Phillip Toews, founder of Toews Asset Management and author of "The Behavioral Portfolio," unveils the pitfalls of the traditional 60/40 investment strategy. He examines historical market failures, revealing how this approach could have led to severe losses during economic downturns. Toews highlights the concept of 'adaptive fixed income' and critiques current monetary policies, suggesting new pathways to protect wealth. He introduces 'hedged equity' strategies, promoting portfolios that prioritize investor psychology and long-term stability, while also addressing the dangers of 'corona bias' in financial decision-making.
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insights INSIGHT
Redefining Portfolio Success
Traditional balanced portfolios fail profoundly during severe crises like the Great Depression, losing up to 72%.
Starting portfolio design from behavioral and economic investor needs prevents catastrophic losses and supports client retention.
insights INSIGHT
Adaptive Fixed Income Explained
Historical bond bear markets can last decades, with the 1945-1981 period resulting in a 21% real loss.
Adaptive fixed income strategies move beyond core bonds to reduce principal loss risk during rising interest rate periods.
insights INSIGHT
Rethinking Bond Market Risks
Current bond market risks may stem more from global currency debasement than traditional rising interest rates.
High sovereign debt worldwide creates an environment vulnerable to inflation driven by currency devaluation.
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La Behavioral Portfolio Theory (BPT) è un modello di investimento che integra la teoria del portafoglio moderna con principi di economia comportamentale. Riconosce che gli investitori non sono sempre razionali e che le loro decisioni sono influenzate da fattori psicologici. La BPT considera gli obiettivi individuali degli investitori e suddivide il portafoglio in 'mental accounts', ciascuno con un proprio profilo di rischio e orizzonte temporale. Questo approccio aiuta a gestire il rischio in modo più realistico e a raggiungere gli obiettivi finanziari personali. La BPT è un'alternativa alla teoria del portafoglio moderna, che si basa su assunzioni di razionalità e avversione al rischio.
Phillip Toews, founder of Toews Asset Management, delivers a master class in portfolio construction that challenges everything you thought you knew about investing. Drawing from historical market catastrophes often ignored by conventional wisdom, Toews reveals how a traditional 60/40 portfolio would have been devastated during the Great Depression – losing up to 72% of its value and remaining down over 60% after thirteen years.
This eye-opening conversation explores the concept of "adaptive fixed income" as Toews walks us through the little-discussed bond bear market from 1945 to 1981 that eroded investor wealth by 21% in real terms. With high sovereign debt levels globally and unprecedented monetary policy responses, Toews suggests we may be vulnerable to currency debasement rather than traditional market dynamics.
The heart of Toews' philosophy lies in his revolutionary approach to behavioral finance. Rather than starting with conventional portfolios and coaching investors through volatility, he advocates designing "all-weather" portfolios from the ground up that address both economic and psychological needs. His hedged equity approach aims to capture most market upside while dramatically limiting participation in downturns, potentially allowing investors to maintain positions during crashes and capitalize on eventual recoveries.
Toews introduces the concept of "corona bias" – just as society was unprepared for a pandemic despite historical precedent, investors ignore financial catastrophes outside their professional lifetimes. This collective amnesia leaves portfolios vulnerable to recurrences of historical calamities.
Whether you're an investment professional seeking to differentiate your practice or an individual investor concerned about today's complex market environment, this conversation provides a roadmap for building portfolios designed to withstand various economic scenarios while managing the crucial behavioral aspects of investing. Discover why Toews' recently published book "The Behavioral Portfolio" is changing how advisors approach client relationships and portfolio construction.
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