Barrons: Market is setting new records. Here’s How to Prepare for a Plunge

[pcsrini]

https://www.barrons.com/articles/market ... 1594380614

Summary:

1. Hedging is expensive. The best way to protect your portfolio is diversification through asset allocation. Since 2007, a 100% stock portfolio has returned 8.3%. 70/30 stocks and treasuries has returned 8.2%
2. Volatility is the reason stocks have returned more than treasuries or Cash. Bonds have done their job this year as a hedge with some turmoil
3. Hedging is a drag on returns. Though midway through the article, a plug for keeping a portion of assets in hedge funds?
4. Suggestion to tune asset allocation based on valuations
5. The best hedge is perhaps money market accounts, savings or short term treasuries

[rkhusky]

Preparing for the plunge = determining your rebalancing strategy

[Nate79]

Stay the course and ignore such noise.

[Random Musings]

Since 2007, before the big bear. Bond yields still existed.

Barron's, are the cherries ripe for picking?

RM

[pcsrini]

Preparing for the plunge = determining your rebalancing strategy

+1. It's a bit difficult to unemotionally rebalance when the plunge happens, but it does seem to get easier after a few times. I like the RBD strategy.

[abuss368]

Here is how I prepare for a “plunge”: I tune out the noise and financial porn.

No need for Barron’s.

[whodidntante]

There's a reason some call that rag Bearon's. The capital markets drive the economy more than the economy drives the capital markets.

That said, this former prodigious accumulator of cheap debt has been deleveraging lately. Mortgage will be retired in August. Though I did start prior to COVID-19 and did stop during the ugliness to free up capital for market timing. This gambler enjoys taking a good risk.

The rest of my debt is either 0% or 1.89% so I think I'll keep it. Toons would tell me to pay it off.

[bestplans]

I try to keep a good plunger handy

[btq96r]

Yawn.

Markets have geometric properties, so they're is going to be up and down; volatility is part of how this all works. If someone can't handle that, I don't know what to tell them aside from the overall trend line is going to be to your liking if you keep investing and reinvesting in the basic index funds. Listening to the noise should be for entertainment purposes only. Having seen the Great Recession and COVID up close, I've got every confidence in staying the course so long as our current economic and monetary paradigms are in place.