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Training To Invest: Asset Allocation Daily

Feb. 07, 2019 2:09 PM ET3 Comments
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SA For FAs


  • Russell Investments helps us understand investors’ motivation to buy (or sell) as a means of addressing pain points and obtaining gratification.
  • Pimco lays out a conservative base case for investing in 2019.
  • Thought For The Day: Investors must train themselves to adopt a long-term outlook against a proclivity to seek pleasure and avoid pain in the present.

Emerging Markets

“If one can potentially soften draw-downs, while also gaining exposure to a source of diversified returns, EM may become a much more attractive investment...Consequently, a minimum volatility strategy may help investors feel comfortable investing in a riskier asset class, while also helping them to remain invested...” (BlackRock)

Investing In Europe

“A smooth execution of Brexit requires a lot of improbable things to go right. A volatile outcome only needs a few likely things to go wrong. Bottom line: Our UK-based holdings are predominantly multi-national businesses with minimal domestic exposure.” (Invesco US)

2019 Outlook

“We expect volatility and slowing profit growth to continue to impact investor appetite for equities in 2019. Therefore, we have a modest underweight to equities, with an emphasis on liquidity and high-quality, defensive sectors. We favor large caps over small caps, U.S. equities over European equities, and are modestly overweight Japanese equities given positive earnings, low leverage, and a still-supportive Bank of Japan.” (Pimco)

Investor Psychology

“For some investors the pain in the present of losing money during difficult periods for equity markets caused them to abandon their investment strategy. They likely picked up the phone and called you with a clear decision: sell now and move to cash…From the vantage point of the investor, however, she or he is simply buying cash by selling out of the market. To the investor, there's a perceived safety in leaving the market to avoid the immediate pain of volatility.” (Russell Investments)

Thought For The Day

In an article offering genuine insight, Russell Investments helps us understand investors’ motivation to buy (or sell) as a means of addressing pain points and obtaining gratification. By way of analogy, the asset manager explains why investors pulled over $120 billion out of mutual funds and ETFs in Q4-2018, as follows: Imagine after a long night out with the family, you run

This article was written by

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GIL WEINREICH - Author of "The Mentor," a unique parable for financial advisors and those who aspire to become one. I have worked in the FA arena since 1997, and during that time, the New York State Society of CPAs twice awarded its prestigious Excellence in Financial Journalism award to me for a monthly column I wrote on business ethics. Previously, I reported on international news for Voice of America (where I was awarded a newsroom writing award) and prior to that worked as an editorial assistant at U.S. News and World Report. I live with my wife and children amidst the verdant and vibrant hills and dales of Jerusalem.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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