It’s too easy in such scenarios to succumb to greed. Since in year one, you’ve had a 25 per cent gain in stocks, you tell yourself that you need more in that asset class. ‘If only I had not had so much money in bonds and if I had had it all in stocks,’ you think, ‘my gains would have been double of what I ended up with.’ So you second-guess yourself based on past events and prepare for future events by unloading all bond money into stocks. Only that this year, stocks fall by 15 per cent and bonds go up by the same amount. What has happened to your portfolio value?
