Rates Matter, Till They Don't?

The Fed's actions on interest rates clearly matter to the economy over the medium-to-long run and to investors in the short run. Investors who were positioning for the now-imminent cuts ahead in prior months prior have benefited, and will likely continue to do so in the months ahead, from that stance. The question remains, of course, the timing of it. Was it smart to turn bond-friendly last fall or last spring? The point is that a consistent TrueNorth allocation that allows for some flexibility is the true answer.

This table shows a client OmniFolio's susceptibility to wild best-case, worst-case swings based on historical performance data by asset class from 2007-2024. The real-life portfolio (left column, well-balanced) will weather a 35-40% decline in equity markets reasonably well while not missing out on a super bullrun (since Nov.'23 for instance) if the market were to accelerate post-Election. A riskier What-If portfolio (right column, lower fixed income allocation) while offering higher LT average returns could lead to significant grief if the market were to tumble in the next 12 months.

FinDosh allows you to model this for yourself, or along with your financial advisor in a simple user-friendly manner. Try it out for yourself!

Till next Monday....