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| Adrian Mastracci, president of KCM Wealth Management, says “My experience shows that you get much needed mileage by concentrating on portfolio activities that you have some control over. And control is key, especially during today’s uncertain times." |
For Immediate Release
Vancouver, BC (May 10, 2004): Have the 2004 stock and bond market gyrations made you just a little uneasy? Perhaps, you are not alone.
Adrian Mastracci, investment counsel with Vancouver's “fee-only” KCM Wealth Management, comments, “Many investors are contemplating what they should be doing differently to manage their portfolios. In the midst of the continuing uncertainties and fears of today.”
“It’s natural to fiddle with your portfolio,” says Mastracci, “You want to do something hoping that improvements will come along. Such as reversing the losses incurred since mid 2000. Or, how to attain the highest market returns. Of course, without the wrath of the risky part.”
“Investors like to worry. Today’s investment climate is still full of apprehensions. Three years of stock declines were overcome in the last year, but investors are still on edge,” notes Mastracci.
“Let’s peek into the walls of worry. US Government deficits are larger than life. Oil prices flirt with $40 per barrel. The inflation word is back,” remarks Mastracci, “Currency fluctuations are anybody’s guess. Interest rates are on the rise. Outsourcing offshore continues. Consumers may have taken on a little too much debt for comfort. Just to mention a few niggling worries.”
“On the other hand, US jobs are making a great comeback. But even this good news was turned into bad news. It feels like everything is being bashed, it’s a no-win,” adds Mastracci.
Mastracci goes on to say, “If your investment plan is running smoothly, you probably don’t have to fiddle with it. Unless the proposed changes make sense. However, it’s possible that your investment plan doesn’t exist, or is long outdated. Then, step one is to develop the policies that make sense for your situation.”
“My experience shows that you get much needed mileage by concentrating on portfolio activities that you have some control over,” states Mastracci, “And control is key, especially during today’s uncertain times.”
“Something definitely worth discussing with your investment advisors,” recommends Mastracci.
Here are a few controls to ponder with your advisors:
- Ensure that your investment plan reflects the important goals to be achieved.
- Don’t get distracted by the best market returns; instead, focus on the investment returns required to achieve your financial goals.
- Understand your personal investor profile and stay invested within those boundaries.
- Know all your portfolio risks being incurred.
- Make sure your portfolio is sufficiently diversified to meet your specific needs.
- Review the appropriateness of your asset allocations within the four investment pillars: equities, bonds, cash and real estate.
- Understand your investments currently owned and being contemplated.
- Adopt a selling strategy for dealing with gains and losses; particularly the losses.
- Resist the temptations to jump onto hot investment bandwagons; the exit signs are blurry at best.
- Review the duplication of stocks among the mutual funds you own.
- Tally your investment fees, such as the invoiced ones, fund MER’s, front and back end loads.
- Review your portfolio every so often and rebalance it when required.
- Make certain that your borrowing to invest does not inflict lasting portfolio damage.
“Your investment plan should not change without valid reasons,” observes Mastracci, “Savvy investors know that asset allocation is significant for portfolios. Clearly, it’s the focus among my clients.”
“Say you wish to pursue a touch of aggressiveness. One prudent way is to consider allocating your portfolio into two camps,” explains Mastracci, “Invest the largest portion, say 80 to 95 percent, within your normal investor profile. The remainder could then be invested into more aggressive selections.”
“This approach protects the majority of your portfolio. It also limits the damage of incurring losses in the more aggressive portion. You know that some losses will be incurred,” outlines Mastracci.
“Let’s put the investment worries in perspective. Early last year, the economic sentiment was much less upbeat than today’s,” points out Mastracci, “So, what do you do now? Stock markets are far from predictable. Factor in some setbacks along your investing journey.”
“Learn to expect the unexpected and make adjustments,” suggests Mastracci, “Count on volatility to stay around, sometimes with some harsh ups and downs. Like the roller coaster rides.”
“You are unlikely to influence the market directions,” concludes Mastracci, “However, you have plenty of direct control on how you interact with the markets. Ultimately, you may have to change something if the markets don’t feel right for you.”
“Exercising that direct control maneuvers your portfolio into better positions,” summarizes Mastracci, “Hold that steering wheel tightly, the road is not without bumps.”
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