Happy Friday. Your Survival Guy had a memorable lunch with longtime clients (25 years) yesterday, and I’m looking forward to seeing another for coffee in an hour. He’s visiting all the way from Idaho. Please, if you’re in my neck of the woods, won’t you consider stopping by? I’d love to see you.
OK, there’s plenty going on out there today, with the situation in Iran, midterms Tuesday, and earnings season in full swing, to name a few. Are you invested right now according to your risk tolerance? Because tomorrow may be too late, and that’s exactly what my conversations with you have been about.
Know Your Risk Tolerance
It’s been Your Survival Guy’s experience that investors are not as prepared as they thought they were. They don’t know their risk tolerance as well as they know a family member, and they realize this after the fact, not before. Make sure you have a good lay of the land by understanding where we’ve been and running your finger along the efficient frontier.
Remember, the only free lunch in investing, according to Harry Markowitz, is asset allocation. Bonds have historically counterbalanced equities in diversified investment portfolios.
And today, you can sink your teeth into these yields, which are finally rewarding savers like you with the multidecade highs you deserve. Do not miss this boat.
Climbing the Capital Pyramid
In addition to yield, you own bonds for their added safety—their margin of safety over common stocks, stemming from their higher status in the corporate capital structure. In other words, bondholders get paid first.
And Treasuries are full-faith credits, and that’s worth something, especially with all the turmoil I’ve witnessed on the ground in France. Treasuries are the nicest house in a rough global bond neighborhood.
Action Line: Are you invested appropriately? Do you have a portfolio that will allow you to follow the advice of the late, great Jack Bogle of Vanguard fame: “Don’t just do something, stand there”? I hope so. Not sure? Email me at ejsmith@yoursurvivalguy.com to discuss, or just stop by and see me.
