Those of you who didn’t attend our August Lunch and Learn missed an important lesson in managing behaviour in volatile markets.
With the equity market close to doubling in value over the last 5 years, it is now even more important that clients take control of their emotion-based decision making process.
We followed the investing habits of 2 brothers, with opposite investment strategies, over the course of their investing lives.
One brother was either 100% in equities or 100% out of the market at varying times over the last 40 years. The other brother maintained a 70% / 30% (S&P500/Barclays US Government Bond index) asset allocation, rebalanced annually, regardless of the performance of the equity market.
The results: The 70/30 portfolio brother had a portfolio over 3 times the value of his market timing brother. See the attached power point presentation for details.
The moral of the story: stay disciplined to your plan, have faith in the market and maintain patience in volatile times.