On this week’s episode of Tape Talk, Quint and Daniel discuss the continued bear market rally and what the strategy might look like going forward.
Emotions and psychology have been the theme of the recent decline and subsequent rally. Investors fled the market at any cost and are now on the verge of rushing back in at signs of good news. This is a great example of the psychology that goes along with investing in volatile markets.
When it comes to your financial plan and reducing volatility, allocation matters. The recent volatility illustrates why thinking of your allocation as different buckets of volatility and time horizon are important for your inevitable withdrawal strategy in retirement.
Diversify and Rebalance
Diversification goes a step beyond simple asset allocation by adding in very uncorrelated assets such as metals and real estate. By including these in your portfolio some of your assets will move in different directions to allow you to make the most of rebalancing.