Performance chasing
“ Despite historical precedent , investors are typically hesitant to reposition portfolios when the economy changes ”
Richard Bernstein Chief investment officer at Richard Bernstein Advisors
recommend rebalancing your portfolio from time to time , they also caution against performance chasing – buying into something after it has rallied , often meaning you miss out on the majority of gains . The question is , when does one become the other ?
Jumping on the bandwagon Edward Allen , investment director at Tyndall , says that while constrained supply in oil & gas , for example , means it is sensible to have some exposure to this sector in his portfolio , it is not a case of jumping onto the bandwagon with both feet . “ The point is that we don ’ t know what oil or gas prices are going to do ,” he says . “ Adding to oil when it ’ s at $ 50 feels like a totally stupid thing to do . Whereas it seems like a sure thing at $ 120 , when a large part of the returns have already been made . “ As a colleague of mine often says , ‘ think of the number of times you got into an AIM stock after it doubled , only to be sorely disappointed ’.”
Issue 86 - July 2022 / 27 /