhering to your process, particularly during emotionally charged environments. Over time, consistent discipline in your approach will naturally lead to favorable outcomes, in our view.

But first, here’s a summary of the global asset classes utilized in our portfolios and their exposures for September.