Markets are at an almost ALL time high, there is an upcoming election and the Pandemic is still present.
Jason Labrum and co-host Alex Klingensmith discuss the market and why it continues to tick up. The focus of the show today will discuss New School Factor Portfolio’s and what that means to investors. Markets are forward looking mechanisms- taking all the collective knowledge of the entire universe and the market participants who are researching, analyzing, and forecasting to get a clear picture of what to expect.
Today’s topic focuses on the evolution of science in investing- Factor Investing. Invest your portfolio with the lowest possible cost, maximum tax efficiency with the best potential returns for the amount of volatility and risk you are willing to accept.
New School Factor Investing is not new in the sense that it’s never been done before, its more of an evolution of science and data and how to best accomplish rates and returns given the lowest volatility possible. Bonds are traditionally bought because they are lower volatility than stocks. Bonds have a lower volatility where stocks have a higher rate of volatility and both have risk associated. So the question becomes, how much of my portfolio should be bonds. What is your target rate of return? In other words what is the return you need to achieve the financial life and the purpose you’ve set forth for yourself. We help you design that through the financial planning process. And then we decide how much bonds versus equity goes in the portfolio in order to achieve that return with the least amount of volatility possible.
What is factor investing? It is the continued evolution of investing that is long time tested, philosophically driven data driven, proven investment strategy.
This strategy assumes we will continue to change and model as new information becomes available, as research becomes better, as technology becomes better as markets change.There are certain characteristics of portfolios that have yielded additional returns over time, or there is some measurable benefit to having a portfolio with those characteristics. Factors Include:MOMENTUM, VALUE STOCKS , SIZE FACTOR, COUNRTY DOMICILE, MINIMUM VOLITITLY, PROFITABILITY OR QUALITY OF COMPANIES Factor Investing applies tilts to these specific factors or characteristics that have proven over time to have an impact on return in a portfolio.
In this show you will learn about:
- When to use Bonds, How to use Bonds, and Why to Use Bonds?
- Dollar Cost Averaging vs. Lump Sum Investing
- What is Factor Investing
- Risk and Return ARE Related