December 2008

Issue: 64

Welcome

Greetings!

Thanks for coming to the Downtown Women's Club event last month.

I wanted to share my monthly company newsletter with you. It continually receives rave review each month. If you chose not to receive it, promise, no hard feelings.

Portfolios are depressingly down. It is completely appropriate to rethink your actual tolerance for risk and adjust your portfolios accordingly. Let's face it: a discipline to follow traditional investment principles is very difficult in the current chaotic market.

Here are some ideas that are prudent in this market:

Reevaluate your personal tolerance for risk. Now that they are experiencing the downside part of the equation is quite different (and quite lower) than they believed. If your time horizon or blood pressure does not allow you to endure volatile markets, then reallocate to a more conservative portfolio. Keep in mind that your portfolio needs to beat inflation to be successful over the long-term.
Improve your portfolio's "time diversification". If there is a certain amount of money you know you will need over the next 2-3 years, or which you simply cannot tolerate losing, then by all means move that money to a shorter-term, more liquid, more conservative sub-portfolio.
Take advantage of the market downturn to rebalance your portfolio. While most investors would rather have gains and owe taxes, this is now a good time to make any portfolio moves you were holding back on because of the associated tax hit. Harvest any tax losses within the portfolio that you can use later to offset gains.
Think opportunistically. Many smart investors (e.g., Warren Buffett) believe this current market environment has created some unbelievable opportunities. No one is predicting when or where the bottom will be, but if you are comfortable watching your investments go down in the short-medium term, you may be well rewarded in the long term.
Don't panic, stay disciplined and think long-term. Cliché advice. It is a cliché because it is true. Whatever portfolio moves you decide to take, take them with the long-term in mind and in accordance with a well-thought-out investment strategy and objective.
Be very wary of anyone offering simple or one-off answers. Traders and stockbrokers love this market. Fear sells. They are making a fortune on commissions. You need to look at your entire picture.
Don't buy high and sell low. Never make drastic moves when everything is turmoil. It's just a good way to make a bad situation even worse.

If you'd like to talk, give us a call. Have a safe and happy holiday season!

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Good news! Past issues of the WH Cornerstone Newsletter and Client Market Commentaries are available for your reading enjoyment.