Aug 7 2023
Can You Stomach A 20% Portfolio Drop?
"It's just not that easy to make money in the markets; it requires discipline."
These words resonate with self-directed investors who often find themselves underperforming the indices.
The new Steady Wealth Podcast website, available at www.steadywealthpodcast.com, delves into the heart of this issue (and others), addressing the reasons behind individual investor underperformance.
In this episode, Serge delves into an essential topic:
Can you stomach a 20% portfolio drop?
As the host of the podcast, Serge is also the principal of Blue Marlin Advisors, an investment advisory firm.
Throughout the episode, Serge takes a research-based approach to discuss market volatility and its impact on investors.
He begins by emphasizing the importance of understanding one's risk tolerance and how it can affect investment decisions.
Serge offers valuable insights into the current market conditions, highlighting the significant rise in US equity markets while cautioning about the potential underperformance of the bond market.
He further discusses investor complacency, indicating how periods of strong market performance can lead to overly confident attitudes among investors.
Serge shares his experience with clients who exhibit excessive confidence but may not fully comprehend how they would react during market drawdowns.
To illustrate the concept of volatility and risk, Serge walks the audience through several charts and examples, making the information accessible even to those who may only be listening to the podcast without visual aid.
The episode also covers the importance of determining one's risk appetite, especially during retirement.
Serge explains that as investors get closer to retirement, their risk tolerance typically decreases, and it is essential for investors to be aware of this shift to avoid panicking during normal market fluctuations.
The podcast continues with a hypothetical portfolio example, where Serge explains how to gauge and measure risk tolerance by using a diversified 60-40 portfolio allocation.
He emphasizes the significance of understanding both the percentage and dollar amounts involved to make informed decisions.
Towards the end, Serge encourages listeners to take a free risk assessment offered by Blue Marlin Advisors.
He highlights that this exercise is crucial for both long-term investors and traders, as knowing one's risk tolerance can help avoid irrational decision-making during volatile market conditions.
The episode concludes with a reminder to continuously assess and adapt one's risk tolerance as it may change over time, particularly during different life stages like retirement.
Overall, The Steady Wealth Podcast with Serge Berger provides a thought-provoking analysis of market volatility, risk tolerance, and the importance of making informed investment decisions.
By combining research and real-life examples, Serge empowers his audience to navigate the markets with greater confidence and prudence.