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Last fears of the Fed tapering their money burning continue to -- the markets is -- tiger rethink the old adage of a 6040 portfolio allocation 60% equities 40% bond.
Got -- on that says that strategy is dead he's got a new one that's gonna help you withstand the ball -- joining us -- Blumenthal.
His modern portfolio for the everyday investor must talk about fed tapering -- know that we we.
We've kind of been the source that a little bit but that would certainly affect how much goes inequities in how much goes to bonds.
What is your perspective what that's the big bomb in the portfolio today is that exposure to fixed incomes so I think what most.
What happens with most individual investors that they don't think they can lose money.
In their fixed income portfolio and as we seen in the last month.
In 19100 basis point rise is about an 8% hit to ten year exposure.
-- let's just focus on that for second since may we've seen in ninety basis point rise in interest rates thirty to 40% is if this continues.
Over the next few months -- I know everybody's saying no it's it's over done the interest rate rises -- But what if it's not.
How do you prepare yourself -- games interest rates keep going up.
Well there's a different way to think about how you allocate to fixed income in one of those options is to shorten up your maturities and be patient.
I don't think this is over I think it may be over for now.
But ultimately the Fed in the global central banks are trying to drive inflation I think that the wind so again how do you prepare for the worst case scenario if you're if you're.
In retirement you gotta you gotta think -- the worst case scenario what.
What happens how do you prepare for that well most portfolios or 604060.
Equities forty fixed income.
And it's that forty piece that runs into a lot of trouble so we lose 10%.
We're down and 40% exposure our overall portfolio takes forty -- That's what some have possible what is the modern portfolio get some golf course is that what about about -- -- or especially if I'm.
Part of the older generation -- went up my bond holdings.
I heard the word modern for portfolio and I think I've missed the -- -- frankly yeah we -- probably doing it the way that most people do it their allocated to to stocks and bonds.
The music on your raise your he's -- -- changer allegations.
I would toll to at AT and -- increase the buckets at a third bucket there are a lot of returns streams that are available to every investor now.
That aren't dependent on one directional move in interest rates so bull market in bonds going with interest rates down.
Where equities going up so expand.
Instead of 6040 think a third a third a third in this other bucket has a number of tactical types of strategies.
-- currency trading strategy.
Or different types of risks -- diversify.
The hole so this other third starts a third bonds a third the other third it would include cash sure -- I'm not I'm not clear about not -- that -- I don't think you need to go to cash so this is a very common to institutional space endowments -- -- he yells and how reallocate.
But in the past.
You had do these super wealthy investor didn't get access to some of these returns to think trading strategies.
Think something they can trade markets up or trade markets down or tactical that has a shift that it will.
Increases equities and then reduce his equity exposure goes to fixed income exposure.
There's some great strategies out there -- that -- -- again just to be precise would be something like what hedge funds do.
Yes but in liquid form in mutual funds -- daily liquidity you don't have K one unafraid of them the -- veteran mutual funds that sort of thing.
Well the municipal bond exposure this in mutual funds and absolutely again going back to the bonds I think that that's for the big -- -- And forget the 1% move that we've had an interest rates.
Think three or four or 5%.
That's tomorrow that's not yet today I don't believe.
It has a lot of it might leave it to the tactical and that's and that's the -- David misses -- first thing I thought it was high hedge -- But reacted so many retail investors for so long have been shut out of the hedge fund industry and Allison there's more more ways for for all of us to come again tomorrow and that's the point you know get aware -- that these and these strategies are out there and their liquid and they're accessible and there's some good ones hedging your bets -- Stephen thank you very much thank you for having to see --
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