Catherine Gordon helps oversee Vanguard's Institutional Asset Management group, which provides policy consulting, portfolio recommendations, and investment management to our endowment, foundation, and defined benefit clients.
The idea of holding a portion of your portfolio in non-U.S. stocks has been around for quite some time, but the ways in and reasons for which it’s put into practice have evolved.
At first, the addition of non-U.S. stocks provided another level of diversification, as these markets did not move in perfect tandem with the U.S. market. Today, it’s harder to discern the difference between markets in the United States and abroad—just consider the events of the past year.
Of all the generally accepted investment concepts called into question by the recent market environment, it seems to me that rebalancing is pretty close to the top of the list.
During late 2008 and early 2009, rebalancing your portfolio to stay close to your asset allocation target would have been almost a daily ritual—and one that would have felt increasingly futile. Even if you’d stuck to an annual approach, closing the gap between your actual asset allocation and your target would have required strong nerves.
Steve Utkus, one of my fellow bloggers, wrote recently about the dubious value of a local radio station’s early-morning reports on where the S&P 500 and Nasdaq markets are likely to open the day, based on futures trading. He labeled it “junk news.”
Since this is a “summer of sequels” at the cinema, I’d like to add my own sequel to Steve’s blog post.
I’ve had a hard time deciding which way the economic and investment winds are blowing, so I decided to make a list of the things I think have changed and those that haven’t.
At long last, someone called Jim Cramer out. It wasn’t the mainstream press. In fact, it was one of the leading faces of the “fake” press, Jon Stewart.
In a widely publicized feud and subsequent joint television appearance, Mr. Stewart took Mr. Cramer to task for being (in Mr. Stewart’s view) a cheerleader for those who watch his Mad Money television show. While this encounter may have been as much about entertainment as about substance, I still give Mr. Stewart credit for raising the issue at all.
