When the stock market’s gone up for several years it’s easy to get complacent and ignore the changing risk in your portfolio. Why sell or rebalance or adjust an allocation when equities are doing so well? Because investing has tradeoffs in risk and return. When you only have a plan for moves higher, you leave yourself unprotected from worse markets.
Risky events don’t happen on a timely basis. There are no giant neon signs that flash, “It’s time to get out!”
Instead, we hear pundits droning on about the “risks” from trough to peak. In other words, quantifying risk is hard: Continue Reading…