Juggling Knives By Jim Jubak
This book is best suited for someone who is looking for an explanation and justification of why our financial economy is so volatile. It’s not an easy read, it’s technical and detailed.
He spends a lot of time explaining the changing trend of an economy that is becoming even more volatile. There are a lot of historical data which he has researched in-depth.
The rest of the book is spent sharing with the reader how best to invest in order to decrease the risk of volatility to your overall wealth. Some of these investment strategies are a bit advanced, therefore may not be what the average healthcare professional may want to do with their free time.
Volatility In The Market
I don’t doubt that the new economy is and will be more volatile than economies in the past. There are a few reasons for this including globalization, powerful economic competitors, our recent change to fiat currency, and easier access to securities trading.
However, how does this affect the healthcare professional who wants to secure a healthy investment account and have enough savings to get them through to retirement.
On a timeline of 1-2 decades I suspect the average investor would see a ton of ups and downs. There would be many years of bull markets, followed by some flat gains and the occasional dip, crash, or market correction.
The amazing thing about volatility is that it is a temporal factor, not an issue affecting the value of the underlying assets. Therefore, if a consumer is savvy and can withstand pressures, they will see their portfolio recover in time.
Ensuring Steady Income
By having cash stashed aside, by having a good asset allocation geared towards less volatile assets, by reinvesting unneeded income from one’s portfolio, and having the ability to adjust one’s budget based on market performance, even the worst case volatility can be overcome.
There are 2 ways that I can see that an investor can avoid volatility completely.
#1. Maintain Employment Income
Employment income will almost never mirror investment income for healthcare professionals. Most of us will always be in high demand one way or another. By having a little income or even the ability to have income on the side, such as when the economy is misbehaving, we will not be affected by market volatility.
#2. Invest CONSERVATIVELY
Investing conservatively, aka, losing money, is the best way to avoid volatility. If you invest in a savings account or a CD or treasury bonds, you will likely avoid market volatility.
However, this also means that your money will lose value. This comes as a shock to many that they would invest knowing they will lose money. However, that’s the only way that I can see a consumer could avoid the volatility of market returns.
The less risk a consumer wants to take, the less they will be rewarded – and apparently punished.