Last week, the Standard and Poor's 500 index surpassed 1,500, crossing a barrier it last saw in December 2007. In fact, since its low point in 2009, the index has soared about 120 percent, as I noted in last week's blog post. Yet despite the long bull market, a 2012 survey by Natixis Global Asset Management shows that 57 percent of respondents wouldn't reduce their cash portfolio despite historically low interest rates and a soaring stock market.
Obviously, investors still mistrust the stock market. "I don't know that they've recovered fully from the experience of 2008," when the market began plummeting, Robert Hussey, executive vice president of institutional services for Natixis, told AdvisorOne. "Market volatility over the last three to four years has increased, and for high-net-worth individuals, not losing what they've built up over the last few years is important," he added.
Wealth preservation is more important when you've already got it. For those who still need to build wealth, the level of risk they will require can be uncomfortable. But in the current market, despite predictions for more volatility, there is room to grow. Most experts believe a properly allocated global stock portfolio will deliver returns.
But as the survey indicated, it's not for everyone. Depending on when you want to retire, how much you will need to live and your ability to handle risk, your portfolio should be designed to meet your own goals, not to meet someone else's definition of wealth.
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