Retail Investors Do A Bad Job Rebalancing: Wilson

Summary

Mike Wilson discusses how retail investors typically fail to rebalance and are now over-concentrated in large-cap growth after a decade-long bull market. He argues cash and short-duration fixed income have become more attractive because they pay positive real returns, and points to infrastructure bonds, utilities, and staples as defensive options. His key warning is to rebalance and take profits in crowded winners.

• Mike Wilson says most investors do a poor job of rebalancing and many portfolios are now unbalanced.
• He notes cash and fixed income now provide positive real returns since Covid.
• He calls cash and mid-tier short duration bonds good assets.
• He says infrastructure bonds and defensive equities such as utilities and staples can protect portfolios.
• He warns investors are over-loaded in large-cap growth stocks.
• He suggests now is the time to rebalance and take profits, even if it means paying taxes.