by KYW's Salil Gutt
October was a horrendous month for investors. It was also the perfect time for us to gauge our stomach for risk. Some of us threw in the towel and sold everything. That was an indication that an asset allocation was seriously flawed.
Asset allocation is the mix between stocks and bonds in a portfolio. The higher the amount of bonds the less the volatility. However, in this perfect storm, no asset class was untouched. Everything fell. Stocks, bonds. Even the veracity of that old stalwart, the money market fund, was "questioned".
This storm was not the first and will certainly not be the last. It will blow over but you should ensure that next time around you are comfortably ensconced in an asset allocation that will allow you to hang on, and not bail.
The older we get, the harder it is emotionally to withstand such storms. Take a page from the respected John Bogle and make sure you have your age
One cannot underestimate the peace of mind that comes with such a strategy.
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