In an effort to attempt to always keep things simple, we have found our own secret sauce, which, as you might have anticipated, is just that, Simple! (By the way, we certainly have learned from mistakes in the 207-2009 “off the cliff“, time frame, and we are generally more conservative and cautious investors today.)
In our opinion, here are the two most important items in navigating this market today, and why it is helping us stay grounded:
Step One:
Have the correct Stock/Bond mix for your situation. Throughout 2007-2009 we learned as professional advisors we were unknowingly slightly more aggressive in certain areas than we had originally thought. We also learned we wanted to be generally more conservative, across the board, given the world events and future possibilities. With a few more gray hairs, and an extra wrinkle or two, we are more conservative today in our allocations, and our specific investments. As most of you know, here is our go to allocation chart of risk and reward (Fixed/Equity).
Step Two:
Rebalance, rebalance, rebalance. When markets are slow lumbering elephants moving through the forest like they were in early 2011, specific individual investments tend to be the key. When markets are bouncing around like kids on a pogo stick, massive groups of investments all move together, for the good or the bad. When one group goes up and becomes too large for the appropriate allocation, trims are necessary. When another group gets dragged down by macro market movements, allocating funds to this situation is key.
This step is the ultimate in courage and confidence, as EVERY time we are selling investments that have gone up, and buying the investments that have gone down, most mainstream folks are Zagging, and telling us how silly we are as we politely Zigg !
From a client perspective, this is why you have seen more movement in portfolios this year.
Thanks very much for your continued confidence and compliments, we appreciate it very much and hope you have enjoyed this quick refresher of how we are keeping our cool!
Have a Super Day and Welcome Back!
JK
214-706-4300