Facing Market Changes and Systemic Risk: The Importance of Asset Allocation
The post reiterates value-investor risk control: defensive index funds, position limits, and living-expense reserves.
CLEC Investment Club Written date: May 19, 2019
The U.S.-China dispute is gradually expanding. Although it has little impact on long-term investors, investors should remember what we have always recommended: risk control and asset allocation for value investors.
The following is what we have always reminded everyone. It has nothing to do with the U.S.-China dispute. It is the risk awareness that value investors should always keep in mind. By doing the following risk control and asset allocation well, you can withstand short-term market changes and systemic risk.
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Most capital should be defensive investments, mainly index funds.
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Each individual stock should not exceed 5% of total investment capital.
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Reserve two years of living expenses, or keep 20%-30% of total investment capital in cash.
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