Hi ,

Happy TGIF!

Just a short follow-up to what I shared earlier this week.

Out of the 4 questions, I personally find this one the most important:

If the portfolio drops 15% to 20%, what is the rule?

Hold, add more, rebalance, reduce risk, or wait?

Most investors don’t lose confidence when markets are calm.

They lose confidence when the headlines turn negative.

You open your investment app and see the value lower than before.

You read words like recession, inflation, interest rates, war, slowdown, or market sell-off.

You hear people say, “Maybe better to wait first.”

And suddenly, the plan that once felt logical starts to feel uncertain.

That is when investor’s remorse appears:

“Should I have invested later?”

“Should I sell first?”

“What if this gets worse?”

“Maybe I made the wrong decision.”

The issue is not that investors are not wise.

It is that they may not have the right information sources and framework to guide decisions.

Because every piece of market news needs to be interpreted properly.

When inflation data comes out, what does it mean for interest rates?

• When the US dollar moves, how does it affect global assets and currencies?
• When central banks change their tone, what does it mean for monetary policy?
• Without a framework, investors may end up reacting to headlines.
• With a framework, the same information can guide better decisions.

I once worked with a client who invested for retirement income.

The portfolio was designed to provide dividend income. When markets corrected, the account value naturally moved down and felt uncomfortable.

But because we had already discussed the rules beforehand, he did not panic-sell.

We reviewed the portfolio using my 7 Macro Allocation Framework, which looks at areas such as interest rates, inflation, currencies, monetary policy, valuations, economic growth, and liquidity conditions.

So instead of reacting to headlines, we reviewed the portfolio based on the original income plan and macro framework.

He stayed invested, avoided emotional selling, and continued receiving dividend income for retirement.

That is why I believe a portfolio should not only be built around “what to buy”.

It should also be built around:

What information matters, how to interpret it, and what decision rules to follow when things go wrong.

Because when markets fall, the better question is not:

“How much did the portfolio drop?”

The better question is:

“What is the rule now?”

And once you see investing from this angle, it is hard to unsee it.

Thought this was worth sharing.

Best Regards,

Zest