What is value? The answer seems simple in one sense: Value is what something is worth. We apply this principle every day when we make purchases. If the value we attach to a certain object or service is equal to or greater than its offer price, we hand over our payment.
Investors trade more than they used to. Often these buy and sell decisions are emotional responses to market volatility — an attempt to limit losses in choppy markets. We believe an investor should rarely, if ever, make adjustments to their portfolio based upon an emotional response to the market.
You’ve probably heard that asset allocation is the most important determinant of portfolio returns.