New Strategies for Asset Management Amid Market Volatility in 2025

The global financial markets in 2025 are unfolding in a complex risk environment characterized by high interest rates, geopolitical uncertainties, and rapid technological industry changes. In such a situation, investment approaches that focus solely on individual stocks or short-term gains may actually increase the risk of losses. Instead, a systematic approach called investment portfolio has become key, which goes beyond simple asset collection to pursue risk diversification and sustainable returns simultaneously.

Principles of Asset Allocation: Why You Shouldn’t Put All Your Eggs in One Basket

The fundamental idea of an investment portfolio is to combine stocks, bonds, cash, alternative assets(gold, commodities, etc.) in various proportions. For example, a structure allocating 60% to stocks, 30% to bonds, and 10% to stable assets becomes more valuable as market volatility increases.

Looking back at the 2008 financial crisis, investors holding only stocks experienced an average loss of over 40%, whereas those with diversified portfolios limited their losses to around 15–20%. This is because bonds acted as defensive assets during sharp stock declines. Ultimately, investment portfolio is a mechanism that structurally reduces the impact of poor performance in specific assets on the entire asset base.

The Power of Long-Term Growth and Compound Interest

The performance of an investment portfolio maintained over the long term is remarkable. Historical data shows that the average annual return of a diversified portfolio over 20 years or more is around 6–8%, providing a much higher compound interest effect than simple interest.

From a long-term perspective, patience to withstand temporary market downturns is crucial. If you have specific goals like retirement or education funding, long-term portfolio management reduces emotional decision-making and enables systematic asset accumulation.

Long-Term vs. Short-Term: Combining Two Strategies

To effectively manage an investment portfolio, it is essential to understand the differences between long-term and short-term strategies.

Characteristics of long-term investing:

• Decision-making centered on intrinsic value and industry growth potential
• Using dividends and asset appreciation as sources of income
• Fewer transactions, resulting in lower fees
• Less affected by market news

Characteristics of short-term investing:

• Timing decisions based on technical indicators(RSI, MACD, moving averages)
• Sensitive responses to short-term events like economic indicators and earnings reports
• Repeated accumulation of 1–2% short-term gains
• Requires high management effort and quick risk response

In practice, a hybrid approach combining both strategies is most effective. Securing stability with long-term assets while selectively responding to short-term opportunities enhances overall portfolio stability.

Asset Allocation and Rebalancing Execution

The key to effective investment portfolio management is regular rebalancing. For example, if initially set at 60% stocks and 40% bonds, but stock prices rise and stocks reach 70%, you should sell some stocks and rebalance to 40% bonds.

Research by Vanguard, BlackRock, and others shows that portfolios that perform regular rebalancing yield 0.5–1% higher annual returns than those that do not. Especially with popular ETFs and index funds offering automated rebalancing features, even novice investors can easily implement this.

Risk Hedging and Flexible Position Management

Hedging strategies to reduce the risk of declines in existing assets are also important components of an investment portfolio. For example, if your US ETF holdings are large, you can mitigate losses by using short positions in specific sectors when a market downturn is anticipated.

CFD( contracts are tools that realize such hedging strategies, allowing you to take both upward and downward positions without holding actual assets. However, due to the leverage characteristic of CFDs, profits and losses can be magnified, so it is advisable to limit their use to a few positions within your investment portfolio. Maintaining high-leverage strategies within 5–10% of total assets is a fundamental principle for loss management.

Market Entry Techniques: Dollar-Cost Averaging and Timing

Accurately predicting the market is impossible. Therefore, an effective investment portfolio strategy employs regular dollar-cost averaging) to buy in installments.

For example, instead of buying all at once when the stock price drops from 100 to 70, dividing purchases at 100, 90, 80, and 70 results in an average purchase price of 85. This approach can lead to significantly higher returns when the market rebounds compared to lump-sum buying.

Additionally, short-term investors should seize opportunities around major events like earnings reports or central bank rate decisions, while setting stop-loss( limits in advance to prevent emotional decisions.

Systematic Management Free of Emotions

The core of successful investment portfolio management is consistency. Getting greedy during market surges or panicking during sharp declines can harm long-term performance.

Discipline in not deviating from automated strategies or pre-established plans is essential. Maintaining the strategy even during stagnation or short-term losses is what enables long-term survival.

Lifecycle-Based Portfolio Design

Investment portfolio should vary according to the investor’s age and financial goals.

• In their 30s: Aggressive allocation)80% stocks, 20% bonds( aiming for high returns
• In their 40s–50s: Balanced allocation)60% stocks, 40% bonds( combining growth and stability
• Over 60: Conservative allocation)30% stocks, 70% bonds and cash( prioritizing stability

Recently, portfolios reflecting ESG) criteria are gaining attention, evolving toward considering both financial returns and social value.

Conclusion: Prepared Investors Win the Market

To succeed in the uncertain markets of 2025, understanding investment portfolios is essential. The combined operation of asset allocation, diversification, risk hedging, and balancing long-term and short-term strategies can lead to high performance.

The key is ‘being prepared rather than predicting.’ Abandon the illusion of perfectly forecasting the market, and design structures capable of responding to various risks in advance—that is the path of wise investors. Clearly understand your risk profile and goals, continuously review and improve your investment portfolio based on data-driven decisions. This is the survival strategy of modern investment focused on long-term survival and growth rather than short-term gains.