Two tenets of personal finance came under attack after the financial crisis. The first was diversification and the second was the concept of buy-and-hold investing. A quick glance at the performance of major asset classes over the past decade shows that a focus on US equity assets would have left an investor out in the cold. Admittedly all risky assets tanked during the financial crisis but a longer time horizon shows the benefits of a globally diversified portfolio. The concept of buy-and-hold has also been tarnished. However the idea that one would buy a portfolio and never adjust it was always in error. Re-balancing is a key, albeit modest, component of any buy-and-hold approach. In today’s screencast we re-examine a couple key components in portfolio management.
Items mentioned in the above screencast:
A look at the past year (and decade) for the Global Markets Index. (Capital Spectator)
On the power of portfolio re-balancing. (SFO)