By Scott Ronalds

From our Quarterly Report:

Looking to the future, the advice we’re giving our clients has increasingly focused on risk management. Rising stock prices have resulted in increased valuations and a renewed thirst for risk assets. The current stock market run could go on for a while, but the fund managers and I are struggling to find ‘cheap’ assets. Low interest rates and tighter credit spreads have eliminated the ‘easy ones’ in the income area and a 50% increase has laid bare the ‘undiscovered’ in the stock market.

In my view, it’s not the time to chase yield or return, but rather, revisit your plan and make sure your portfolio is close to its long-term asset mix. If you haven’t re-balanced in the last year or so, you likely need to (Founders Fund clients excepted). It may not feel good with stocks on an upswing, but re-balancing has never been about boosting short-term returns. It’s about managing risk and making sure the odds are in your favour.

Read Tom's full brief and the rest of our report here.