Risk
MAKE SURE YOU ARE DIVERSIFIED AND OWN SOMETHING THAT’S UNPOPULAR
MAKE SURE YOU ARE DIVERSIFIED AND OWN SOMETHING THAT’S UNPOPULAR
BE AWARE OF THE MARKET RISK IN INDEX FUNDS
BE AWARE OF THE MARKET RISK IN INDEX FUNDS
BASIC INDEX FUNDS’ ADVANTAGES
- Broad, unfiltered & unhedged exposure to market
- Low fees and tax consequences
BASIC INDEX FUNDS’ DISADVANTAGES:
- Exposure to all companies in index: good & bad, expensive and cheap, profitable & unprofitable
REVIEW YOUR RISK TOLERANCE FOR THE U.S. STOCK PORTION OF YOUR PORTFOLIOS
REVIEW YOUR RISK TOLERANCE FOR THE U.S. STOCK PORTION OF YOUR PORTFOLIOS
FOCUS ON COMPANIES WITH FINANCIAL STRENGTH
FOCUS ON COMPANIES WITH FINANCIAL STRENGTH
- Entering a period of increased volatility
- Many companies have taken on large amounts of debt to take advantage of low interest rates
- IMF warning of rising corporate failures
3 U.S. COMPANIES SEEN AS BETTER CREDITS THAN U.S. TREASURYS
(as of 10/1/15 – Lower 5-year CDS spreads than U.S. Treasurys)
- Merck
- Chubb
- Cambridge Bancorp
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