Investing Principles
MAKE SURE YOU ARE TRULY DIVERSIFIED
MAKE SURE YOU ARE TRULY DIVERSIFIED
- Not truly diversified until you own something that makes you uncomfortable
- Uncomfortable usually means: unpopular, underperforming and cheap
- “Uncomfortable” assets today include:
- Value stocks
- Emerging markets stocks and bonds
EXTEND YOUR INVESTMENT TIME HORIZON
EXTEND YOUR INVESTMENT TIME HORIZON
PROBABILITY OF A LOSS FOR THE S&P 500
(Rolling Price Returns, Jan 1930 – Jan 2021)
- 1 day investment = 46% chance of loss
- 1 year investment = 31% chance of loss
- 5 year investment = 19% chance of loss
- 10 year investment = 10% chance of loss
Source: Richard Bernstein Advisors “Insights” March 2021
STICK WITH YOUR INVESTMENT DISCIPLINE
STICK WITH YOUR INVESTMENT DISCIPLINE
- KNOW YOUR RISK TOLERANCE
- STAY WITH YOUR ASSET ALLOCATION
- REBALANCE WHEN IT GETS OUT OF WHACK
- BE DIVERSIFIED AMONG:
-
RISK ASSETS, LIKE STOCKS
-
SAFE ASSETS, LIKE SHORT-TERM TREASURIES
-
HEDGES AGAINST DISASTER, LIKE GOLD
KNOW YOUR RISK TOLERANCE AS AN INVESTOR
KNOW YOUR RISK TOLERANCE AS AN INVESTOR
- Understand Your Own Risk Tolerance
- Put to the Test During Market Turmoil
- Are You an Investor or a Speculator?
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