The Best Drawdown Threshold: When To Avoid Volatility – And When To Stomach It

How much market downside are you willing to accept before being willing to miss out on potential upside? More specifically, the author of today’s article poses the following question: “How much would the market have to decline at its worst point in the next year for you to forgo investing in stocks (S&P 500) to invest in bonds (5-Year U.S. Treasuries)?” He proceeds to identify at what point an “Avoid Drawdowns” strategy begins to outperform “Buy & Hold” – and what drawdown threshold may provide the absolute best performance. For more, CLICK HERE.

35/55/3/3/4: The Gold Standard Of Portfolio Construction?

“You can have a portfolio that returns a lot, with a lot less risk,” declares the author of today’s article. He has long advocated a 35/65 portfolio (35% stocks, 65% bonds) in this regard, but after experimenting with variations on the 35/65 portfolio he has devised a portfolio – 35/55/3/3/4 – that offers “almost the return of the 80/20 portfolio with half the risk”. For more on this potentially ultimate portfolio – and how its attractive risk/return profile hinges largely on gold – CLICK HERE.

Reflections On The Market Turmoil

“This is why you own bonds,” declares the author of today’s article as part of his thoughts on the current state of the markets – and he’s got the chart that puts this point in stark relief. What has caused the recent market volatility (and what hasn’t)? Why does he state that buy low and sell high “may not be the best advice for the majority of investors” (and what may be the better advice for most)? For this and more, CLICK HERE.

The Current Case For Cash

Could cash prove to be the biggest winner in your portfolio for 2018? The S&P 500 and Dow – and bonds – are currently in negative territory for the year, and the author of today’s article advises that “With the sharp October swoon from the September high of a very long-in-the-tooth bull market, now could be the time to reevaluate the upside of earning only 2 percent on cash versus being overconfident in the stocks that have done so well for you in a low-rate environment.” For some considerations on how to allocate to cash “the right way”, CLICK HERE.

Preparing For The Rest Of 2018: Thoughts From “The World’s Biggest Investor”

It may not feel that way, but the chief investment strategist at BlackRock reminds investors that 2018 has actually been a return to normal in the markets after a not-so-normal 2017 – and in their Midyear Global Investment Outlook, BlackRock’s senior strategists conclude that “Even if ‘normal’ means more uncertainty and greater overall risk, investors have a lot to look forward to between now and the end of 2018.” For the strategists’ advice for individual investors – including which stocks with “fortress balance sheets” to consider targeting and what looks attractive in the bond market – CLICK HERE.

Trend Following vs. 60/40: Which Strategy Will Outperform?

Which investment strategy will outperform over the coming years: trend following or a traditional 60% stock/40% bond buy-and-hold portfolio? Based on an analysis of how trend following has performed over time relative to a 60/40 portfolio, the author of today’s article makes the case that “trend following has a much higher probability of outperforming a 60/40 portfolio in most environments and especially in the current environment.” For more, CLICK HERE.

Is There Green To Be Made In Green Bonds?

Bonds are increasingly going green – with companies (including Apple) and municipalities issuing bonds for projects that are eco-friendly or which benefit the climate. And while these bonds tend to be bought up by large institutional investors, the author of today’s article points out that smaller investors can still get in on the green bond action through exchange-traded funds and mutual funds that buy them. But should they? The author outlines some of the drawbacks and caveats to consider when it comes to green bonds. To read more, CLICK HERE.

The Case For The Good Enough Portfolio

As an investor, is being “good enough” good enough? The author of today’s article compares the returns of two hypothetical portfolios with the same 60/40 stock/bond mix and identical asset class allocations – the only difference between the two portfolios is their specific holdings, with Portfolio 1 holding the best performing funds over the last ten years while the funds in Portfolio 2 are mostly random selections. How does the performance of the “good enough” portfolio compare to that of the “optimal” portfolio – and what is the lesson for investors? CLICK HERE to find out.

Sell In May And Go…Where?

Should you follow the old adage and sell in May and go away? Based on what the author of today’s article found, it depends on where exactly you plan on going. Specifically, the author compared a number of strategies – Buy & Hold, Sell in May & Go To Cash, Sell in May & Go To Bonds, Sell in May & Go To Consumer Staples/Utilities, and a Diversified Sell in May Portfolio – to see which strategy performs best on an absolute basis. To see what he found, CLICK HERE.

“Sell Bonds, Post Haste!”: Why Bonds, Not Stocks, May Be The Single Most Overvalued Asset Class

The single most overvalued asset class right now may not be U.S. stocks, but rather bonds. This is the assessment of the author of today’s article, who believes that, “short of an economic recession, bond holders are almost guaranteed bigly losses over the next decade as we are now set on a likely path to lower bond prices and higher bond yields.” For the author’s multi-pronged rationale for why he believes investors should “sell bonds, post hate”, CLICK HERE.