For Immediate Release

Adrian Mastracci, president of KCM Wealth Management, says "Knowing when to fold is one of the hardest steps. Yet, investors who have mastered it know what a dramatic affect it can have on the success of their portfolio."

Vancouver, BC (June 3, 2002): Incurring losses and watching investors wrestle with the aftermath is painful.

Adrian Mastracci, fee-only investment counsel and financial advisor with Vancouver based KCM Wealth Management, comments, "My experience shows that successful investors know how to deal with investment losses. These savvy investors know when to hold and when to fold. Moreover, they do it quickly and without regrets."

"When an investment heads south, and we've had plenty of examples lately," says Mastracci, "It often feels like catching a falling knife. The financial pain can be excruciating."

"Making portfolio selections is not about always being right," explains Mastracci, "Part of investing is about coming to grips with the prospects of being wrong. This experience touches us all, including the professionals."

"It is important to admit that one was wrong about the initial investment analysis, and equally important to do something about it," remarks Mastracci, "However, the doing something part is difficult for many."

"Folding the tent on an investment is one of the hardest steps to take," observes Mastracci, "Yet, investors who have mastered it know what a dramatic affect it can have on the success of a portfolio."

Mastracci illustrates the pain of incurring losses with this table:

"Incurring losses is a normal consequence of investing," comments Mastracci.

"However, investors shouldn't kick themselves for the initial investment decisions gone sour," recommends Mastracci, "Instead, the positive step is to curb the flow of losses from disappointing investments sooner than later."

"The reasons for a loss are not important," explains Mastracci, "The question is whether the loss is sufficient reason to reduce the investment position."

"If the investment strategy is not delivering on expectations, it may be time to act like a professional, take the loss and move on," says Mastracci, "This approach applies even more to portfolios whose core holdings are individual stocks."

"Another area of concern is when investors allocate more than 5% of their total portfolio value to one stock, especially the employer's stock," relates Mastracci, "Too often, this strategy produces disastrous results when the stock goes into free fall."

"Say an investment loses 50%, it has to gain 100% just to breakeven. If the loss is 60%, the gain has to be 150% to breakeven," observes Mastracci, "Now those are miracle turnarounds ! The bad news is that I can't recall many of them."

"The devastating impact of incurring losses, especially unchecked losses, cannot be underestimated," mused Mastracci.

"While it's normal for investors to want to close their eyes and hope that the losses will magically reverse themselves quickly," notes Mastracci, "In many cases, if it happens at all, it takes years of patience before a turnaround comes about.

Mastracci outlines five observations about incurring losses:

• What is most detrimental to portfolios is not incurring losses; rather it's keeping them far too long.
• Many investors cannot bring themselves to sell a loss position, often adding to it with the hope that it will bounce back to breakeven or better.
• The turnaround either does not materialize or is long in coming -- either way the losses run unchecked. As proof, many stocks have declined more than 60% in the last two years.
• Astute portfolio managers have the nerve to admit to being wrong.
• Being wrong does not make a bad portfolio manager; staying too long with the loss is the dilemma.

"Investors can't stop all losses from happening," says Mastracci, "So how can one contain their impact on the portfolio?"

Mastracci offers his five-point approach to reduce the impact of losses:

• Stop getting emotionally attached to the investments.
• Plan on some investments to result in losses.
• Establish the personal threshold for losses, say 20%, 30% or 40%.
• Cut the loss and stop the bleeding when the personal threshold for losses is reached.
• Don't second guess the investment decision to cut the loss.

"Investing is a game of probability," notes Mastracci, "Yes, one can bail out too early on a loss position. However, successful investing is about being right more often than being wrong."

"If the fundamentals change, take the loss and select other investments with upside potential," counsels Mastracci.

"It is less painful to bail out, rather than to insist that the investor is right and then bail out later with bigger losses," suggests Mastracci, "Each loss starts out as a very small loss."

"Be diligent about focusing on investment losses", summarizes Mastracci, "Invest like a professional -- that first loss is likely the best loss. The medicine is awful, but the investment experience will improve."

"Cutting the losses early inflicts fewer damages on the portfolio," concludes Mastracci, "Know when to fold and when to hold. Investment success improves when losses are kept in check."

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.