Should I Invest Differently This Time?
We think that people should have a globally diversified portfolio made of mutual funds and exchange traded funds that have low-costs and that are tax efficient.
We think you should rebalance when it’s necessary to rebalance when things get out of whack.
Otherwise, keep your portfolio as it is as long as that portfolio allocation makes sense for you.
Others think that you should try to time things so that when a market or economic conditions are a certain way, you should try to do things differently. Recently in the Wall Street Journal, Jason Zweig, who is a is a great columnist, looked into the period from 1966 to 1982, where we had stagflation, where there were miserable stock returns and high inflation, to see what companies did best and is that a strategy we should replicate now?
The answer is no. The companies that did the best, a lot of them don’t exist anymore, and have had terrible track records since then. So, I still think the best advice is have a globally diversified portfolio with the allocation that’s right for your risk tolerance and circumstances, that’s low-cost and tax efficient. Rebalance it, don’t change, and don’t try to time things with the market.