Investing Archives | Page 8 of 8 | Wealthspire Advisors

Our recent post on standard deviation discussed how volatility can negatively impact an investor‘s financial or psychological health. Financially, this occurs if an investor is “forced” to liquidate during times of heightened (negative) volatility, incurring significant permanent losses in the process. Psychologically, this occurs when an investor’s angst reaches extremes and either impacts their health, or catalyzes emotional decision making with regards to portfolio decisions. One of the ways to minimize volatility is to have an appropriately diversified portfolio. In this post, we will explain how to think about this crucial aspect of portfolio construction. Let’s start by using an…

Pop quiz:  Investment X and Investment Y have each returned 10% over the last 5 years.  Which one is better? It is tempting to claim neither, as their returns are equal.  But how does your response change if we also provide this fact: Investment X went up slowly and steadily each year, while an investment in Y was a wild ride – down 10% in two of those five years.  Our guess is that most people would strongly prefer Investment X with this new information.  The moral: when evaluating investments, one must assess both returns and risk together. Standard deviation…

Recently there have been a multitude of articles concerning how low interest rates are going to negatively impact investors. The conclusion of many of these articles is that your bond holdings should either be jettisoned or drastically changed in favor of riskier bond strategies that can earn higher returns. Below, we will highlight our view on why this is the wrong conclusion. The Role of Fixed Income in Your Portfolio Please note: the following applies to investors who seek a “balanced” long-term allocation, whether it be 75%/25% equity-fixed or vice versa, and does not apply to portfolios that are equity-only.…

Alternatives are often a source of confusion for our clients and the investing public, and with good reason: there is no uniform standard for the definition of an alternative, and there is no investable benchmark to represent the asset class. How to Define Alternatives If there is one thing everyone can agree on, it is that "alternatives" are not old-fashioned stocks (think S&P 500) or old-fashioned bonds (think treasuries, high grade corporates, and the Barclays Aggregate index). I consider this the "smell test definition" - does it smell and taste like a stock or a bond? If not, it's an…