BUY-HOLD-SELL Strategy on Asset Allocation- Part 4

tactical asset allocation

Continuing from part 3 of the chapter, tactical asset allocation attempts to show its effects more on the blend of long-term nature of how markets work and the behavioral aspects of the markets. Both are important if you wish to survive and gain the market.

The combination of a strategic and tactical asset allocation is something that is irreplaceable and has to be one or the other. One can tie the knot with the two together in order to balance each other. The tactical strategy is there to assort the strategic asset allocation.

It’s a modus to variegate across time and environment of the market in contrast to the older perception of diversification that only works to deviate across asset genres. It can simply be called rebalancing, keeping in mind that this strategy seeks to over the re-counter-balance to financial products.

Changing this scenic involves battling ideologies into the portfolio. Having a combination of the rewarding funds, factor-based strategies and trend-following in a low-cost, globally diversified, rules-based portfolio is a great way to diversify across asset class, geography, and strategy. No one celebrates forever which makes this approach to balance out portfolio especially when one part of the portfolio is performing relatively poorly.

Learning from such drafts, MyFinopedia focuses on using the chunk of the said strategy, on the investors hard earned money as and when required in whatsoever portion.

Let’s get back to the original point about holding when markets get dizzy. There is always a psychological challenge present but it becomes relevant in some part of the market environment not on a regular basis. 

The investors have certain questions like where to invest a huge lump of cash in order to make it work before a crash.  The potential investors do worry about why the valuations are high with low lying interest rates in the market. 

Now-a-days the current challenging questions we are asked are why and how the market valuation is bullish with the least change in the market prices of the many stakes. 

The answer and the only reason for the above questions is the huge difference found between the wealth accumulators and wealth preservators at various stages of their life cycle.

If you haven’t read part 3 yet, take a look here!

BUY-HOLD-SELL Strategy on Asset Allocation- Part 3 !