Tactical Asset Allocation—Winter 2019/20
There really is nothing that can take the place of proper asset allocation when it comes to growing and protecting your wealth throughout the economic cycle. What happens when you ignore your own risk level and your proper asset allocation portfolio? Consider the Americans who lost over 50% of their investment portfolio value between 2000 and 2002 because we were in a "new economy" and "old rules no longer apply."
No. Refuse to be one of the victims of a shock to the system by taking these three simple steps:
No. Refuse to be one of the victims of a shock to the system by taking these three simple steps:
- Identify your Risk Number
- Assure your portfolio is aligned with the appropriate portfolio below based on your unique Risk Number
- Use a combination of the 100 investments in the five Penn Strategies to fill in where you are underweighted
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member.services@PennWealth.com, headline "Allocations"
member.services@PennWealth.com, headline "Allocations"
Spring, 2020 Commentary...
Allocate for a comeback, but with strict risk management triggers in place.
(05 Jan 2020, Excerpt from The Penn Wealth Report Market Outlook 2020) We see very little chance of our nightmare scenario playing out, but it feels as though investors have stoked up a little too much confidence going into 2020. About the time that the most timid of investors, the ones who always see the “little guy” getting the shaft, seep back into the markets, trouble generally hits. After a remarkably good 2019, the fear of missing out is palpable, and very few emotionally-driven individuals will be able to resist getting their “fair share” of the gains.
There may not even be a direct, easily-identifiable catalyst for the downturn. After the fact, the analysts will rush to the screens to tell viewers that “of course, market valuations simply got too rich.” They will also remind viewers that they opined to take some money off the table—which may or may not be true, but who will hold them accountable?
As the downturn begins to snowball, all of the dormant fears—geopolitical turmoil, dysfunction in Washington, inflation concerns, trade worries—will bubble back up to the surface of investors’ minds like a specter in the night. How much could the market drop in such a scenario? While impossible to pinpoint, something in the range of 10% to 15% in the S&P 500 seems more than possible.
At this point, it will be critical for investors to remain true to their appropriate tactical asset allocation and ignore, to the greatest possible extent, the inevitable hyperbolic headlines. When the dust settles on 2020, we see mid- to upper-single-digit gains for the major averages. The worst possible course of action would be to lock in losses during a trough due to headline risk, and then wait for the rebound to buy in at higher levels.
—MSH, Penn Wealth
(05 Jan 2020, Excerpt from The Penn Wealth Report Market Outlook 2020) We see very little chance of our nightmare scenario playing out, but it feels as though investors have stoked up a little too much confidence going into 2020. About the time that the most timid of investors, the ones who always see the “little guy” getting the shaft, seep back into the markets, trouble generally hits. After a remarkably good 2019, the fear of missing out is palpable, and very few emotionally-driven individuals will be able to resist getting their “fair share” of the gains.
There may not even be a direct, easily-identifiable catalyst for the downturn. After the fact, the analysts will rush to the screens to tell viewers that “of course, market valuations simply got too rich.” They will also remind viewers that they opined to take some money off the table—which may or may not be true, but who will hold them accountable?
As the downturn begins to snowball, all of the dormant fears—geopolitical turmoil, dysfunction in Washington, inflation concerns, trade worries—will bubble back up to the surface of investors’ minds like a specter in the night. How much could the market drop in such a scenario? While impossible to pinpoint, something in the range of 10% to 15% in the S&P 500 seems more than possible.
At this point, it will be critical for investors to remain true to their appropriate tactical asset allocation and ignore, to the greatest possible extent, the inevitable hyperbolic headlines. When the dust settles on 2020, we see mid- to upper-single-digit gains for the major averages. The worst possible course of action would be to lock in losses during a trough due to headline risk, and then wait for the rebound to buy in at higher levels.
—MSH, Penn Wealth
Aggressive Growth Portfolio: If your Risk Level is above 90
Conservative Growth Portfolio: If your Risk Level is 51-89
Growth & Income Portfolio: If your Risk Level is 28-50
Asset Preservation Portfolio: If your Risk Level is 27 or below
