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They can move their wealth from stocks to gold, for example. Look at the price of gold.
by cjrp 1y ago
They can move their wealth from stocks to gold, for example. Look at the price of gold.
- lesuorac 1y agoMore importantly you keep the portfolio semi-balanced. Just using Google / Gold as a comparison [1]. Assume you have 100 units of each. In late 2021, Googs gone up ~100% so you have to rebalance because you have $200 in Goog and $92 in Gold. So lets say you rebalance to 80 Goog (160$) and 144 Gold ($130). In late 2022, Googs gone down ~40% so you have to rebalance because you have $96 in Goog and $141 in Gold. So lets say you rebalance to 100 Goog ($120) and 118 Gold ($112). So over the course of 2 years Goog has gone up 20% and Golds gown down 5% but your investments are overall up 16%. Obviously a 100% Goog investment is higher but with more risk. If you didn't do any rebalancing then you have a gain of 7.5% (100*1.2 + 100*0.95 = 215) [1]: https://www.google.com/finance/beta/quote/PHYS:TSE?comparison=GOOG%3ANASDAQ&type=line&window=5Y https://www.google.com/finance/beta/quote/PHYS:TSE?compariso...