Staying the Course No Longer Works?

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The following is an excerpt from Hello Harold, a book by Harold Evensky - click here for a free Kindle version!

Ever since the market debacle triggered by the great recession, “Staying the Course No Longer Works” and “Modern Portfolio Theory Is Dead” have been popular headlines with the financial media.

It sure sounds good.

After all, why would any investor willingly subject their portfolio to the massive losses of 2008 and early 2009? They wouldn’t, of course; so does that mean that long-term strategic investing is out the window? One of my core beliefs is that to earn market returns, an investor needs to be in the market. Is that yesterday’s story? Needless to say, my investment committee takes these considerations very seriously, and we regularly review our investment philosophy and strategies. What we’ve concluded is that a better headline for the critics of modern investment theory would be “The Pot of Gold at the End of the Rainbow.”

Unfortunately, no one has yet discovered that pot. Here’s our take on the debate.