It is often said that the only constant is change. This simple adage can be applied to nearly every aspect of our lives, and especially our financial lives. Over the past few years, we’ve been riding an economic roller coaster, at times treacherous enough to unnerve even the most prudent investor. By forcing us to reconsider our long-held beliefs, this new landscape presents myriad opportunities for innovation in investment management, moving beyond the traditional long-only 60% stock, 40% bond portfolio.
Why the sudden shift? Here’s a quick glance at where we are today – lingering inflation, rising interest rates, and persistent volatility in markets across the board – all a sharp pivot from just a few years ago. The problem with “timeless” investment mantras (such as the 60/40 asset allocation) is that they are likely to be devoid of sensitivity to present economic conditions. But most financial advisors are still hesitant to deviate from traditional wisdom. At AlphaCore, we believe that stagnation may perhaps be the riskiest move of all.
A shrewd investment strategy is dynamic and informed by macroeconomic factors. There is strong empirical evidence to suggest that current equity valuations and bond yields are very useful in predicting future returns. Investors should be paying close attention accordingly. This is not to suggest a market-timing strategy, but rather a strategic allocation to a diverse set of assets that strives to bolster a portfolio’s resilience and consistency of returns. Hence AlphaCore’s guiding philosophy (and the title of this article) – WIN MORE BY LOSING LESS.