Death to the 60/40! Long Live the 60/40!

The traditional 60/40 balanced portfolio is no stranger to coming under fire. Many pundits have decreed the death of the balanced portfolio, arguing that a low yield environment will prove insurmountable and bonds will no longer be able to provide necessary diversification for investor portfolios. This proclamation has yet to be proven correct, and in the investment management industry, being too early is the same thing as being wrong. That being said, is this time different?

How Strong Is Your Stomach?

The vast majority of the time, most investors are not terribly concerned with their risk tolerance. Typically, the CBOE Volatility Index (VIX), a measure of S&P 500 volatility, sits comfortably below 20 and financial markets exhibit a consistent upward trend. However, as 2020 can attest, markets don’t always behave this way. Earlier this year the…

Are Fractional Shares Just a Gimmick?

One area of finance that has been getting a lot of attention lately is the concept of “fractional shares” and their use in investment portfolios. In an effort to make investing cheaper and more available to the masses, certain brokerages are allowing clients to buy fractional shares so that investors aren’t burdened with having to…

One Size Doesn’t Fit All: Assessing Suitability in the Context of Uncertainty

BLOG SERIES: UNDERSTANDING RISK

This installment in our volatility series will aim to provide a framework that helps to quantify an investor’s ability and willingness to take risk based on constraints and the importance of reaching wealth targets. Additionally, I will finally add varying returns into the analysis to illustrate the impact of the risk and return trade-off. Through simple examples and simulations, I will show that understanding an investor’s total financial picture and applying a probabilistic framework for risk management can help achieve desired outcomes in the face of uncertainty.

Volatility, What a Drag

BLOG SERIES: UNDERSTANDING RISK

Over the past couple of months, investors of all types have likely been caught off guard by global events that caused massive swings in the market value of their portfolio holdings. Unfortunately, some have realized that their investments were far too risky and have lost more than they could tolerate. The old gambler’s adage of not risking more than you are willing to lose holds true for investors as well – but how do we know how much is really at risk?

Why You Should Hold Bonds

The most recent pullback in equity prices due to uncertainty around COVID-19 has resulted in another leg lower for bond yields as investors clambered to gain exposure to the safety of fixed income products. The steady march lower in yields is once again prompting market participants to question how much lower yields can go, and…