Exchanges and bonds, how to invest with fluctuating markets: portfolios from one to ten years

The paradox of the financial markets

Markets go up, markets go down: physiological. Not at all, however, to see a loss of more than 8% in 12 months on radically different portfolios, equity discharges or, on the contrary, very unbalanced on risk capital, such as those examined by theCourier economywith the help of Progetica. the result of a – decidedly rare – phenomenon which in 2022 saw both equities and fixed-income instruments fall simultaneously, undermining the traditional decorrelation between the two main asset classes. In the history of American financial markets, calculates T. Rowe Price, it happened only five times from 1928 onwards. In this first glimpse of 2023, things have gone much better (see table, below). But in many cases, the rebound was not enough to offset the declines experienced in previous months.
There is some good news: the rise in reference rates by the major central banks has created the conditions for having, from now on, more solid portfolios, restoring the correct relationship between stocks and bonds: when the stock exchanges fall, the bonds should go up. And viceversa. If this is true, then it is now possible to construct a portfolio allocation that is better able to withstand possible — probable — new waves of volatility. always, however, a delicate balancing act between risk and return, to be found by crossing the answers to two fundamental questions: how much time do I have to make my investment? How much am I willing to lose, along the way, to increase the expected gain?

01 May 2023

© Reproduction reserved