Despite signs of financial complacency, many investors are yet to formulate a comprehensive game plan to navigate the possibility of a market shakeout. The good news is this is both desirable and feasible, and the costs of doing so are quite low.
While they may differ on the specific magnitudes, the majority of investors would readily admit their portfolios have benefited from the sustained support provided to markets by central bankers. This has done more than bolster prices to levels beyond those strictly warranted by current fundamentals. It has also given the markets the confidence to repeatedly “look through” exogenous shocks, including quite a string of geopolitical tensions. Continue reading »