Stock portfolio yields you profit just for holding it. You have dividend payments and when it’s a bull market — which is historically most of the time — your stocks rise in price. If we’re talking about US stocks measured by a broad market index, that all gives you long-term around 6% real (inflation-adjusted) returns.
But what If you want more? You will probably end up chasing for market timing opportunities or growth stocks.
Don’t miss another option! Make a stable, low-volatility portfolio with old and resilient low-beta stocks. Then add a little of a long-term treasury to smooth the ride through bear markets. Then take a reasonable leverage, like 50%-75% of the portfolio. You’re ready to go!
Surprisingly, low-beta stocks don’t get punished in returns for being low-beta, even the opposite. They have an exposure to the value factor, which gives them a boost in long-term returns. Their resilience to recessions and stabilizing treasuries in your portfolio make portfolio drawdowns much more controllable, so you can afford some leverage without taking a bigger risk than just holding a broad market index. Just don’t forget to re-balance.
Have your increased returns for the same risk.
And remember that an average market timer lags the index.
But what If you want more? You will probably end up chasing for market timing opportunities or growth stocks.
Don’t miss another option! Make a stable, low-volatility portfolio with old and resilient low-beta stocks. Then add a little of a long-term treasury to smooth the ride through bear markets. Then take a reasonable leverage, like 50%-75% of the portfolio. You’re ready to go!
Surprisingly, low-beta stocks don’t get punished in returns for being low-beta, even the opposite. They have an exposure to the value factor, which gives them a boost in long-term returns. Their resilience to recessions and stabilizing treasuries in your portfolio make portfolio drawdowns much more controllable, so you can afford some leverage without taking a bigger risk than just holding a broad market index. Just don’t forget to re-balance.
Have your increased returns for the same risk.
And remember that an average market timer lags the index.
No comments:
Post a Comment