Good morning, good afternoon, good evening. Depending on the part of the world you’re in. This is Jonathan Satovsky of Satovsky Asset Management with a quick observation on “Seeking Wisdom, Wealth, and Wellness” on the concept of flood insurance. Hurricane insurance.
Why does the demand for hurricane and flood insurance rise after a hurricane and flood? Of course, people want something based on recency bias. But of course, the cost to get flood insurance and hurricane insurance goes up right after the flood. So it’s no different than portfolio allocation decisions. When people want portfolio insurance, protection from downside, generally, it’s super expensive.
So consider the timing, and where the weight of populous thinking is, to understand the cost-benefit of what you’re buying. Because at the end of the day, if you’re an investor for a lifetime, you want to make sure that you’re creating good value and good asymmetrical risk-return opportunities. Even if they don’t pan out, you still want to continue to operationalize the concept of good risk-returned decision-making.
Think about that on your path to Wisdom, Wealth, and Wellness.
Have a great day.