Adrian Mastracci, president of KCM Wealth Management, says "A touch of selling high is a good practice to rediscover. It's that wonderful strategy known as rebalancing. Where applicable, it can reduce portfolio risk and increase diversification."

Vancouver, BC (November 21, 2005): Investors have yet another opportunity to revisit the all important asset mix. Many an investor is carrying too hefty a portfolio of equities. Put another way, a severe drought of fixed income.

Harold Geneen once said, "In the business world, everyone is paid in two coins: cash and experience. Take the experience first; the cash will come later".

Adrian Mastracci, investment counsel at Vancouver's “fee-only” KCM Wealth Management, comments, “Well, the pesky markets have moved up again. Investment profiles may have shifted. Risk tolerances may be different now than in the last two or three years."

Perhaps, Mr. Geneen's wisdom can be applied to the markets. But first, the perspective on where equity markets have been.

Here is the overview to November 21, 2005:

My experience tells me now is is the right time to check the nestegg. Let's get to it.

My premise

The markets are showing substantial gains since January 1, 2003. It's prudent strategy for each investor to take advantage of the markets and put that investment house in order. Fix the venerable asset mix, that is.

No doubt, the markets can go higher and may well do so. However, revisiting the portfolio mix makes a lot of sense today. When market prices are again hovering around their highs for 2005.

Particularly for investors with a large allocation to equities (stocks and mutual funds). Judging by the portfolios of my first time inquiries, there are many investors firmly in this camp.

Equity holdings in the 75% to 90% ballparks are a frequent asset mix that I see in too many portfolios. Often holding more than 20 mutual funds.

I repeatedly have to squint to find the occasional fund, among the glut, that has traces of a bond or treasury bill somewhere in its holdings.

My premise is two-fold:

1.. Investors who are heavily invested in equities, say 65% and over, ought to have a very close look at their current asset mix. It's probably quite different than their real investor profile.

2.. Investors who have less than 65% allocated to equities should review the asset mix. To reconfirm that the current mix is still appropriate to attain the personal goals.

The fix

The smart and simple fix is to lighten up on the equities, where applicable. Just a trim, not a wholesale change.

Perhaps, pruning to an asset mix closer to the investor's real profile. Most of whom would be in the 40% to 60% equity mix.

The popular wisdom of the day is to ride the winners. But just because it's popular, doesn't mean it's always wise.

The wise strategy is to sell some of the winning equities and buy some of the other asset classes.

Let’s put perspective on high equity allocations. A 70% to 85% mix of equities is an aggressive investment profile, while 85% to 100% in equities is speculative.

It takes a serious appetite for risk to embrace either the aggressive or speculative profiles. Say an investor has 80% allocated to equities and the true profile is closer to 60%.

Over time, the equity component would be trimmed back to 60% and reinvested in other asset classes. It does not have to be done all at once.

Of course, the costs and income tax implications of each sale ought to be considered before taking any action.

Wrapping up

The wise move is to sell high some of the winning equities. Yes, I agree -- it is counter intuitive wisdom for many investors. One they find hard to grasp.

A touch of selling high is a good practice to rediscover. It's that wonderful strategy known as rebalancing. Where applicable, it can reduce portfolio risk and increase diversification.

Ladies and gentlemen, a fix or two may be just the ticket to fine tune the precious nestegg. Please check now.

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.