After rereading my original “Why Your Asset Allocation is Probably Wrong” piece two years later, I feel good about some things and bad about others.
I feel good that since we wrote that note the S&P 500 is up 31.5% while the Bloomberg Barclays U.S. Aggregate Bond Index up 7.9%. So every dollar that people shifted as a result of that first piece is worth $0.24 more, but I feel bad that.
Not enough people sold bonds and bought stocks.
Did you shift your allocation?
It seems like the first piece gave a very rational argument - bordering on academic: 1) I explained stocks can be volatile, but can have higher returns; 2) I explained that bonds were definitely going to have lower returns for the foreseeable future; and, 3) I explained what compounding was and why the extra return was worth it to me and could be worth it to you.
If that works for you, great. Let’s set up a call to discuss equity investing with our 3R methodology. For the rest of you, let’s get a little more basic. (Click here to set up a call)
Do you own bonds or fixed income mutual funds? Why? Because they are less volatile than stocks? Did the financial advisor who sold them to you explain the potential return you are giving up to have less volatility in your portfolio? Was it a long discussion? Did you realize that was one of the more important financial discussions you will have in your life?
I ask because at this time, bonds look like a terrible investment that a lot of people might own because of a pie chart that was generated by some computer sitting behind the desk of a well-meaning financial advisor.
Maybe my first article was too ambitious. It required the reader to become an expert in volatility, bonds, compound interest and pick up the phone and do something about it.
Let’s try something a little simpler this time. If you are invested in bonds or fixed income mutual funds, give me a call. That’s it. Click on this link. And then we can talk about it for 15 minutes. Maybe your allocation isn’t wrong. Maybe you are older or have a liability that can come due at any moment. I will be happy to tell you what I think.
Worse comes to worse you will have gotten a second opinion on one of the most important financial decisions of your life.
About the Author
Manny Weintraub, CFA, is the President of Integre Asset Management, a New York-based registered investment adviser, that combines investments in industries benefiting from long-term trends with the use of active management to reduce risk. A former Managing Director of Neuberger Berman, where he co-managed more than $1.5 billion in U.S. equity assets, Manny is an experienced portfolio manager and contrarian investor. A graduate of the University of Pennsylvania, he serves on the boards of The Atlantic Theater, and North Country School – Camp Treetops. To learn more about Integre, please visit www.integream.com.
Integre Asset Management Disclaimer – 8/1/2019 Past performance may not be indicative of future results and every investment program has the potential for loss as well as profits. This material is presented solely for informational purposes and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security or fund interest or any financial instrument. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All material has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on such information. All information is current as of the date of this material and is subject to change without notice. The views expressed in this presentation are subject to change based on market and other conditions. Any views or opinions expressed may not reflect those of the firm as a whole. Additional information can be provided upon request.
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