e-fundresearch.com: With regards to the new year 2015: How optimistic is your view into the future and what obstacles and challenges should investors be prepared to overcome in 2015?
Eric Robbe: I think it is important for investors to create their own overall asset-allocation policy based mostly on their ability to tolerate risk—risk being the potential that the market value might decrease and continue to be decreased for several years. Then, as we enter a new year, investors can try to assess how to weight the broad asset classes within the context of the current macro and micro environments.
My own macro view is that interest rates are likely to continue to be low throughout 2015 and the Fed’s tapering may trigger more volatility on US equity markets especially. Due to this environment, an area of opportunity may be in some of the “alternative” sectors, like REITs, commercial real estate, private equity, etc.
I just want to draw investors’ attention, an environment of low rates and volatility, if it persists for a long period, may contribute to a rapid buildup of leveraged positions and credit risk, that could lead to an higher risk framework.
The “bottom line” to all of this is to maintain a broadly diversified portfolio, because no one can consistently time investment markets. Know your risk tolerance, stay broadly diversified and you will both sleep well and see your investments increase over time.
Hinweis: Eric Robbe (Laffitte Capital Management) ist Speaker beim
ARC Outlook 2015 am 21. Jänner in Wien
As forecasts for 2015 are published, think about how much you want to base your financial decisions on expectations of what might happen. Many people will make confident-sounding forecasts about 2015 and many of these prognosticators will be wrong. As humans, our natural tendency is to be drawn to what sounds confident. Confidence and accuracy, however, are two different things.
If you accept the uncertainty of not knowing what will happen, you will make better decisions. Those who ignored the forecasts and stuck to a long-term allocation strategy likely did better this year than those who adjusted their allocations based on what they thought would happen. A similar difference in portfolio outcomes is likely to occur in 2015 and beyond.
So according to what happened in 2014, the lesson for 2015 should be the same from that we learned in 2014. Don’t try to time markets. Pick an asset allocation that’s right for you and stick with it through thick and thin.
This is a long-only approach, personally I am more comfortable with absolute returns strategies, most of the time uncorrelated with financials markets.