Thinking About The Crisis With Asset Allocation Expert William J BernsteinJacob Wolinsky
ValueWalk's Raul Panganiban interviews asset allocation guru William Bernstein, PhD in Chemistry, MD, Co-principal of Efficient Frontier Advisors, and author.
Hello podcast listeners. Today's very special episode with William Bernstein, PhD in Chemistry MD, Co-Principal of Efficient Frontier Advisors, and author. William practice neurology. He authored several books including the Intelligent Asset Allocator, A Splendid Exchange, and his upcoming book, which covers the madness of crowds and human behavioural finance. In today's episode, we discuss covid and the potential effects. I'm gonna welcome William back to the show, and I want to welcome all our listeners to a very special episode.
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Welcome to ValueTalk with Raul.
I just wanted to welcome our listeners to a very special episode. I have William Bernstein. And William welcome back to the show.
Pleasure to be here.
All right. Yeah, if we can just begin. Well, I just want to welcome you back during these unfortunate times. So, from the investor perspective, is it appropriate to ask what investors should be doing now and what they should not be doing?
Oh, sure. Let me preface the answer that by pulling back and saying that it makes me a little uncomfortable to be talking first and foremost about investment policy at a time like this, there are larger human concerns. And I think that there are also larger societal and political concerns that really we should all be thinking about. You know, as far as what investors should be doing and what investors should always be doing, which is they should be staying the course. They should have an investment policy, they should adhere to that investment policy. And they should be aware when they design their investment policy, that this sort of thing, at least this sort of market response is going to occur. From from time to time, you know, 11 years ago people, there wasn't the prospect of, of large numbers of people dying. But 11 years ago, it all looked like our financial structure of the world financial structure was going to collapse. And, and I think we forget that I can remember being at an investment gathering, all about two years ago, when there was a little bit of volatility. I think the S&P didn't quite fall 20%. And people, somebody asked me, you know, we haven't seen volatility like this ever. And I just I looked at and I said, no, you need to look at the data, this sort of thing occurs, you know, 20% fall in the market occurs once every three to five years. And you know, you can't be a net stick to what happened, you know, eight years before that during the global financial crisis. And even what happened during the global financial crisis certainly wasn't anywhere near the worst case scenario. So in from a strictly financial point of view, this is not at all different. It looks like the world is going to end from time to time. It's just that it looks like that modus operandi, modus operandi of the world ending changes, this kind of virus last time, it was a financial crisis. And it was the most dangerous kind of financial crisis was the kind of crisis that was centred on housing as the largest impact of any any kind of financial crisis or any kind of debt spiral. You know, right now we're looking at a death spiral, very likely in corporate debt, and that's bad, but it's not nearly as bad as one having to do with housing. So, so the answer to your question is have a policy stay the course and be prepared for times like this and understand that Having an investment policy of times like this means by Yes. Yes means selling.
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