Retired Treasury bond manager Robert Kessler has always been skeptical of Wall Street’s “stocks for the long term” mantra. He explains why he is completely out of stocks in his personal portfolio—and why you should consider doing the same.
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ROBERT KESSLER
Veteran U.S. Treasury Bond Manager (retired)
ACTION POINT
DESIGN YOUR PORTFOLIO WITH THE WORST 2% OF CONDITIONS IN MIND
- Advice from “THE FOUR PILLARS OF INVESTING” by William Bernstein
- William Bernstein, a retired neurologist, Investment Adviser, Co-Founder Efficient Frontier Advisors, Author
“… it’s a huge, and usually fatal, mistake to design a portfolio without focusing primarily on those approximately 2% of times that will cause you to lose your nerve and violate Charlie Munger’s prime directive of compounding. As Munger, who is Warren Buffett’s partner, puts it: ‘The first rule of compounding is to never interrupt it unnecessarily.’ … holding plenty of safe assets—like dull, low-yielding Treasury securities—and being prepared to see your risky assets get periodically, and hopefully temporarily, slaughtered.”
The Wall Street Journal
Journal Reports: Investing Monthly
William Bernstein on Investors’ Biggest Risk: Not Preparing for the Worst
(August 7, 2023 print edition – August 4, 2023 online edition)