With rising inflation, “crazy stock valuations,” soaring home prices, and even booming commodities prices “after a 10-year low… it’s increasingly challenging to find pockets of value in this environment,” according to Cullen Roche, chief investment officer at Discipline Funds.

“This is, in my opinion, one of the hardest investment environments we’ve experienced in a long time,” Roche said. “And I think it’s going to continue to be challenging until we see some price adjustments.”

Speaking with NYSE’s Judy Shaw for ETF Leaders, powered by the New York Stock Exchange, Roche explained that the biggest challenge for investors “is always psychological,” so “behavior is always… the investor’s biggest… problem to overcome.” The Discipline Funds CIO said that going forward, “being patient, being disciplined, [and] being aware of your own behavioral biases… are going to be the most challenging aspects of the next couple of years.”

During the interview, which was conducted at Exchange: An ETF Experience 2022, Roche admitted that “it’s hard” for advisors to prepare their portfolios, because “this is an environment where investors need to be over-diversified,” and that hyper volatile events can expose investors “to a lot of unnecessary risk” if their portfolios are overly concentrated.

“We’re big proponents of all-weather portfolios being broadly diversified across a huge number of assets, not just to better diversify yourself psychologically, but to provide you with multiple income streams and multiple asset class return streams,” said Roche.

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