Let's briefly talk about all of the instruments... the trumpet, the piano, the drums, the - wait, those are my musical instruments! I meant to talk about financial instruments, where my history has been a progression of instruments. From investing savings into a CD (back when they paid real interest!), to mutual funds, and then to stocks followed by ETFs; and, in the current millennium with options, and then to futures. My bond and forex (foreign exchange) exposure to-date has largely been through the corresponding ETFs and futures, not directly. With each new instrument, new techniques were learned, and new ways to create a diversified portfolio could be envisioned. (Five stocks of different industries does not a diversified portfolio make!) While some instruments have been reduced to my minimal usage, I've been surprised to see my revitalization of even the mutual fund, for which we'll talk about later. Each instrument can be used as a main contributor of beta...
Let's briefly talk about all of the instruments... the trumpet, the piano, the drums, the - wait, those are my musical instruments!
I meant to talk about financial instruments, where my history has been a progression of instruments. From investing savings into a CD (back when they paid real interest!), to mutual funds, and then to stocks followed by ETFs; and, in the current millennium with options, and then to futures. My bond and forex (foreign exchange) exposure to-date has largely been through the corresponding ETFs and futures, not directly.
With each new instrument, new techniques were learned, and new ways to create a diversified portfolio could be envisioned. (Five stocks of different industries does not a diversified portfolio make!) While some instruments have been reduced to my minimal usage, I've been surprised to see my revitalization of even the mutual fund, for which we'll talk about later. Each instrument can be used as a main contributor of beta or alpha, a portfolio hedge, or reducer of volatility. Let me not confuse instruments with asset classes - different instruments do not automatically diversify a portfolio; however, having all of these tools in the toolbox can facilitate the creation of a diversified portfolio. (In fact, a well-diversified portfolio could be envisioned with futures alone, backed with some cash management. But, I'm getting way ahead of myself...)
[For those new to these topics, lots of terms to look up: alpha, beta, diversification, ETF, forex, hedge, volatility.]
So, back to the topic - those are the basic instruments for the portfolio of the band we will be conducting. Yes, there are others, some especially popular ex-USA, but these will suffice to create the overall sound portfolio to keep our investments growing in tune with our financial goals.
What are your go-to financial instruments, and why?
Until next time, with assuredly more musical puns.
[For those new to these topics, lots of terms to look up: alpha, beta, diversification, ETF, forex, hedge, volatility.]
So, back to the topic - those are the basic instruments for the portfolio of the band we will be conducting. Yes, there are others, some especially popular ex-USA, but these will suffice to create the overall sound portfolio to keep our investments growing in tune with our financial goals.
What are your go-to financial instruments, and why?
Until next time, with assuredly more musical puns.
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