my 2c
your job as a client advisor is to settle nervous investors and sell them the company book. you have to play the psychiatrist and quell the anxiety. he should be in a 60/40 portfolio and you know it.
my 2c
your job as a client advisor is to settle nervous investors and sell them the company book. you have to play the psychiatrist and quell the anxiety. he should be in a 60/40 portfolio and you know it.
I would tell the client that its his call when he wants to try and time that market as this not something that you will do. He doesn’t want to follow your advise and you or your firm is not making any money off of him so a reactive client service model is probably best.
And make good detailed notes on his client file.
thing is though, if the market does tank then he will blame u, and could potentially sue u. my opinion, if u got a client who cant handle a risk, dont try to change their minds. juss refer them to marc faber and bill gross.
The client is making bad investment decisions based on his emotions and irrational belief that the world is going to end. He went to cash in late 2009, probably against the advisor recommendation (?) and missed out on alot of upside.
The Advisor has absolutely no control over what the market does; only the strategy, asset mix (etc…) and trying to manage the investment behavior of clients. Some need more hand holding then others, and hopefully can prevent some one from doing something really stupid like walking off a ledge from time to time.
We’re not clear on the purpose of the portfolio but the asset mix should reflect his risk tolerance, objectives, liquidity needs, tax etc… His portfolio may have declined more than he thought it should have in 2008-09, missed out on the upside and now is trying to rationalize his current strategy.
I’m not sure a high cash allocation now, 7-8 years off a bottom with huge returns since, is exactly insane though.
Might as well put it in a market neutral fund. Try to get at least beat inflation.
If inflation is zero, cash works fine. I’d go out the risk curve a bit on my cash, but I think there is a solid argument for it.
i personally never hold excess cash. I hate to recommend this, but selling cash secured atm or itm puts in places you want to build a position on is a smart way to use excess cash.
you collect a premium, and its a high probability win. (you do give up upside though)
if markets go down, you will build a position at a lower price than the current market price.
assuming market prices stay where they are, it’ll return a lot more than inflation.
problems with this though is prolly 1. liqudity, the bid ask spreads and volume are shitty for most stocks. 2. commissions will be a biznitch, but it scales up pretty easily. 3. your portfolio will look funky when you use this strat.