Charles Schwab Investment Management’s Chief Investment Officer Jeff Mortimer offered some interesting thoughts on the current market and keys to a good investment strategy in a Q&A with Washington Post readers today.
One key thought from Mortimer, when asked whether his advice takes into account potential unprecedented events or situations: “The most dangerous words in investing are ‘it’s different this time.’ The world has had many issues before, and will again. It is important to study history and learn from it, knowing that it will never repeat exactly, but should be somewhat similar. The best advice to always follow must be based on sound research and time-tested strategies, two traits which don’t change whether the Dow is at 14,000 or 8,000.”
Mortimer says now is not the time to hide from stocks. “During times of stress, we all wrongly believe that safety is job number one,” he said. “My belief is that the values offered by equities now, vs. 14,000 on the Dow, actually make them a better long term buying point … than in most times in the recent past.” He says that the current uncertainty brings great opportunity. “You just have to have the courage to look and assume some risk when things don’t look so great.”
Mortimer also discusses the importance of asset allocation, something he says most investors usually get wrong. “The one theme I keep seeing in most individual investors is the over allocation to equities in rising markets and the lack of allocation to equities when markets are falling,” he said. He says investors should talk with a professional about “the most important decision you or anyone else makes regarding investments – how much should be allocated to the major asset classes?”