Asset Allocation
STAY CAUTIOUS
STAY CAUTIOUS
- No one knows how the global recession will play out
- Profound changes occurring
- Time to be prudent and cautious
HAVE AT LEAST ONE ASSET THAT IS NOT CORRELATED TO THE STOCK MARKET
HAVE AT LEAST ONE ASSET THAT IS NOT CORRELATED TO THE STOCK MARKET
ADD SOME GOLD TO YOUR PORTFOLIO
-
LARGE AND ESTABLISHED GOLD ETFS:
- SPDR GOLD SHARES ETF (GLD)
- ISHARES GOLD TRUST ETF (IAU)
- 3 MONTH TREASURY BILLS AND OTHER TREASURY SECURITIES
- CAN PURCHASE TREASURY SECURITIES DIRECTLY FROM U.S. TREASURY AT TREASURYDIRECT.GOV
CASH AND CASH EQUIVALENTS
CHECK YOUR ALLOCATION TO STOCKS
CHECK YOUR ALLOCATION TO STOCKS
- A big risk for pre-retirees and retirees is a major decline in retirement funds
- Lack of time to make it up
- More than one- third of baby boomers’ 401(k)s: +70% in stocks
- Almost one-tenth of baby boomers’ 401(k)s:100% in stocks
START PREPARING YOUR PORTFOLIO FOR THE NEXT TEN YEARS
START PREPARING YOUR PORTFOLIO FOR THE NEXT TEN YEARS
Market leaders of one decade are frequently laggards of next and vice versa
2010s MARKET LEADERS
(12/31/2009-12/31/2019)
-
U.S. Stock Market:
- Large (S&P 500) +256.4%
- Mid (S&P 400) +230.6%
- Small (Russell 2000) +205.5%
NETFLIX +4000%
2010s MARKET LAGGARDS
(12/31/2009-12/31/2019)
- Emerging Markets (MSCI Emerging Markets Index) +48.3%
- Brazil (Ibovespa) -26.9% (USD)
- Gold +38.9%
- U.S. Treasury Inflation-Protected Securities (TIPS) + 39.2%
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Commodities:
- S&P GSCI -16.9%
- West Texas Intermediate (WTI) – 23.1%
REMEMBER TO REBALANCE INTO OUT OF FAVOR SECTORS
- U.S. growth stocks, mega-caps, in particular, have dominated markets and portfolios for years
- Their powerful performance means they have outsized positions in indexes and portfolios
- Out of favor groups like small caps, cyclical stocks, value, and emerging markets have been beaten down and in many cases are selling at the lowest relative values to large-cap growth since the financial crisis
- Divergence in valuations has created an opportunity not seen in years, to take some profits from overvalued large-cap growth and add to these unpopular and undervalued sectors
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