Horan Securities, Inc.              
Protecting Your Future, Today                         

Your Financial Planning Resource
 

1st Quarter 2008

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How to tame a wild portfolio

Investors may be weary of the market's recent ups and downs. But with big market swings likely to continue, they would do well to learn to live with the volatility.

 

In unsettling times, the conventional investing wisdom says: Fasten your seat belt and hold on. Don't get too fancy or flustered. Since markets go up more often than not, keep a diversified portfolio of stocks and bonds and shoulder only as much risk as you can handle.

 

Rising volatility is a signal that new market leadership is emerging. Managing your portfolio nowadays demands a realistic perspective and the wherewithal to make informed decisions. It calls for you to resist the pull of the past and look forward.

 

While volatility creates opportunity, you don't necessarily need to overhaul your investment plan. More often than not, making small, tactical shifts to a properly allocated portfolio can position you for a changing market climate. Typically, it's enough to trim past winners and use proceeds or surplus cash to add areas that haven't done as well.

 

See full story, located at Market Watch. (free registration may be required)
 
IRS: Late fix delays refunds
More than 3 million people will have to wait until February to get their tax refunds because of Congress' late fix to the alternative minimum tax, the IRS said Thursday.

Congress put a one-year freeze on growth of the alternative minimum tax last week, shielding many middle- and upper-middle income taxpayers from first exposure to the tax. But Congress' late action means the Internal Revenue Service won't be able to start processing five AMT-related forms until February, delaying potential refunds for those people until that month.
See full story, located at Yahoo Finance.
 
With stocks, timing is not everything
Don't wait for favorable market winds to invest a financial windfall.
 
Year-end salary bonuses are here, but putting that money into stocks doesn't seem so smart right now. The market has been gyrating wildly, with cliff-hanging swings not seen in almost a decade. Maybe it's better to wait for a more attractive time to invest.
 
Probably not. If you're thinking of directing a bonus or other financial windfall to stocks and you won't need the money for several years at least, take a page from Nike and just do it.
 
The odds of hitting exactly the right moment to invest are extremely remote. Repeating this feat year after year borders on fantasy. Mere market mortals have to be satisfied that stocks, while volatile, go up more often than not and over time will add more to a portfolio than bonds or cash.
 
Market-timing is not only difficult, it's overrated. A recent Schwab Center study showed that someone who invested in the Standard & Poor's 500 Index as soon as possible after receiving a chunk of money performed almost as well over the long haul as someone who timed the market perfectly.
 

See full story, located at Market Watch. (free registration may be required)

 

Want financial success?  Quit reading.
I was going through some old magazines I had saved for one reason or another when I came across an article in the Aug. 14, 2000 issue of Fortune, entitled "10 stocks to last the decade." The timing of the article was interesting. We were five months into the three-year-long millennium bear market and this article was written during one of those sneaky rallies that often occur early in the market decline. Just for grins, I thought I'd see what would have happened if you had put $10,000 into each of the ten stocks back then and discover what you would have wound up with seven years later.
 
$100,000 becomes $52,437.  Unless the writers were talking about a different decade, it doesn't appear that their decade picks have done very well. 
 
People like lists that claim to predict the future and financial magazines are written to give people what they like. But they can't, and often these fortune-telling lists cause us to make decisions that are not in alignment with our financial needs and goals.
 
There are, however, some things that do seem to work. If you understand the difference between risk and volatility you will be less likely to be spooked and react to short-term events - the "buy high/sell low" syndrome. If you understand diversification you won't create a portfolio of a hundred mutual funds that still all moves in the same direction. And if you understand yourself you will know whether you have the emotional tolerance to handle the swings of the market, or should instead keep your money in safe money places. Perhaps the most important thing is to realize that no one can predict the future and to quit reading articles written by those that think they can.
 

See full story located at ProducersWeb.

 
 
QUESTIONS OR COMMENTS?
 
Do you have a question you would like addressed in our next issue?
Please email Kristin Solomon at kristins@horansecur.com or call (513) 745-0707
 
STRIVING TO EDUCATE OUR CLIENTS IN THE EVER-CHANGING FACE OF THE
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