Volatility In Equities And Bonds – Stay The Course! Which One?

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Volatility In Equities And Bonds – Stay The Course! Which One?

Volatility In Equities And Bonds – Stay The Course! Which One?by Axel Merk, Merk Investments

Each time I hear someone suggest investors should ‘stay the course’ as markets tank, I fear such well-intentioned advice fails to adequately capture the predicament investors are in. Worse, the ‘stay the course’ mantra may set many investors up for failure.

So what’s wrong with sticking to one’s holdings when they tank? I would be the first to agree to encourage investors to stick to a plan when the markets are in turmoil, but only if its investors have been on a plan all along. Let’s assume for a moment that an investor has done his or her homework, possibly even sat down with a financial planner or given his or her money to someone to manage. We are all good then, right? I’m afraid that may not yet cut it.

Investors developing a financial plan tend to look at parameters that consider the person’s life situation expressed in factors such as financial goals, income, expenses, and risk tolerance. They tend to choose a mix of assets to pursue their goal.

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