Written by: Jamal Hamama
With tariffs looming over Wall Street and the stock market having registered its worst quarter since 2022, fear has displaced greed as the dominant sentiment among investors. Early April’s selloff further rattled markets, leaving many searching for stability. At PCM Encore, resilience is not just a goal but a guiding principle. The firm’s commitment to building durable portfolios shines in volatile environments like these, where its disciplined strategies and diversified investments thrive.
Diversification Still Reigns Supreme
Concentration in a few high-profile stocks has proven costly for many investors this year. As of early April, NVIDIA has dropped over 20%, while Tesla has tumbled over 30%. In contrast, broader market indices have fared better, with the S&P 500 down only 8% in the same period. Excluding the “Magnificent 7” tech giants, the S&P 493 is flat for the year, as is the globally diversified MSCI Index. Beyond equities, real estate and private credit have demonstrated resilience, insulating investors from the broader market’s turbulence.
“Diversification across and within asset classes remains the one free lunch in economics,” says Michael Paulus, Founder and CEO of PCM Encore.
Such investment philosophy manifests in the firm’s comprehensive strategy, which balances growth-oriented assets with recession-resistant sectors, as demonstrated by PCM’s ownership of Hawx Smart Pest Control. Public market peers such as Rollins have seen gains exceeding 20% year-to-date, validating PCM Encore’s focus on acyclical investments.
The Importance of Quality Management
Warren Buffett famously said, “Only when the tide goes out do you discover who’s been swimming naked.”
A nugget of wisdom, these words align closely with PCM Encore’s method of selecting fund managers. Through its partnership with Morgan Stanley Graystone, the firm meticulously evaluates hundreds of managers to identify those with proven track records across economic cycles.
“In benign markets, even average managers can look brilliant,” Paulus explains. “But during periods of uncertainty, deal-picking alpha becomes critical.”
Aligning with best-in-class operators who maintain privileged access to high-quality deal pipelines and implement rigorous underwriting standards, PCM Encore makes sure that its clients are positioned to weather economic storms while capitalizing on opportunities that arise from market dislocations.
Risk Is Personal
At PCM Encore, no two client portfolios are alike. The firm initiates every relationship with a comprehensive financial planning process to understand each client’s investment horizon, liquidity needs, and risk tolerance. Encore’s individualized strategy ensures that investment portfolios are tailored to unique client circumstances rather than relying on one-size-fits-all solutions.
“For younger clients with 20-plus-year horizons, market drawdowns are often buying opportunities,” Paulus notes. “But for retirees or those nearing major liquidity events, a 14% drawdown can be devastating.“
Such a nuanced understanding of risk allows PCM Encore to calibrate equity exposure and overall portfolio composition to align with each client’s own goals and timelines.
Turning Challenges Into Opportunities
While market volatility may be unsettling, it also creates strategic openings for well-positioned investors. PCM Encore uses direct indexing strategies to harvest single-stock tax losses during market downturns, offsetting future gains while rebalancing portfolios tax-efficiently. The firm also employs tax-advantaged rollovers and conversions to generate additional value for clients navigating turbulent markets.
Additional, through its strategic real estate partnership with American Capital Group (ACG), PCM Encore has seized on industry stagnation to acquire and develop multifamily properties in supply-constrained markets.
“The most compelling opportunities often emerge during times of fear and dislocation,” Paulus asserts. Moving decisively when others hesitate, PCM Encore positions itself—and its clients—to benefit from long-term growth potential while mitigating short-term risks.
With global markets more uncertain than ever before, PCM Encore’s disciplined strategies promise stability for investors seeking both growth and capital preservation. Those ready to embrace a resilient investment philosophy and framework grounded in diversification, quality management, and personalized planning will find PCM Encore ready to guide them, regardless of whatever challenges may lie ahead.
