Josh Brown, CEO of Ritholtz Wealth Management, outlines a series of best practices, or survival tips, he believes
investors can follow during difficult market environments. Brown’s process starts by asking a series of questions, which hones on each individual’s risk tolerance and portfolio positioning. For example, asking if one is overexposed to stocks, how much interest rate risk one is exposed to, whether or not hedge-like strategies are appropriate and asking what the chances are that stocks and bonds could fall at the same time. These are all important questions that should be thought about in the context of long term investing and one’s allocation.
Brown also makes a very important point, which is that when stocks fall their expected future return is increasing. According to Brown, when volatility picks up “you are earning the premium long-term returns that not all investors have the stomach for. That makes you the winner of a game that many others consistently lose”.
See Brown’s 4 Survival Tips from Fortune Magazine on the right.