Obsessing about the right time to be in or out of the market is harmful to an investor's long-term prosperity, but is still an important signal that an investor either doesn't have a systematic approach to investing, or is following one that doesn't suit them. Know what can help?
If investing were like dessert, would you find diversification with the 31 varieties of ice cream at Baskin-Robbins? or merely variety? What about at the supermarket? Hmmm.... Thoughts on a powerful word with two confusing meanings.
Regardless of the investing environment, diversification can help lower total portfolio volatility and stabilize, or even increase, returns. This wonderful illustration demonstrates just how important diversification is and what impact combining multiple asset classes can have in your portfolio.
Investors who try to maintain any given asset allocation in a portfolio will soon find that asset price ups and downs have taken that portfolio "out of whack." Here’s a quick explanation of rebalancing - getting that portfolio back in line - with a helpful tool to make the process easier.
Downturns can happen in two directions: depth and length. Both types matter, and the Ulcer Index (UI) is a fantastic metric to intuitively explain the extent of a portfolio downturn. Unsurprisingly, RP portfolios are less stressful than their traditional counterparts, as measured by UI.