Investors often rely on simplistic market mantras to make decisions, but a look at long-term history suggests that the answers are rarely so straightforward. Behavioural biases, such as recency bias, increase the likelihood of poor judgments. While markets are forward-looking, history shows that they don’t always move ahead of the economy. Asset class allocation needs to be driven by underlying risk factors, not just simplistic rules-of-thumb about how assets behave. Taking a more robust approach to data analysis can help investors build stronger portfolios that can withstand different scenarios, and a portfolio that is flexible and holds “just enough” risk to achieve goals is crucial when uncertainty is high.
Portfolio Insights – Leading Indicators
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