It's about balance

Oct 11, 2018 | Jeremy Goldfarb


It's been a short work week here in Canada, but there is no shortage of market activity to talk about. The volatility and corrective behaviour seen over the past 2 sessions is an excellent reminder of the benefit of discipline and balance in portfolio management.


I can recall a recent discussion I had with colleagues as I spoke about the overall risk to my portfolios over the past few months to what I would refer to as "target weight". It had been a docile and positive 18-24 months, and it stood to reason that some sort of corrective pattern was due to take place.


Being aware of your real risk tolerance even when things are good will come in handy when things turn bad. Since I don't know of anyone with a crystal ball, it's better to be ahead of the curve, giving something up at the top to avoid the mess at the bottom.


The cash and short term instruments that you now hold (as a result of your balance discipline) will come in handy as things on the risk side of the spectrum get less expensive. Something to think about.