Below the basic appreciation-stability allocation, rebalancing to targets among low-correlation asset classes is how you can get a rebalancing bonus.
Below these asset classes, sectors act as reminders of other aspects of your investment strategy.
One of the asset classes that we use to build diversified portfolios consists of hard asset stocks.
Canada is the one major country that is not included in the EAFE (Europe, Australia, and Far East) foreign index. Not only are they good neighbors but a good investment.
Like the iron rods in sailing ships, bonds keep your portfolio upright in stormy weather.
There are many things riskier than volatility.
Baring a real people’s revolution, it will take until 2050 for China to complete their slow march to free markets.
Overweighting investments with average higher return and lower risk is a win-win situation.
The value of any asset category does not go in one direction forever. The housing prices boom shows signs of weakness, and that they may correct or at least under perform for the next few years.
If the S&P were a financial advisor it would say, “Let’s buy mostly large cap growth stocks in the industry that did well last year with a high price per earnings ratio.”
It is usually better to be a seller of options than a buyer of options.
All investors should have a certain measure of foreign investments. That may sound scary, but not as scary as putting all your eggs in one country’s basket!