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Usually the investors' portfolio usually has a percentage of fixed income and variable income , asset allocation or “asset allocation” involves deciding the percentage of the portfolio that we will use in each type of asset, not only in the specific assets to consider.
Deciding in practice what percentage will be applied often depends on factors that are not very “objective”. There are people who choose to have everything in fixed income, because their aversion to risk ends up pushing them. On the other hand, there are people who mistakenly believe that bonds do not provide profitability, so they occupy their entire portfolio with stocks. These investors may be wrong.
A study published in t Ghana Email List he US in compared the profitability of bonds with stocks between and , concluding that after discounting inflation, stocks gave % annually and bonds %, with much less risk. . However, we must keep in mind that in the world after the real estate crisis of , bond yields have decreased greatly.
Risk aversion or propensity, the common but incorrect way to choose asset allocation
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In general, what has been done is to ask the buyer of the financial product about their risk tolerance in the following way: are you willing to lose profitability (earn less money) in exchange for security? That is a serious failure since:
It triggers in the investor the bias towards aversion to the loss of the financial product, with which the decision is not completely rational or based on the mathematical expectation of the investment.
The circumstances of the investor are unknown , except for their propensity for risk. What is their age? What disaster does a loss of , or % of his investment mean for the investor? Will he be able to recover?
The circumstances of the portfolio are ignored , the more diversified it is in variable income assets, the lower the risk will be. Maximum diversification is usually achieved by investing in indexed products. In fact, if the entire portfolio is invested in a single type of bond, we would be running a significantly higher risk than a highly diversified portfolio in global stocks. Although the bond is a low risk asset and the shares are a higher risk asset.
So how can we adjust the stock/bond asset allocation?
The ideal is to adjust to the age
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The father of “value investing”, author of the book “The Intelligent Investor” and mentor of the successful investor Warren Buffet recommended that in the last years of life, investors choose to transfer their portfolio to fixed income , that is, bonds and the like. . Increasing our money in bonds is also recommended by American finance guru Jane Briant Quin.
Why should we increase our participation in fixed income as we age? Mainly because as we get older we will have less time remaining to recover the losses we may have experienced by investing in more volatile and profitable assets , compared to having done so in more stable assets. According to some authors such as Charles Ellis (Winning the Looser's Game) it took a maximum of years to recover our inflation-adjusted position between and
The question is what percentage should we invest in bonds? Well, it depends on the author. There are those who defend a : portfolio, which invests half in bonds and half in stocks, but that leaves us in a bad light compared to what was mentioned in the previous section. There are also those who believe that the percentage in bonds may be based on our age, so that at we would have to have % in bonds and % in stocks and at we would have to have % in bonds and the remaining % in stocks. . There are those who believe that this does not make sense due to the longer life expectancy.
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发表于 2024-2-15 19:00:38
