Capital Preservation Wealth | EI Blog

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Understanding the mathematics of loss must ultimately translate into portfolio construction. Not all defensive assets offer the same quality of protection. Conflating perceived safety with genuine downside resilience is a costly mistake. US Treasuries, for example, carry structural, battle-tested protection: deep liquidity, government backing, and a proven track record of holding value during equity drawdowns.

Private credit, by contrast, may offer attractive yields but can mask risk through illiquidity and limited price transparency. In periods of severe stress, it may not reprice in the same way as public markets. Instead, liquidity can become constrained.

This is a critical distinction. Truly asset-backed investments, where hard collateral such as real property, equipment, or receivables underpins value, provide a more concrete and legally enforceable floor on recovery. Cash flow projections alone are not collateral.

*Wealthspring Capital LLC (WSC) is an SEC-registered investment adviser. Registration with the SEC does not imply a certain level of skill or training. Information presented in this article is for educational purposes only and does not constitute individualized investment advice. All investments involve risk, including the possible loss of principal. Past performance is not indicative of future results.

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