Away for a while...

Investment ramblings to ruminate while away…

  • Glad to see “value” plays getting some momentum recently

  • Will negative rates come to the U.S.?

  • Tough market for thought-leaders betting on higher rates in 2019, but no one remembers those calls

  • As much as I love bonds, the bond rally can not persist and is not sustainable… famous last words!!

  • Hard to believe how far GE has fallen from grace; a great American company subject to bad bets and poor management

  • Being a fiduciary is what investment management is all about; doing what is in your clients best interest. It has nothing to do with selling investment products… though that is how it has been run from Wall street… the sooner we hold “salesman” to higher standards the better.


Back on August 23, I postulated that this is an “historic” time of market volatility prompted by a most diverse set of factors, including the phenomenon of the “Trump Tweet”.  Sure enough, Wall Street came through with an attempt to measure it!

JPMorgan, Citigroup, and Bank of America Merrill Lynch all have taken a stab at measuring the impact of the tweets.  Turns out, according to Merrill Lynch, when Trump tweets relatively frequently we see negative stock returns of 9 basis points on average as opposed to days with relatively fewer tweets with positive returns of 5 basis points on average.

The JPMorgan “Volfefe Index” is more focused on the impact on Treasury yields.  “They found that the Volfefe Index can amount for a measurable fraction of moves in implied volatility…”

See this article on WSJ for more info:

Quite Contrary

This Labor Day week started ominously with a weak PMI stat under 50 indicating contraction in the manufacturing sector for the first time in 35 months.  A second round of weak stats came through at the end of the week with monthly non-farm payrolls showing up at 130,000 and under expectations.

Some positive influences were evident, too, with the labor participation rate increasing to 63.2% and wage gains beating estimates driving hope that the consumer will continue to spend and keep the economy chugging along.

Taking any one stat by itself would cause one to come up with narrow, and certainly, flawed conclusion about where the markets are going.

So, this battle of countervailing forces caused the equity markets to go… UP; and the bond market to go… DOWN.  It seems that the markets liked these stats with positive leaning expectations; if nothing else, tilting the scale to encourage a Fed easing.  But, we still have a global slowdown with trillions in negative yielding bonds causing a flight to US dollar-denominated debt as a driving force to push US rates low… which force will win the battle?  Not to mention the continuing repercussions of the US-China trade issues… And, so it goes…

Quick Post: PMI of 49.1% shows manufacturing contracts in August

Readers of this blog know I have been an advocate of the ISM PMI as a very strong component of leading indicators for economic growth and corporate earnings health. Today’s drop to 49.1% indicates a contraction in manufacturing growth (first such sign in the past 35 months!) and is a warning sign that needs to be considered within a full context of other factors.

Long-term strategic allocations to equities with a low volatility profile and fixed income with some duration exposure should outperform core positions in this environment. Higher quality investment grade corporate bonds, likewise, could provide ballast to core equities.

Divide and Conquer!

If you are an investor in a high marginal tax rate, total returns from tax-free municipals have been fine this year, but certainly a laggard compared to the returns generated by investment grade corporate bonds, high yield bonds, and other fixed income sectors.

The iShares National Muni Bond ETF (MUB) has produced a total return YTD through August 31 of 7.22% with a most recent SEC yield of 1.48% (tax-free!).  Alternatively, the iShares High Yield Corporate Bond ETF (HYG) has produced a total return of 10.84% with a most recent SEC yield of 5.18% (taxable). On a pre-tax equivalent at a 30% marginal tax rate, HYG still has a yield advantage over MUB by a wide margin; 2.11% versus 5.18%.  So, you will pay more tax, but still end up with more incremental income; being careful not to jump into a higher tax bracket.

Additionally, a comparison of these two bond ETFs shows some interesting statistics.  First off, they are not too correlated with each other with a 10-year correlation of only 0.10; in other words, no correlation - a good thing from a portfolio construction perspective!  HYG is obviously a riskier proposition than MUB with a 10-year standard deviation of 7.03% versus 4.53% for MUB.  But, the Sharpe ratio of excess return per unit of risk is mildly advantageous to HYG over MUB by 0.91 versus 0.83, respectively.

The performance trend line for fixed income sectors with some duration or credit risk, including HYG, has done especially well this year.  Long-term strategic investors should already have a position in duration and credit in their portfolios this year and reaped the rewards of broad diversification.  This is in no way a market call given the aggressive rally this year in duration and credit risk instruments, but a well-timed entry given today’s market situation can complement income and portfolio diversification.

Quick Post: Buckle Your Seatbelts!

The word “historic” is often overused.  Since last December, the capital markets have defied all prognosticators by recovering from the depths of a disastrous Q4, a dire month of May driving most tacticians to the hills, and plenty of positive and negative tweet storms.  I don’t think anyone measures this, but the market’s ability to “react” and “recover” from such a diverse pool of factors seems “historic”.

Today is no different.  On the cusp of a market recovery, a new tweet storm today caused equity markets to sell-off big-time.  Trump escalated the trade war by tweeting that US companies should look for other suppliers instead of China (something that is already happening, by the way).  The reaction was obvious. 

In this market environment of jawboning and innuendo, there is no sanctuary; except to be broadly diversified.  All those smart guys that overweighted short agency paper anticipating rising rates missed out big time on the benefits of investment grade corporate bonds and aggregate-style core bonds.  Duration and high quality credit are the big winners this year on a risk-adjusted basis.  Even high yield bonds, emerging market bonds, and preferred stocks proved their worth!

Keep your seat belts buckled!

Bank Loan Comparables

Some investment pros like to quote Morningstar Ratings as an objective measure of an investment’s performance.  The rating has come under criticism periodically since it has not really been a good predictor of future returns (  But, it still persists as the go-to measure to confirm or deny an investment manager’s investment decision.  I came across a new problem recently with the Morningstar system that bears attention.

I am a fan of diversified exposures to manage portfolio risks.  One of the fixed income asset classes I favor is the bank loan sector.  That sector is not without credit risk, and perhaps liquidity risk, if not properly managed, but it has been a valid long term performer to smooth return profiles.

Looking at the top performers in the Morningstar Bank Loan Category revealed an interesting fact.  A top performer over the past five years in that category, the Eaton Vance Floating Rate Advantage I mutual fund (EIFAX), produced a 5-year total return of 4.32% besting the average Bank Loan total return of 2.97% and Intermediate Core Bond total return of 2.88% garnering it a Morningstar 5-star rating.

Upon more research, however, I found that the fund has a large leverage component to boost returns that the adviser discloses on its website and Fact Sheets; but this point is nowhere to be seen on the Morningstar site.  Leverage, of course, adds risk to a portfolio and could produce magnified gains and losses if on the right or wrong side of the bet.

Without a full review of all the Bank Loan funds in that category, it is hard to say how many other funds in that category utilize leverage.  Consequently, it is an unfair comparison to lump all bank loan funds, those with and without leverage, together within a ratings framework.  Once again, buyer beware and know what you are buying and why.       

Why Bonds? Part 2

As a “bond guy,” it is not unexpected that I am a fan of the positive attributes that bonds can bring to a portfolio. Things like regular cash flow, the ability to “dial-in” the amount of interest rate and credit risk, and negative correlations to equities all lead to a good portfolio component.  This thought process has worked out very well on a year-to-date basis (see previous blog post here for more info: 

During my years managing interest rate risk at a major insurance company, we had sophisticated systems and analytics to measure and manage our fixed income portfolios and exposures along the yield curve.  The math was sound and proven to provide useful information that we could use to manage exposures.  The trouble, however, was that we were not very good at forecasting interest rates!  The best we could do was manage our exposures; trying to position for a rate spike or yield curve flattening or steepening to pick off some extra total return almost always ended in a losing proposition.  Consequently, we resigned ourselves to manage a “matched” book; making sure that our asset and liability durations were matched within a tolerance range to “immunize” our target return.    

I feel the same way today.  Running an “immunized” fixed income portfolio to its liability target is exactly analogous to managing a “long term strategic asset allocation” to a target risk profile.  Some of my peers in the industry took confident positions in “short bond ladders” and “short government agency paper” to position for rates to rise due to the consensus view for 2019.  They were all dead wrong (so far) and missed the excess returns provided by taking duration and credit risk from other fixed income sectors. 

Certainly, rates could go lower from here or stay the same for a protracted period of time; especially if the global trade tensions lead to a U.S. (and global) recession.  In that case, bonds could produce positive total return above current yield rates (10-year treasury yield of 1.64% as of today, for example).  Alternatively, rates could go higher if the U.S. Fed and global central banks are (ever) successful in promoting more robust growth and inflation above meager sub-2% levels.  Of course, rates are ALWAYS subject to ups and downs; we just don’t really know when they will emerge.

Please see my prior blog post from June 2019 to see more detail on interest rate forecast foibles:

Why Own Bond Funds?

I am a “bond guy.”  I worked in an insurance company managing investments for 25 years and spent most of my time worrying about bond duration mismatches, credit quality, defaults, and sector exposures.  We had equities, too, but they comprised a small allocation since they didn’t work very well to hedge liability cash flows.  We loved bonds for their cash flow characteristics and lower risk profile.

Bonds, however, have not gotten a lot of “love” in this post-Crisis environment.  Inflation, which most market commentators said was sure to follow the aggressive global central bank easings (but has yet to materialize), would certainly crush the value of all those long duration bond portfolios, as they say.

But, on days like we have seen most of this year, owning bonds have performed exactly as we would hope; as a hedge against equity volatility.  Year-to-date through July 2019, core bonds have exhibited a negative correlation of -0.41 to the S&P 500; a much higher negative correlation than over longer time horizons (10-year correlation to the market is almost 0.0; granted this is an unusual time horizon).

To all my peers buying short term bond ETFs and mutual funds to protect value and running away from credit quality, you have missed a key value of core bonds; as a diversifier of market risk.  There is certainly a place for all the different varieties of bonds funds, and I like most of them, but not to the exclusion of good old “core” bonds with some moderate duration and investment grade credit quality. They are called “core” for a reason, after all!

Yikes! The aggregate core bond ETF from Schwab (SCHZ) is up 7.86% year-to-date while the investment grade corporate ETF from iShares (LQD) is up 14.02%, pretty close to the S&P 500 returns of 16.2%.

Best to own a well-thought-out diversified mix of different bond types to capture the unique characteristics that each of them offer.

"Beats Me!"

A former chief investment officer at my prior firm (you know who you are!) was one of my favorite market commentators.  At client meetings, he would talk for a good 30 minutes about the economic and capital market issues of the day.  Usually there would be a good mix of positive and negative characteristics to end up with a balanced presentation of the current situation.  At the end of each presentation, and he always did this, he would close by saying, “so, what is the market going to do?  Beats Me!”

I am quite comfortable saying the same thing today!  Plenty of good news and plenty of bad news.  It certainly seems like a great time to buy dividend paying equities since the S&P is currently paying about 2% (and high dividend equities are over 3.5%) which is much higher than the 10-year Treasury at under 2% (1.76% as of August 5).   See my blog post dated Feb 27, 2019 for more detail on this topic (  Plus, qualified dividends are a tax-advantaged investment compared to bond interest.  But, there is a huge overhang of market stress due to the escalating trade war.  And, weakness in other global economies. Etc., etc.

As I am wont to say, plenty of reasons to be cautious, but no reason (yet!) to run for the hills.  New money should go into the market slowly, since that is ALWAYS the low risk approach to get market exposure.  Investors with a long term strategic approach properly diversified and positioned in the risk profile appropriate for their situation should stay the course.

Do You Need a Retirement Plan?

Most investment advisers offer some form of investment planning for retirement.  Sometimes it can start and stop with a few rules of thumb; fund an “emergency fund”, max out your 401k, identify an age- and situation-appropriate risk profile, live within your means and check back when you are 65 to see how you did.  Alternatively, you can do some fancy income, expense, goals and investment modeling with some of the great investment modeling software available to advisers to come up with a probability of success.  Depending upon your age and financial situation, it can be very useful or overkill.  Let’s take a look at the differences.

If you are under 40 or 50 years old, you have a long time to go before you retire; probably 25 or more years – when a lot can happen.  Though you can certainly model out all of your “known” financial and non-financial considerations to get some insight into your financial future, I can guarantee you that you will be wrong and miss some important unknowns that will throw a kink into your plans.  Usually, it makes best sense simply to do some high level planning and stick to a simple approach.

On the other hand, if you are 50 or older you will likely have a much better handle on how the next 10 or so years will evolve and can take meaningful steps to help ensure a high probability of success to fund your retirement goals and expenses.  It makes very good sense to map out a budget of income and expenses with short-, medium- and long-term goals and overlap that with your investment portfolio and projected savings to see how it could perform until your “end of plan” (when you die!).  Your goals will include things like European vacations, a Florida condo, a new car every five years and whatever else you can think of.  Your expenses and goals need to have an inflation adjustment, too, with things like health care expenses getting a higher inflation adjustment.

Unlike a more generic approach, a modeled approach with realistic cash flow assumptions allows for a statistical measure of the “probability of success”, i.e. the chance that you will reach your end of plan with the means to fund it over your retirement period!  After considering your income from all sources, e.g., part-time work, pensions, annuities, social security, required minimum distributions from tax-deferred accounts, etc., and your expenses and goals, it is useful to overlay scenario testing of different risk-based investment portfolios over your planning horizon.

For example, you could find that an aggressive portfolio could have a higher probability of success (maybe 80%), but the large drawdown in any one year (perhaps -30% or more) is too big a risk to take in any one year.   In that case, you may opt for a lower risk portfolio (with maybe a 70% probability of success), but with only a -15% drawdown.  Modelling software helps to fine-tune the risk profile of a target investment portfolio to your retirement needs and desires.

Quid Est Veritas?

Translated: “What is Truth?”  The financial (and other) media has many ways to tilt its reporting of news.  Whether it is due to the selection, frequency, or framing of stories, the media has a choke hold on how consensus views get formulated by the consuming public.  The CFA institute (of which I am a member) published an article titled, “How to Read Financial News Redux:  Understanding Consensus” by Robert J. Martorana, CFA ( that highlights some of the issues to consider when reading financial news.

The author highlights the main ways he reads the news and makes informed decisions to get his version of “truth”.  First, he reads a variety of general news sources, such as the New York Times, Wall Street Journal, and Google News.  He then gets to the investment news from sites such as Dash of Insight, Fundamentalis, and Factset Insight, as well as pure investment research such as from the JP Morgan 2019 Long-Term Capital Market Assumptions.

The author looks at how each source covers the story, such as if it was a lead story with deep analysis or if it was buried somewhere with only a cursory overview.  Also, if the story keeps recurring with updates, that news source obviously has some bias (legitimate or otherwise) to keep reporting on it; which could be different from a different news provider.   Also, there is obviously a political bias in news reporting today; it is critical to “spot it quickly, read multiple viewpoints, and come to our own conclusions”.

As an investment professional, I am intrigued by how investment-related stories are covered by the mainstream media. Oftentimes, I hear or read a story that is blatantly wrong or mis-reported. The errors are obvious to me as an “investment professional”. Consequently, I wonder how many other stories I hear or read about that I am NOT an expert in that are mis-representing the facts. As a Chartered Financial Analyst (CFA), we need to do our due diligence as we prepare and implement investment plans and management. We need to ensure that our sources of information are fair, unbiased, and “truthful” so that we can faithfully serve our clients.

After-tax Benchmarks? Not!

Maybe it’s hard to believe, but there are no readily-available published investment benchmark indices calculated and presented on an “after-tax” basis. However, this should not be surprising given the personal and complex nature of taxes. For example, everyone has their own personal “effective” tax rate and also their own variable timing of cost basis and the receipt of taxable income; not to mention the realization of capital gains and losses; short- and long-term!!

I found an interesting article by Morgan Housel ( that got into some of the details on the impact of taxes on a taxable equity portfolio. He did the math and found that from 1993-2017 the S&P 500 returned 7.7%; add in dividends (that are taxable) and the pre-tax return jumps to 9.7%. Add in an adjustment for inflation and you get a “real” return of 7.4%. Now, finally, factor in some assumptions for taxes on the dividends and you see a drag of 0.6% per year making the total return 6.8% annual return over the horizon. This is a bit intuitive since the S&P 500 currently yields about 2% per year; a 15% Fed tax on qualified dividends plus an assumed 5% state tax (totaling 20%) puts the tax cost at about 0.4% per year (not including compounding, etc.). But, of course, not everyone is paying 15% Fed tax or 5% state tax, hence the benchmarking problem! And, most investors also have some non-qualified dividends and bond interest that are taxed as ordinary income, making the problem even more complex.

What do we do without an after-tax benchmark? There are few things, but one approach is to look at each distinct holding in a portfolio and evaluate its relative attractiveness on an after-tax basis. For example, compare tax-free municipal bond rates to taxable corporate bond rates on an after-tax basis. Today, the median A-rated tax-free municipal bond has a yield of 1.97% and the median A-rated corporate bond has a higher yield of 2.82%. Simple math shows that for any effective tax rates lower than 30%, it is more economic to buy the corporate bond (i.e., 0.70 * 2.82% = 1.97%) and vice versa. This analysis, however, ignores risk measures, portfolio correlations, and ignores the possibility of trading and perhaps generating gains or losses.

June PMI at 51.7; weakened once again...

The ISM PMI came in weaker again for June 2019 at 51.7, following a weak May measure of 52.1. Still over 50, indicating a growing manufacturing sector, but more weakness in this number will portend slower economic growth in the U.S. When this statistic was released on July 1, there was not much media hoopla and the markets absorbed it pretty well. Since then, the S&P 500 hit an all-time high again on July 3, 2019!

Plenty of reasons to be cautious here, but no reason to fear any kind of prolonged drawdown (yet, as things can change on a dime given the propensity for Fed-speak and Trump/China trade talk to impact market dynamics). Fears of a global growth slowdown seem well-founded, but slower growth is not something to fear as much as a negative growth! Moreover, this could just be a pause that refreshes!

...always having to say you're sorry!

The common catchphrase from the 1970 movie Love Story goes, “Love means never having to say you’re sorry.” This can be modified and applied to diversification in an investment portfolio to read, “Diversification means always having to say you’re sorry!” This certainly applies to the performance metrics we have seen from diverse asset classes so far in 2019.

A baseline moderately aggressive strategy with a 70% equity and 30% fixed income allocation produced a 14.16% cumulative return for the year-to-date period ended June 30, 2019 (see the chart). The component asset classes were spread amongst the usual suspects including large cap, mid cap, and international equities; plus a few special purpose alpha generators. The “core” asset classes turned in their benchmark returns, whereas the alpha generators did there job by adding (and subtracting) excess return. Who were the winners and losers over this 6-month horizon?

On the equity side, the S&P 500 represented by the iShares Core S&P 500 ETF (IVV) turned in a great performance with 18.33% total return for the period. However, others did better! Positions in the factor space, momentum and minimum volatility (MTUM and USMV) produced benchmark-beating returns of 19.28% and 18.91%, respectively. Likewise, mid-cap and small cap equities won out as well with 19.87% and 18.49% returns ouflanking the S&P 500. On the flip side, however, REITs marginally underperformed, but international developed equities and emerging market equities underperformed the S&P 500 by wide margins for the first half of 2019.

On the bond side, the Bloomberg Barclays U.S. Aggregate Bond Index (through the iShares AGG ETF) turned in a stellar return (for bonds!) of 5.84%. Other alpha generators in the fixed income space, however, all beat the “agg” handily including investment grade corporate bonds, emerging market bonds, high yield bonds, and bank loans with YTD returns of 11.92%, 11.29%, 9.91%, and 6.62%, respectively. Only short term bonds lagged the agg with a measly 2.15% return. So much for placing a bet on the consensus views that rates were going to “go up” and that credit spreads were ready to spike!

So, despite some good calls, being diversified cost this strategy some upside… over the long haul we hope to have more ups than downs.

Timing is Everything

A former Chief Investment Officer at my prior firm used to say “timing is everything!”  At the surface, a very simple phrase but in reality, a very important truth in investing (as in life!)

This is what he meant:  you might have the fundamentals right with exactly the best possible analysis, but if you miss the timing you miss the above market returns.  Or, in other words, fundamentals tell you “what” to buy and technicals (market timing) tell you “when” to buy.  Of course, no one can predict the market, so the “when” is almost impossible to achieve.

The chart below is a good example of this.  Coming out of 2016, the Dow Jones Moderate Index (global) had a great run in 2017 (note the nicely upward sloping line with not much volatility).  Since then, 2018 into 2019 has been much choppier.  In fact, the steep dips and steep climbs since the end of August 2018 has resulted in a meek 1.2% return (through June 14, 2019).


Consequently, 2019 YTD performance is mostly irrelevant without a look-back to 2018 Q4.   We have been in a trading range since January 2018 with the great 2019 YTD performance simply a broad re-trace from the 2018 Q4 lows.  As always, plenty of discourse on where we go from here.

My Best Ideas (today!)

When people find out that I am in the investment business, it is not unusual for the conversation to turn to investments.  A lot of times I will get asked, “what is a good investment right now?”  Certainly, a tough question to answer without knowing the persons financial situation.  Depending on who you are and the resources you have, the answer could very well be a bank CD (not really, but it could be!)

However, I always felt I needed an answer (with caveats).  During the post-Credit Crisis environment, the answer I almost always gave was high dividend stock ETFs.  During that time that class of investment provided a low cost, diversified portfolio of income-generators with advantaged tax treatment for qualified dividends.  They also provided the potential for capital appreciation (upside) that was not likely from bonds.  And, most importantly, they provided a once-in-a-lifetime income rate better than bonds.  What was not to like?

I updated my analysis recently and found that this answer still works pretty well (see my blog post from February 27, 2019).  But, as we all know, things change and answers like these are subject to change.

Such is the case with another one of my favorite ideas:  the Corporate Income and Opportunity (PTY) closed end fund from PIMCO.  I wrote a blog post back on March 19, 2019 titled “A Non-Bond Bond Fund.”  PTY was trading at $17.21 per share back in March and it has rallied strongly since then to almost $19/per share recently.  Here is a case where the “value” equation takes precedence and something I said only two months ago is now “old news” and should be ignored.  Unlike stocks that can have unlimited upside, this particular closed end fund is trading way over its NAV and normal trading range at a 29.1% premium!  Maybe it will work out, but I am not buying!

Whither Rates Up or Down?

Forecasting the path of interest rates is very hard; impossible, really.  That doesn’t stop talking heads from trying to do it.  Starting in the post-Credit Crisis environment of 2008/2009, most thoughts pointed to rampaging inflation and sky-rocketing interest rates in the aftermath of aggressive Fed easing and increases in the money supply.  Certainly, that has not been the case.

Interest rates and inflation continues to be muted and well under control.  The 10-year treasury is currently yielding 2.13% today and from 2009 to today has been within a range of 3.98% (April 2010) and 1.38% (July 2016); a small range with hardly a trend.   Fed Funds, on the other hand, has moved up in a telegraphed and orderly manner from about 0% from 2009 to 2016 and then up in steps to about 2.37% today.

Barron’s had a few articles on interest rates in the June 10, 2019 issue.  One article titled, “Say Goodbye to Those 2% Rates on Savings”, made a point that Wall Street thinks interest rates are going lower.  So, if you have that view, some strategies that could benefit could include to try to lock in rates, place some bets on financials (that might be more profitable in a steep yield curve environment), or buy real estate investment trusts that could broadly benefit from a general decrease in rates.

Another article titled, “The Rate Swing of a Generation” by rate guru James Grant, made the point that bonds have traded in two great long-lived markets: the bear market of 1946-1981 and the bull market from 1981-2016 (which may be extended if we get another round of rate cuts).  He is not forecasting anything; instead, he is positing that rates could rise from here.  He thinks we have an unreasonable “love” for bonds that could turn on us.  One point he makes is that “real” rates, rates after adjusting for inflation, are historically low and should not persist. 

So, no one knows and there are plenty of differing views.  Undiversified bets in either camp could cost you; best to stay diversified.

More Trouble with Tactical: GMOM Update

I have reported a few times in this space about the difficulty tactical managers have had in the recent market environment. This update today continues to show a trend of underperformance.

In February, the Cambria Global Momentum ETF (ticker: GMOM), a notable player in the tactical space, called a risk-off environment. As of June 4, 2019 the ETF is comprised of almost 100% bonds (of different varieties and flavors) and no equities except for some REIT exposure. Year-to-date through June 4, 2019, the ETF has produced a total return of 2.71%, compared to the S&P 500 of 12.74% and the Bloomberg Barclays U.S. Bond index of 4.91%. Most interestingly, yesterday June 4 when the S&P 500 was up 2.2%, this fund was up only 0.4%. Unremarkable performance by any measure.

This market environment has been characterized by geo-political turmoil, trade battles, Fed-speak, and economic stats that present a mixed bag of conclusions. More can be said on this topic, but let it be known that trying to outguess this market is ripe with risk. For long-term investors who have correctly evaluated their tolerance for risk, it is best to stay the course.