Every night, it seems, we got news of the stock market hit a record high. People make money. They are happy. Everything seemed fine.
Some careful temporal interpolation. I have seen this story – more than once, in fact. My advice is still the same:
You have to diversify.
Most people are not properly diversified. Yes, they are making money. Yes, they invest more and more, sometimes a great speed.
You might think you a wide range of
Just because you have more than one mutual fund, this is not a guarantee of pluralism. The asset can be associated. They all react in the same way.
Under normal circumstances, a person may have their own personal retirement accounts managed and it has a lot of blue-chip is the worst PERFO well. They could from their work, including four or five mutual funds, mostly growth-oriented 401 (K). Different investment, yes. But they have the same investment market risk, therefore, they are not really diversified.
If the market performed well, the economy seems to be improving, everything is rising. What’s wrong with it? simple. When the market does not do well, what will happen?
If the market began to struggle, then everything in the portfolio are likely to go down. Then, you have a problem on your hands.
Do not make the same old mistakes
With growth stocks performed particularly well, I think this has led to some complacency – security is almost a false sense of security. You can almost see the wrong we have witnessed repeated in 1999 and 2007 significantly, before the two most recent bear market, we have experienced. this is a big problem.
It is our customers, most of whom are retired or who plans to retire five years or 10 years of a person’s risk of error.
When the market rises, all performed well, even though it was already close to retirement, they do not adjust their portfolios. It is very difficult for people to sell winners, some of the risks of the table to lock in profits or take off, especially when all march higher.
People will say, “Oh, so if the marketBarriers or things get a little rough, we’ll make some adjustments. “It’s almost like they claim to have a crystal ball. I heard the same thing in 1999 and 2007, I do not remember exactly who YONE make these adjustments.
Then you how to diversify your portfolio? it sounds counterintuitive. you do not necessarily want to invest in transmission, but may be lagging behind some of the other locations after you. again, this sounds strange, but let me explain .
If everything in your portfolio is way up, and now, of course, it feels good. but it also means that everything is related. Once the market turned around, we get a bad economy report everything in your portfolio is likely to fall if there is no real diversification, you can not ride out the storm.
Warning and let’s not fool ourselves. history tells us that there will be some bad times.
I remember PEOP music conference in 2007, I expressed their lack of diversification of attention. they do not listen. when the market fell, after my story who becomes I think they retired 6 May’s story. Some of them may still work today.
Some people lost so much, they are very angry with anyone they have their own money, but if they did? Maybe they got the first two views, still do not listen. they just do not want to hear it.
When everything is consistently going up, people want to ride that wave. we also see people who believe they can manage their own money. when the market continues to rise, it is easy to make money, people naturally think they can do the same job, they are good advisers.
In a good market, t hat may be true.
However, I believe that when things are not going well in our own separate business from a professional amateur. when the market is not growing at a rapid rate, which is when a consultant can provide the guidance needed for difficult times, expertise and discipline .
4 tips correct diversification
If desired diversification, if you are looking for a consultant or someone to provide a second opinion, here are my suggestions:
Know the real diversification. If there is one poor performance of your portfolio position, do not panic. You know, this might be strict diversification. When the tide turn, and it will serve as a hedge to offset a declining market.
Self. know how commoditie, foreign investments and fixed income investments insert the correct figure of a diversified portfolio. We have been told not to put all your eggs in one basket, right? Similarly, you need a different bucket of money, nothing looks the same.
To find the right advisor for you. Different people need different styles. If you are a do-it-yourself type of investor, you do not need the same level of guidance of people who just look at their statement several times a year. In any case, find someone who is aligned with your values, rather than trying to be all things to all people.
In accordance with success. I believe that success leaves clues. Each adviser will say they can make you happy, make you expect in return. But who is the recommendation? Is a registered accountants, lawyers ESTATE- planning and other professionals recommend it? Is a consultant published author? Does he (or she) wrote Finance magazine article or have a weekly radio show? Everyone claims to be an expert. However, the real experts usually have some clues where you can investigate. They allow you to diversify on the right path.