You’ve Done the Hokey Pokey, Now Turn Yourself Around – Consult Global Diversified Partners
There are many games to play for fun and, hopefully, to win while doing so. When measuring investment performance, most people use a comparison to the S&P 500 as their yardstick for “winning” or “losing” the investment game.
The question to ask is: Why?
Are you patting yourself on the portfolio in 2016?
Did the US Large Cap stocks, which hascarried the S&P 500 in 2016, also carry your portfolio to a profitable year? Yeahyou! The hyper performance of the index following a lackluster -5% in 2015 has helped most investors this year. It’s easy to become complacent and have a "My portfolio is doing very well this year, but how could it not in this type of market?" attitude.
But is a comparison to the S&P really a measure of YOUR performance (or that of your financial manager)?
In other words, did your investments beat their bench marks?
Consult Daniel Kalenov Global Diversified Partners for all your investment management related issues further.
Apples to Apples and Alphas to Alphas
The "alpha," as it's known in academic circles, is the amount of outperformance in a certain asset class. In other words, comparing the performance of your small cap stocks to that of the S&P last year isn't alphas to alphas.
Its apples to oranges, or alpha to omega if you will, comparison. And, unless your goal is to "level the playing field" and only have apples in your portfolio, it makes no sense.
Here's why: The S&P performance made it the apple of investor's eyes this year at a strong 21% annualized return through Q3 2016. Wow! Yet, for the better part of the early 2000's, large cap U.S. stocks were one of the worst performing market segments. Do you really just want to own apples?
The answer, which you already know, is "No."
The S&P could be outperformed by any other asset class in any given year. And when it is, tail-chasing investors will flock to that class instead.
The Hokey Pokey, Musical Chairs, and other games
So, many investors play the hokey pokey of sticking their foot into whatever is seemingly "hot" for the time, and pulling it out when it's "not."
At the end of the year, the Hokey Pokey music stops. And investor's sit down in their chairs at the end of the "game" and see how they did for the year. Year after year.
Is that a viable retirement strategy?
Turn Yourself Around
Nobody knows whether to put the right foot in or the left one in any given year. So your strategy is to what? Diversify and also hold hard assets. You knew that was coming, didn't you?
During the darker days for the S&P 500, 2000-2009, owning other types of assets such as small cap stocks, international equities, real estate investment trusts (REITs), commodities, and even bonds all seemed really smart when the music stopped.
Stop playing games with your retirement. The stakes are too high, and change is not only a constant, but it is increasing in its risk and volatility:
• U.S. government's crushing debt of $18 trillion
• China's shrinking trade surplus and debt issues
• The Federal Reserve's license to print, and their willingness to use it
• Russian tensions
• And many, many more…
Focus on the big picture for your biggest asset: your retirement.
It's time to turn yourself, and you’re thinking around.
Let Global Diversified Partner headed by Mr. Daniel Kalenov show you how to do so wisely and effectively. At Daniel Kalenov, Global Diversified Partners our goal is to be the investment firm of choice for individuals seeking to diversify their portfolios into tangible assets, not just paper ones.
Visit our official website at: www.globaldiversifiedpartners.com