Loading ...In this environment adding beta or Growth/Tech exposure carries too much risk in QDS’s view. Instead investors should consider rotating out of their most stretched single-stock positions and into call options . . . ”
Seriously?!?
The typical retail investor is a 35-75 year old middle class or upper-middle class guy or gal with funds in a tax-deferred IRA or 401K account. Their portfolio is 80% low load stock index fund and 20% bond fund. Most also have a considerable equity stake in their house or condo. Over the past ten years they’ve done extremely well with their set-it-and-forget-it long haul investment strategy and see no reason to change course. They consider themselves financially savvy.
If anything were to happen and their investments took a 50% hit they’d scream bloody murder and DEMAND that the authorities “fix this mess”. They’d feel cheated out of their hard-saved money. They’d blame the President, Congress, the Fed, Wall Street, subprime borrowers, short sellers, the Russians, illegal immigrants, and Spongebob Squarepants. They’d blame everyone but themselves. “They stole my life’s savings!” would be the hue and cry. We’ve seen this movie before.