In my article of December 20, 2017, I was urging investors to take a more cautious approach to investing in 2018. For those in retirement or nearing retirement, traditional asset allocation did little to protect portfolios from decline in the last two weeks. Many revere Warren Buffett. Think about how much risk he was taking, because his Berkshire Hathaway shares declined over $11.2 billion in a single week.
In my view, tactical investing is the only way I know to potentially lower this risk. Tactical investing is a mathematical way of measuring stock market risk and seeking to minimize stock exposure when risk of owning stocks is too high.
There is no perfect answer for minimizing stock market risk in all market conditions. However, on February 8th, sidestepping risk in conservative portfolios seemed like an alternative answer to traditional asset allocation investing.
Investors need to ask themselves one simple question: Given my results on February 8th, how much risk have I been taking – and is that acceptable to my investing temperament?
Ben Reppond is CEO and Investment Manager of Reppond Investments. Reppond Investments, Inc. is a registered investment adviser in the States of Washington and Montana. We may not transact business in any state where we are not appropriately registered, excluded or exempted from registration. Individual responses to persons that involve either the effecting of transactions in securities or the rendering of personalized investment advice for compensation will not be made without registration or exemption.
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