Are your current allocations still in line with your expectations?

What a year it has been in the markets and, in particular, the performance to date in our equity disciplines! You never know when a year like this will occur, which once again proves that timing the market generally is a fool’s errand and that the two major factors in a successful portfolio are discipline and staying true to your intended risk profile.

Yet, herein lies the challenge because when markets are good and investing looks easy, we tend to abandon our original course and start to trend into riskier waters thinking that it is safe. I would take the opposite tactic at this juncture and advise clients to really take this time to evaluate their current asset allocation and make sure that the ratio of stocks to bonds reflects their intentions and goals for the monies invested.
Important questions to consider in deciding if your current allocation is, in fact, the proper one:

1. If my portfolio rises 30% in a given year, am I comfortable in a scenario where is goes down 30%?
2. What is the intended use for the investments?
3. If the response to Question #2 is income, then when will I begin taking withdrawals?
4. Is the primary purpose to grow the assets for retirement or to leave the monies to my beneficiaries?
5. What is the time frame for retirement?

Often times, a simple re-balancing of the portfolio seems prudent to get the original allocation back in line with the current one. This strategy ensures the old adage of “Selling High and Buying Low” because we are trimming the sectors that have out-performed and buying the ones that have under-performed. We generally advise an annual re-balancing to keep the portfolio on track taking into consideration tax consequences.
Please take the time to consider how you are currently allocated and if this does reflect your current goals.
As always, Kyle Clark and I are readily available to meet with you for a proper portfolio review.

Karl A. Wagner, III

Director of Business Development