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| Adrian Mastracci, president
of KCM Wealth Management, says "Investors
should concentrate on activities that they
have control over. Make an effort to be prepared." |
For Immediate Release
Vancouver, BC (March 20,
2003): Adrian Mastracci,
investment counsel & president
of Vancouver's “fee-only” KCM
Wealth Management, comments on navigating the precious
nest egg throughout the winds of war:
The important question for many investors
is what should they be doing to manage their
portfolios during the uncertainties and fears
of wartime activities.
It is a normal reaction for investors to want
to tinker with their portfolio. They want to
do something in the hope that improvements
will occur. After all, these are times filled
with plenty of anxiety.
For investors who have their appropriate game
plan in place, I say do very little. Perhaps,
reconfirming that the plan is still valid is
a worthwhile exercise.
If no plan exists, or is long outdated, then
develop the policies and strategies that make
sense for the particular situation.
Investors should concentrate on activities
that they have control over. Make an effort
to be prepared.
Some things to contemplate:
- Stay the course if the game plan
is appropriate.
- The game plan is not something that
should change without a good reason.
- Make sure the game plan reflects
the goals to be achieved.
- Be comfortable with the asset mix
in the four pillars: equities, bonds, cash
and
real estate.
- Asset mix has the biggest impact
on portfolio returns, not market timing or
security
selection.
- Understand the personal investor
profile and stay within those boundaries.
- Know the portfolio risks being incurred.
- Implement diversification strategies
appropriate to meet personal needs.
- Adopt a strategy for dealing with
gains and losses, especially the losses.
- Resist the temptation to jump onto
hot investment bandwagons.
If the investor profile can stand to pursue
a little aggressiveness, an investor may consider
splitting the portfolio in two portions.
Invest the biggest portion, say 80 to 90 percent,
within the normal profile (like balanced or
growth). The remaining 10 to 20 percent could
be invested into more aggressive selections.
This approach protects the majority of the
portfolio and limits the damage of incurring
losses in the aggressive portion.
Besides the fear and uncertainty of war, we
also face some fundamental problems in the
economy:
- A wobbly US employment picture called
the jobless recovery.
- Consumers who have acquired too much
debt.
- Governments who are once again running
deficits.
- Companies having to find more ways
to cut costs to remain competitive.
- Business spending plans unfolding at
a snail's pace.
- High costs of energy rippling through
all facets of the economy and affecting
every wallet.
Investing has never been a straight line sloping
upward. Factor in some setbacks during the
investing marathon, especially during a war.
Expect daily volatility, sometimes severe cases.
So, try expecting the unexpected. That something
unexpected can happen at any time. September
11, 2001 was a good example.
Volatile events usually happen with very little
or no notice and can inflict some pain on the
portfolio. Managing the nest egg during the
winds of war is only one of them.
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