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| Adrian Mastracci, "fee-only" investment
counsel at KCM Wealth Management, says "Successful
investors understand that asset mix has the
biggest impact on portfolio returns. Hence,
it is the foremost cornerstone to focus on." |
For Immediate Release
Vancouver, BC (May 1, 2003):
Adrian Mastracci,
investment counsel & president
of Vancouver's “fee-only” KCM
Wealth Management, comments on steering the portfolio
during turbulent times.
Many investors are musing what should they
be doing to manage their portfolios, awash
in the uncertainties and fears after the war.
Investors naturally want to fiddle with the
portfolios. They want to do something in the
hope that improvements will occur, such as
reversing the losses incurred.
Today’s investment climate is filled
with apprehensions. Three years of stock declines
has a sure-fire way of depleting the supply
of patience.
An investor with an appropriate game plan
in place may refrain from change unless it
has merit. Perhaps, reconfirming that the plan
is still valid is a beneficial exercise.
If no plan exists, or is long outdated, then
first develop the policies and strategies that
make sense for the particular situation.
Investors should concentrate on activities
that they have some control over, such as:
- Ensure that the game plan reflects
the goals to be achieved.
- Review the asset mix in the four
investment pillars: equities, bonds, cash
and real estate.
- Understand the personal investor
profile and stay within those boundaries.
- Know all the portfolio risks being
incurred.
- Implement diversification strategies
appropriate to meet personal needs.
- Understand the investments currently
owned and being contemplated.
- Adopt a strategy for dealing with
gains and losses, especially the losses.
- Resist the temptation to jump onto
hot investment bandwagons.
- Review the duplication of stocks
among mutual funds owned.
- Tally up all investment fees - invoiced
ones, MER’s from within funds, front
and back loads.
- Rebalance the portfolio when necessary.
The game plan should not change without a
valid reason. Successful investors understand
that asset mix has the biggest impact on portfolio
returns. Hence, it is the foremost cornerstone
to focus on.
Say an investor wishes to pursue a little
aggressiveness. One prudent way is to consider
allocating the portfolio in two camps.
Invest the largest portion, say 80 to 95 percent,
within the normal profile (like balanced or
growth). The remainder could be invested into
more aggressive selections.
This approach protects the majority of the
portfolio. It also limits the damage of incurring
losses in the aggressive portion.
However, besides the post war fears and uncertainties,
investors also face a variety of fundamental
problems in the economy. The same problems
that existed before the war.
There is a wobbly US employment picture aptly
called the “jobless recovery”.
Consumers may have acquired a little too much
debt for comfort.
Governments are once again financing expenditures
with deficits. Companies are still looking
for more ways to reduce costs to remain competitive.
Businesses continue to show caution and their
spending plans are unfolding at a slow pace.
The higher costs of energy, as compared to
last year, continue rippling through the economy
and affecting every wallet.
The timing of the hopeful economic recovery
is not predictable. So, factor in some setbacks
during the investing journey, especially after
the war. Expect volatility, sometimes severe
volatility.
Steering the nest egg in a sea of uncertainties
is challenging. Even for the professionals.
A little preparation and review can assist
your investment marathon.
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