Insightful Investor #75 - Liz Ann Sonders: Investing Principles, Inflation, Instability, Diversification
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Jun 17, 2025 
Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, shares her wealth of knowledge on navigating today's market challenges. She discusses the emotional factors affecting investor discipline, inflation volatility, and the significant risks posed by deglobalization. With insights on portfolio diversification tactics, she emphasizes the importance of adapting to market cycles and the critical role of rebalancing. Sonders also highlights how current instability and trade policies influence economic outlook, urging investors to look for opportunities amid uncertainty.
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Emotions Override Investment Logic
- Emotional attachment makes investors act against logic, amplifying fear and greed.
- Liz Ann Sonders says rebalancing forces investors to add low and trim high to counter those emotions.
NVIDIA Trim Regret Story
- A Schwab client resisted trimming an NVIDIA position and regretted selling 5% when the stock rallied 20%.
- Liz Ann used the example to show investors often miss that retained exposure could have lost value instead.
Time Horizon ≠ True Risk Tolerance
- Risk tolerance is not solely determined by time horizon; emotional reaction matters more.
- Liz Ann warns that a long horizon means little if a small drop prompts panic selling.