MY RETURNS ARE GREAT!
I HEAR THAT ONE A LOT.
When interviewing a new prospect many times I hear them say, "My returns are great." I say well that's fine, but what's the standard deviation of your portfolio? Blank stare. More easily said, how much risk are you taking to get the returns you say you getting? 9 times out of 10 they don't know and don't seem to care as long as the performance is there. Well you should care! Maybe you are really underperforming for the amount of risk in your portfolio. Didn't think of that, did you? In doing a review of their assets, I usually see high concentrations in Large caps both in the U.S. and abroad. I call them comfort names. Names of companies you know and figure they will do well. That maybe good like in 2013 when the S&P was up something like 38%, but what about 2008-2009 when those stocks went down 51%? That is why we say DIVERSIFY! By diversifying you help spread out risk and control some of the volatility. It doesn't cure everything but it sure makes sense. Just ask 2 Nobel prize winners Eugene Fama and Harry Markowitz. They will tell you to diversify and rebalance. That's exactly what we do. Let me show you how.