The risk you buy high and sell low.
Benz: So how do you coach clients, then, in a terrible market environment like '08 and early, '09 when everyone's wanting to move to cash, do you give into that tendency or how do you fight against that at a time like that?
Balasa: It's a varied answer to your question. Our clients looking back at that timeframe, if you let them go to 5% or 10% cash, it didn't make a big difference to the total return in the portfolio frankly, but psychologically, it was a huge release. They felt like they did something to preserve principal.
Benz: So saying stay put, we're not going to change anything doesn't cut it?
Balasa: After about five or six months of seeing staying put as the market is going down, they get really old. And so this was kind of an emotional release. But for most people, if you can step back and if you run projections, again, coming back to the idea of looking at numbers for yourself, if you see that I have a 150% of what I need and now the market is going down, I have a 110% of what I need. It gives you the ability to stay.
Now, if you've got 80% of what you need, and I have 60%, but then maybe you have to make some different decisions. But again, coming back and looking at the big picture is really helpful to keep that nervous investor in the market.
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