You Actually Want Volatility
It is not easy for people to understand what is actually going on inside their financial holdings. Some people have 20-30 different line items (funds, bonds, stocks, etc). The simple analogy is that it is very difficult to distinguish which rubber band is good and which is bad. You need to stretch them both, in order to tell which one is weaker. From that point, you can assess whether or not the risks you actually have are ones that you intend, or not.
Jae’s Corner isn’t about ‘what risks you should take (that is for clients),’ but it is about ‘ take the intended risks, avoid the unintended risks.’ The media, the mail you receive, largely leave you without the insight you need. That is for a wide set of reasons, some of those are justified, and some are not.
During volatile times, you can actually observe, to be able to distinguish what risks you effectively have. One reason that people assign false narratives is that people don’t have an accurate picture of their holdings.
Without crushing you with details, the point here is that the classifications of the pie charts don’t tell you the complete story, you will need to check it yourself, as provided over the past months.
Note: Blackrock is being used because it is best of class, not the worst. In other words, it is more likely that your reports are less informative, not more.
S&P 500: 2.53% (whew)
AGG: -0.039% (unchanged)
60% stocks, 40% bonds portfolio = 1.5024%
Now, the results…