Prepare your portfolio for a turnaround
The current bear market has been one of the most tumultuous ever for the financial markets —and among the most difficult for investors. But even the most severe bear markets turn around. Many investors may have made sensible adjustments in response to the crisis. As a result, however, their portfolios may no longer be aligned with their long-term goals. What’s more, their current holdings may not be the ones that will benefit when the market does begin to rise. Will you be ready when this economy turns upward and markets begin to recover? Even if your portfolio has suffered losses as a result of recent volatility, a long-term view is critical to helping you achieve your goals. So a consistent, patient approach is important. Your financial professional can help you follow these basic principles: Don’t try to time the market It may be tempting to move in and out of the market in search of fast gains or to avoid losses. But timing the market can have a big impact on opportunity lost if your assets are out of the market when it begins to move upward. Keep investment goals in mind At times like these, it is a good idea to revisit your goals to ensure that your asset allocation and investment strategy are correctly aligned. Your financial advisor can help you define and categorize your short-, medium- and long-term goals and serve as a sounding board as you prioritize your goals and balance them to help meet your needs. By helping you develop an investment strategy that focuses on what matters most, they can help you avoid making decisions based on short-term emotions. Remember investing fundamentals Balancing risk and return potential in your portfolio through asset allocation can be critical in this economic environment. Your financial advisor can work with you to help you assess the amount of risk that is appropriate for you and help you apportion assets among the basic asset classes, such as cash, equities and fixed income securities. Whether you seek optimal returns or to generate income from your portfolio, you can determine an overall asset allocation and also help you diversify your portfolio. Diversify your holdings If your portfolio is properly diversified across and within asset classes, you may be able to take advantage of sectors and markets that are performing well, while protecting your portfolio from weaker performers. For example, in the equity sector, many investors are turning to companies with a steady record of consistent or maintained dividend payouts or payments, such as companies that focus on consumer staples like health care and telecommunications. While these types of stocks may help mitigate risk and volatility, fixed income securities, particularly those of high credit quality, may help to provide stability and diversification. Are we on the verge of a recovery? Maybe not right away. But investors will want to be ready when the trends turn upward. Kevin Shimmel is a Roseville resident and an associate vice president, financial advisor and chartered financial consultant for Morgan Stanley Smith Barney. He can be reached at 484-5303.
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What bear market are you talking about? You mean the one we had last February? Earth to Kevin Shimmel: The Dow has gone from 6500 to 10400 in 9 months. The recovery is well underway.
Gulliver, I couldn't have said it better. Maybe this story was sent to the AJ last February and fell behind a desk and they just found it. By the way, Nasdaq and the S & P have also gone up substantially. Now if job creation follows we'll be really on the way up from the bottom, however the danger of a double dip recession will become reality if jobs don't follow very soon.
I make money either way, as long as there is volatility, and there has been, I have not suffered at all! This looks like a plug for Ken at Morgan Stanley...
This market has made progress but this is not over. I expect to see several up markets followed by down markets or a "W" market for some time. That being said I have not left the market and and wil stay invested.
Not so fast, according to recent reports 33 % of the new foreclosures taking place are now the fixed rate loans that came subsequent to the subprime loans. These are individuals with good credit. This is all a result of the unemployment rates going through the roof. “The Mortgage Bankers Association’s report Thursday suggests the housing market and broader recovery could be thwarted by the continuing surge in home loan defaults, especially as the unemployment rate keeps rising.” “Lost jobs, rather than the shady loans made during the housing boom, are now the main reason homeowners fall behind on their mortgages.” The stock market often creates its own bubble. With this current bunch we have running things, it doesn’t bode well. I would like to point out, however, that I find it odd that the Auburn Journal would print a stock Broker from Roseville rather than Auburn. They always give the leading brokers each month the title of Vise President or President; they are stock Brokers.
Sounds too much like a sales pitch
"Your financial advisor can help you..."
"Your financial advisor can work with you.."
My wife and I had two investment advisors early on. They put us into syndicated limited partnerships. Every single one of them went bust. So in 1987 my wife took over handling our non-real estate investments and we have done quite well with a collection of balanced mutual funds, even after the difficulties of the last 2 years. Bottom line, if you have above average intelligence and take the time to do a little reading, you will do better on your own than you will do by relying on an investment adviser, who often is more interested in selling a product on commission than on maximizing your investments.
Gulliver, ditto for me. Besides, you also save the management charges which can add up quite a bit.
California Tax Free Bonds. The bigger the budget short fall the more interest they pay. Sometimes I just hate to argue against government debt.
This isn't a "financial column", it's an advertisement. Why is this labeled as news?
Gulliver, I used be a partner in a “Financial Services” firm. Our Certified Financial Planner ended up filing bankruptcy and moving in with his sister. I couldn’t agree with you more. p.s, I left the firm. :)
Here is my financial advice. It always works. Buy low, Sell high.
JonGreen: Don't type so fast, I missed that last part.