SANTA CLARA, Calif., April 24, 2012 /PRNewswire/ -- In this age of economic uncertainty, where more and more Americans are beginning to question how they will provide for their own retirement, it is unsurprising that financial advice would come from a wide range of sources. Even ABC News has recently offered investment tips, in a report on the importance of "slow and steady" investing. The report has drawn attention from renowned economists like Sharath Sury, who responded to ABC's investment advice in a statement to the press.
The ABC report itself takes its "slow and steady" verbiage from the famed Aesop fable about the tortoise and the hare; the article claims that, as in the fable, so it is in investment, where the slow and steady investment technique tends to outperform the "hare" investment. ABC defines the hares as investors who "try to sprint to the finish line of a comfortable retirement without girding their portfolios against the perils of volatility." The smart, slow-and-steady investors, meanwhile, are marked by taking precautions against market volatility, and as a result, their portfolios are frequently more successful.
Sharath Sury has long spoken and written about the importance of risk management as it relates to portfolio construction. He responds to the ABC report with analytic commentary.
"Steady portfolios need not necessarily be built by only investing in 'low return' strategies," observes Sury. "Indeed, some of the most efficient portfolios are designed by assembling strategies that have opportunities for growth; but ensuring that those strategies are not well correlated to each other. One of the most important concepts in investment management is that of diversification."
On the topic of diversification, Sharath Sury offers nuanced advice to investors. "While many investors know that they should diversify, they often do not carefully analyze how diversified they truly are," he says. "Assets or strategies that appear to be diversified when the markets are doing well may tend to lose their diversification benefits when the market starts to experience stress."
The bottom line for investors, Sharath Sury says, is that it "is crucially important to carefully and consistently monitor how assets and strategies behave during different regimes. For example, stocks and bonds move together sometimes and apart other times. The same is true of stocks and commodities." Concludes Sury, "Understanding how asset classes or strategies correlate under different market scenarios is the key to ensuring that you have intelligently diversified your portfolio."
Sury's insight is largely affirmed by the ABC article, which ultimately favors discerning investment strategies over "the halting progress of hares."
Sharath Sury is an internationally renowned expert in economics and finance. An award-winning educator and sought-after lecturer, he currently serves as the Chairman of the Sury Institute for Financial Innovation and Risk Management (SIFIRM) and an adjunct professor of financial economics at the University of California. SIFIRM's diverse panel of economic experts, whose initiatives have included Boards with Nobel Laureates, pioneering academics, and leading investment CEOs, seeks to bring increased innovation and devise new tools and techniques for addressing the world's financial issues. Additionally, Sharath Sury has been quoted for his expert opinion in Bloomberg, MarketWatch, Reuters, Fund Strategy, and other noteworthy publications.
SOURCE Sharath Sury