The Asset Allocator: At What Price Do You Get In? (Podcast)

Summary

• The implicit timeline for most stock-market trades and most stock-market analysis is short-term.
• Yet most investors’ personal timelines are long-term. This mismatch means that a lot of stock-market analysis won’t satisfy investors’ personal questions.
• Among the key questions investors want to know is when it is prudent to get in the market.
• Since we don’t know how low it will go, it’s best to just get in, and get in again, bearing in mind that long-term timeline.

Listen on the go! Subscribe to the SA for FAs podcast on iTunes, Stitcher and SoundCloud (click the highlighted links).

The implicit timeline for most stock-market trades and most stock-market analysis is short-term, yet most investors’ personal timelines are long-term. A lot of stock-market analysis will therefore fail to satisfy investors’ personal questions.

This podcast (6:22) suggests investors not overthink things. Accumulators of capital should buy. The current market crisis may well be the event whose importance to our future wealth we did not fully appreciate as it occurred.

Comments

[capemd1994]

Poignant eloquent and powerful conclusion and message.
I will have to archive this podcast and replay during the bleakest periods !
Thanks

[fujilomi]

If you are young, just dollar cost average a diversified low fee fund and don't panic. If you are old like me, wait for a bottoming process, like an inverse head and shoulders pattern to get more aggressive with dry powder if you have any. If you don't have any I would suggest to use rallies to trim/eliminate iffy stuff to raise some to buy better stuff on sale.

[Ronald Surz]

Hi @Gil Weinreich
This is an interesting time for baby boomers, sort of like using recovery from an illness to start a weight loss program. Boomers are on average following the ancient "60/40 Rule", a mix that lost 30% in 2008. The past 2 weeks have reduced equity exposure, a good start to positioning boomers in a risk they can afford to take. Next steps are to sell more equities, and to sell long terrm bonds too because they're risky and pay nothing.

This is not market timing. It's risk management., The markets will will recover from this health scare, but there will be other, more serious, events in this decade

[Seen_It_Before]

Right on @Ronald Surz !

Your last article on Feb 11, "Why There Is Serious Inflation In Stock And Bond Prices," was a perfect explanation for the current collapse in the market, which was started by the COVID-19 catalyst. Anyone who understands how catalyst's work knows that only a little is required to increase the rate of reaction under the right conditions.

The right conditions have been growing significantly over the last few years, which is when investors should have been reducing portfolio risk if their allocations were weighted too heavily towards risk assets. Now even long term Treasuries have become high risk assets do to their phenomenal rise, which is exactly what occurred in 2008 before they had an equally phenomenal collapse over the next year.

I agree, this market downturn has a long way to go before it stabilizes at levels that more accurately reflect current and future economic conditions.

[Ronald Surz]

Thanks @Seen_It_Before