Portfolio balancing with time horizons

Morningstar has just published an analysis with a focus on when an investor will need their funds.

Model Portfolios for Short- and Intermediate-Term Goals

Investing for shorter time horizons can be harder than it looks. Here’s how to make sense of it.
by Christine Benz, Morningstar, Apr 5, 2023

To help investors match their holdings to their anticipated spending needs, Morningstar’s framework separates funds into one of four holding periods: short (a holding period of one to two years), short/intermediate (two to six years), intermediate (six to 10 years), or long (more than 10 years). To categorize investments, Morningstar looks at the worst time period—from peak to trough to eventual recovery—as well as how frequently those losses have occurred. In other words, if you put your money into an investment, how likely are losses and how long would it take you to get back to breakeven after the investment has lost money?

Some stock types, such as U.S. large-growth and emerging-markets, have taken more than a decade to get back to their preceding peaks, and the likelihood of losses has also been high, especially over shorter time frames. Other investment types, such as high-quality short- and intermediate-term bonds, have required just a few years to recover from losses, and the losses have been infrequent… [end quote]

A retiree with a relatively short time line will have a different perspective than a worker with many decades ahead of them.

This is a good article for anyone who is trying to build a portfolio from scratch or evaluate their current portfolio. @Inspired2learn this article would be valuable for you. Read the whole thing – the risk of concentrating a portfolio in hightly volatile technology stocks will become obvious.


Thanks Wendy, really appreciate that!


@Inspired2learn click on the link in the article to access the long PDF report which is chock-full of valuable analysis.


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