Simple and Timely Lessons
Mar 01, 2025
The chart displays a few simple and timely lessons that we try to impart to those wanting to look after their own portfolio.
It reveals the reasons why we talk about the risk hierarchy in preferring ETFs rather than individual stocks, why asset allocation is important including holding cash which leads to rebalancing. All up, these principles show you how to avoid losing money.
The 3 year round trip shows buying the Hang Seng a fall in 2022 (like many markets which followed the US). A rebalance would see you momentarily happy only to see the fall for 2023. However a rebalance again sees a more positive 2024 and although 2024 was volatile, you would most likely be positive or close to it as a result of your rebalancing.
Holding through volatile periods can be tough on the emortions, but it is important to remember the underlying principles of your investment strategy at those times.
Remember - stocks can only go up or down. And most of the time they go up.
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