Recently, Calpers, the largest retirement system in the country, announced that they are contemplating their allocation to stocks and bonds. We are always surprised at how frequently large entities and individuals make huge shifts in allocation policies. The big shifts from one asset class to another asset class is generally called performance chasing. When an entity or individual makes a decision to shift assets from underperforming to out-performing, they are making one of the oldest mistakes in history. Granite Group encourages clients to take a hard look at how much risk a client really wants to take and stick with it. Many investors change their thinking based upon seeing outsized returns in an asset class that they are not invested in. This makes sense emotionally, but not fundamentally. The reason is simple: your risk is how you really want to invest. Outside forces can change your thinking in the short term, but not the long term. Investing with a customized risk profile is a long term game and should be played with consistency. It’s all about discipline. We can never use the word guarantee, but in this case, we can guarantee that constant reallocation will lead to higher risk and lower returns. The only thing consistent about repetitive reallocation is inconsistency.
This may be self-serving, but if you are looking for an advocate that will customize investments according to specific risk requirements, please feel free to call us directly. You can follow Granite Group Advisors on LinkedIn and learn more about our Wealth Management and Corporate Retirement Services on our Website.