My expectation for losses in U.S. stocks during the next bear market is over 60%, which would take us back about twenty years and would require at least a 150% gain just to get back to even.
What impact would such a loss have on your portfolio? What impact would that have on your ability to retire or sustain your retirement lifestyle? Would any other financial goals be impacted? How about the toll on your mental health to see such a large chunk of your life savings wiped out. Continue reading “Are You Prepared for the Next Bear Market?”
Your investment strategy should be determined by the lesser of (1) your financial capacity for risk and (2) your emotional capacity for risk. Otherwise, you are likely jeopardizing your financial goals.
What’s the difference you ask?
Financial capacity is the ability to achieve your financial goals even after a severe stock market decline.
Emotional capacity is the ability to stomach volatility and losses in a severe stock market decline.
A couple examples will help illustrate these concepts.
Continue reading “Financial vs. Emotional Capacity for Risk: The Importance of Weighing Both When Building An Investment Portfolio”
Investors tend to underestimate the risk of loss especially at the tail end of a bull market that’s been raging for almost eight years. So let’s take a look history for some proper perspective.
Continue reading “Risk and Return: A Historical Perspective”
Did you know that you and a friend could put the exact same amount of money away throughout your careers, earn the exact same average annual return on your portfolio with the exact same volatility but end up with completely disparate portfolio values?
Continue reading “You Only Get One Shot”