When it comes to trying to reduce risk in your 401(k), the phrase “”don't put your eggs in one basket”” applies. Therefore when selecting investments, it's important to diversify.
Asset Protection 101: When Buy and Hold Fails
Welcome to our Asset Protection 101 series. With exception to diversification, the industry doesn't like to talk about asset protection because it goes against conventional thinking and the way that most advisors operate. However, one size doesn't fit all clients so we will take on these topics in this series.
Buy and hold refers to an investment strategy in which investors hold on to their stocks for a long period of time regardless of fluctuations in the market. One of the main benefits of a buy and hold strategy is the easiness of the process. It is no surprise that Wall Street pushed this message as they no longer had to make the tough decision to actually protect client assets before a bear market. Lucky for them, the market had a huge secular bull market from the mid-1970's to 2000 as interest rates declined from the mid-teens to single digits and the stock market had an epic run in the 90's culminating in the Internet bubble.