Change from balanced to low risk

March 16, 2020

Introduction

It is not easy for me to stay humble, not over-confident on my investment strategy. I got contacted by my friend on March 10, 2020, I was over confident and I did not expect that things can get so serious related to corona virus. I need to make change and stay on the course, but reduce the risk.

Asset allocation

It is so important for me to apply asset allocation instead of timing the market. But after carefully consideration, it is better for me to save some cash in my investment account, and I like to use those cash to hedge against equity asset instead.

Here is March 16, 2020 S & P 500 index:

If  I stay humble, and do not be too greedy, then I will not invest another $13,000 Canada dollars on TFSA in February, 2020. Instead I should show concern about Chinese in China, and learn how to prevent Corona virus spread instead of focusing on SPX return for another year, another 30%.

If I am humble, then when my friend Pamela contacted me on March 10, 2020, I will carefully consider her suggestion, and then adjust my asset allocation, reduce equity from 50% to 25%, with total investment amount over $100,000 dollars.

Now I like to take loss, and sell 25% of equities, and then use those cash to hedge against equity. I do believe that SPX will continue to go down at least 500 points to meet 2000, or 2009 level.