Caution alone is not an investment strategy, so Marks penned a follow-up memo last week to give investors six options for how to invest in a low-return world:
1. Invest as you always have and expect your historic returns.
2. Invest as you always have and settle for today’s low returns.
3. Reduce risk to prepare for a correction and accept still lower returns.
4. Go to cash at near-zero return and wait for a better environment.
5. Increase risk in pursuit of higher returns.
6. Put more into special niches and special investment managers.
(CW8888: Why many will fail at market timing?)
3. Reduce risk to prepare for a correction and accept still lower-returns.
Pros: Reducing risk can give you valuable dry powder to take advantage of future opportunities. The hope is that you can put money to work at lower valuations or higher yields if and when things eventually go wrong ......
