An investment style is getting a lot of attention (but nothing new) to replace the supposedly "buy and hold" style and it is called TAA - Tactical Asset Allocation. Although there is some value in doing this, "...tactical decisions may only explain 5% of returns..." so if you are not interested in moving in and out of alternative asset classes, then "buy and hold" still works fine.
The past 1o years have not been good to investors, but those who are trying to time the markets may perform even worse. And those who move in and out of even tried and true stock and bond funds average substantially less (3% per year) versus 10-12% per year over "long" time periods of 15 and 20 years.
Many investors have less tolerance for risk but what is your "capacity" for risk? That ability to withstand a downturn because you have "safe" money set aside to draw from in need. Buying and holding may "look" risky these days, but in the long-term, historically, it has always won. It is short-term where the risk really lies.
In behavioral economics there is a concept called "recency". Be aware that we all have a tendency to overweight the recent past results. (If it is snowing at 1:00 then we expect it to continue, but it never goes on forever, does it?)
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.