Do not let those tables of investment correlations fool you. That table, once printed, will never change. In the real world, correlations between investments within classes and between classes change in strength and can even reverse direction. Bonds often go up when stocks go down from a long-range historical perspective, but that is by no means guaranteed, and the magnitude of the changes are not equal. When it comes to investment strategies and portfolio allocations, rules of thumb can be disastrous. If you absolutely must boil your investment strategy down to a single, pithy maxim, then it should be “buy the SPY.” I hope I’ve convinced you by now that this isn’t a good strategy for most of us, and it certainly not stay that way as we approach retirement age. As I said at the very beginning of this book, sound investing takes a lot of homework. You have to learn as much as you can about how investing works if you want to have the confidence to sleep well knowing your portfolio is all alone out there in the dark.
Last Updated: 6/25/2018