Bonds - Is It Time To Be Cautious?
Liz Ann Sonders, Charles Schwab’s chief investment strategist, is skeptical about bonds and emerging markets and believes that “[i]nvestors are doing what they do well, which is chase past performance,” according to a recent article by Mina Kims posted on CNNMoney.com, “Bond investors are chasing the past.”
Of course, many brokers and advisors are encouraging such behavior despite the fact that when certain investments have outperformed, the prudent course of action can be to pare back those assets to their proper proportion in a well-balanced portfolio, according to Sonders. It is true that what goes up, must come down, or as Sonders and statisticians would put it, there will ultimately be a reversion to the mean (average).
Investment advisors and brokers who provide investment advice have a legal duty to make sure that their advice is consistent with a prudent allocation of stocks, bonds and cash, and does not result in an inappropriate concentration in particular securities or sectors of the market – especially in those sectors that have recently outperformed and are due – as Sonders says – for a correction back down to the mean price.
Investors should periodically rebalance their portfolio to achieve a proper asset allocation and diversification. Investors who have sustained significant investment losses should look for red flags that may signal account mismanagement. See “Recognizing the Red Flags of Securities Account Mismanagement,” which can be viewed at http://www.pageperry.com/lawyer-attorney-1201000.html.
The presence of one or more of those red flags should prompt a call to an attorney with experience in representing investors in securities matters, as there may be grounds for recovery against the advisor and his or her firm for breach of one or more of the legal duties owed by brokers and advisors to their clients.
Page Perry, LLC is an Atlanta-based law firm with over 125 years collective experience representing institutional and individual investors in securities-related litigation and arbitration all over the country. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions.
