One of our favorite quotes is by the Nobel laureate Nils Bohr, who remarked that “prediction is very difficult, especially if it’s about the future.” With a likely increase in financial market volatility going forward, Bohr reminds us that we should not position for a single anticipated outcome but rather prepare for a range of potential financial results.
Read Wittman’s full Q1 2015 CIO Insight: In Lieu of a Crystal Ball, Try Diversification
Happily for investors, a balanced, well-diversified approach does not require accurate prediction to be effective. A diversified portfolio has the potential to provide attractive risk-adjusted returns without having to make market calls. Rather, the challenge is to match anticipated financial needs with an appropriate, sustainable
saving and investing plan.
Diversification does not assure a profit nor does it protect against loss of principal.
The opinions expressed are those of Scott Wittman, CFA, CAIA, and are no guarantee of the future performance of any American Century Investments portfolio.
For educational use only. This information is not intended to serve as investment advice.