The all-stock portfolio is having a moment
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The all-stock portfolio is gaining popularity as investors seek higher returns and capital preservation. Traditional advice of splitting assets between stocks and bonds is being challenged. Bonds have been underperforming their role as a stabilizer in portfolios, and their movements have become aligned with stocks over long periods. The idea of an all-equities portfolio has gained traction in the past, but many investors are hesitant due to the fear of stock market crashes. The average investor tends to panic and sell during market declines, resulting in lower returns. However, an all-stock portfolio is not suitable for everyone, as it requires the ability to withstand significant market drawdowns. Bonds and stocks plunged together in 2022, causing investors to question their bond allocations. The article suggests that an all-stock portfolio may generate higher returns but also carries higher risk.
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