The Double Dip is Dead, but What About Volatility

March 9th marked the 3 year anniversary of the current bull market.  The S&P 500 has scored an impressive 110% run-up, and I think we can officially declare that the dreaded double dip recession didn’t happen. However for the buy and hold investor there isn’t a lot to celebrate.  We are still 16% below the S&P 500’s 2007 peak.  Not including dividends a January 1, …

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Dealing with risk — diversified asset allocation

Diversified asset allocation, the belief system that most investment advisors preach—has the “right”  mix of stocks, bonds, real estate, commodities spread out over the entire world.   This investor age dependent mix is rebalanced, typically quarterly, by reducing your investment in areas that have performed well and increasing your stake in areas that are now underweighted—presumably waiting their turn to perform.

I don’t think this is a bad strategy, but it does make the assumption that the future will be like the past (e.g., equities average around 10% growth per year over multi-decade periods, and that some assets classes like bonds and commodities tend to counterbalance trends in equities.

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Buy and hold v.s. market timing

The last few weeks have been painful for me–being on the sidelines while the market stages an impressive rally.   I don’t expect to call things right all the time, and there are worse things that just not making money for a month, but it’s not fun missing the call. In the typical buy and hold portfolio things have a different feel.   No position …

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