Introduction
Staying invested may look like an unavoidable proposition as long-term structural shifts dampen future return out-looks but also risks. There is little doubt that investing comes with risk, but when looking back at the past decade, one of the highest risks borne by investors was certainly missing out on bull market rallies. In this short guide to staying invested, we highlight considerations important to constructing robust liquid portfolios that are fit for the next decade of central bank actions and market reactions. We introduce the concept of staying invested from a strategic perspective, by doing a statistical risk-reward analysis at the single security and benchmark index levels, while ad-vocating that investors should not overreact to short term volatility episodes. We suggest new perspectives around Defensive assets and value destruction, how to exploit causality to better Drive returns, and redefine Diversifica-tion by focusing on both consistency and dilution.
A “Wall of Money” threatens long-term returns but reduces selection risks
The demand for financial assets can be assumed to fur-ther rise globally, and this can be attributed to three principal reasons.
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