Understand how large losses can have a disproportionate effect on investors financially and emotionally.
This brief update revisits the main tenets of “The Bleak Future of Bonds” paper and provides updates to some key numbers in the aftermath of the COVID-19/coronavirus crisis and what this means for portfolio construction going forward.
The Federal Reserve in March raised its forecasts for GDP growth, inflation and employment, based on the $1.9 trillion in new stimulus signed into law and an accelerated vaccine rollout.
Redefining Income in a Low Yield World: Historically, investors in or near retirement have relied primarily on bonds for “mailbox money” necessary to fund their golden years. Going forward, investors and advisors will need to redefine their concept of “income” and reconsider how they fill their “mailbox”.
Over the coming decade or two, bonds are unlikely to fulfill their dual role of income and capital preservation. Bond investors will be forced to choose between income or capital preservation, and there is a good chance they could end up with neither.
Most of the content published on this topic explains what behavioral finance is, its significance, and the definitions of various biases that plague investors. Here are four actionable steps advisors can take right now to implement behavioral finance concepts.
Behavioral Finance – Actionable Insights for advisors to help investors battle biases, avoid chasing returns, buying yesterday’s winners, and extrapolating a string of short-term wins indefinitely into the future
Conversations with investors about risk is often muddled with industry jargon they often find unrelatable. Redefine the risk conversation to better align with the way investors think about risk-- the pain of losing money.
Worth the Risk? Investors in this space have always emphasized higher levels of income or growth rather than capital preservation. While these investments are often termed “speculative,” are investors truly aware of the amount of risk in these asset classes?