Adrian Mastracci, president of KCM Wealth Management, says “I’ve been cautious all year. I sense that risk management is priority one for 2006 and 2007."

Vancouver, BC (August 21, 2006): Investors are quite a fortunate lot today. They have yet another opportunity to revisit their all-important investment mix.

Someone once said, “Getting the facts is only half the job. The other half is to use them intelligently.”

Adrian Mastracci, “fee-only” investment counsel at Vancouver based KCM Wealth Management, comments, “Those pesky markets have moved up once again. Near the high watermark for the year. Hint, hint. It may be time to tweak the investment muddle.”

I’m seeing more evidence that US economic prospects won’t be as rosy going forward. A slowdown may translate into lower stock prices.

I’ve been cautious all year. I sense that risk management is priority one for 2006 and 2007. Thus far, investors seem to be ignoring the signs. Not to worry. Loads of investors miss the exit signs.

Today, many an investor is carrying a portfolio full of equities. Frequently sprinkled among a muddle of limping mutual funds. Especially, if there was no blueprint for buying them in the first place.

The collections of holdings don’t always fit together. They become unmanageable and difficult to keep track of. Often dealing with two or more advisors does not help. None of whom know the full picture.

In my view, it's prudent and sensible strategy for every investor to take advantage of today’s markets. And whisk the investment portfolio in order. Preferably, selling into strength when prices are high.

The facts

First, a perspective on the markets. Here is the overview to August 18, 2006:

The markets have come a long way since early 2003. No doubt, they can move higher and may well do so. But I'm not clever enough to predict market direction with any accuracy.

However, I’m certain that revisiting the investment mix makes sense now. Particularly when market prices are again hovering near their highs for 2006. Not to mention the possibility of a slowdown.

I see today's prices as another opportunity to make sure the investment mix fits every investor. Maybe reduce the equities for some. It's not a bad idea to sell at a higher price than you bought even if the investment continues to move up after you have sold it.

The smart and simple approach for many investors is to lighten up on equities. Just a trim. Perhaps, pruning to a mix that resembles the investor's real profile. Nobody has gone broke taking profits.

Profile revisited

The key to this exercise is to revisit the personal investment profile, or to create one if it’s lacking. I start by examining tolerance for risk, time horizon and long-term needs.

It’s also beneficial to revisit the total number of mutual funds owned. I can design core portfolios with less than 10 funds. There is no need to own dozens of them.

This table provides an overview of the equity targets for three of the most popular investment profiles:

Say an investor has 75% allocated to equities and the true profile is closer to 60%. Over time, the equity component would be trimmed. The proceeds then reinvested into fixed income.

The wise approach is to start with registered accounts, then personal accounts. All the exit costs and income tax implications of each sale ought to be considered before taking any action.

Some investors add new money to the portfolio. They can keep the equities and allocate the fresh money to asset classes whose targets need to be increased. Such as bonds and cash instruments.

Various investors may consider preservation of capital to be more important than capital appreciation. For example, retirees and those about to enter retirement.

Hence, it makes sense for some to temporarily adopt a more defensive portfolio strategy than the normal investment profile. Say for the next year.

Selling some equities is sensible for many. A touch of selling high is a good practice to rediscover for portfolios laden with stocks and mutual funds. It reduces portfolio risk and helps diversification.

A key component of managing the serious money is to position the portfolio to the markets, with the personal profile in mind. Something that can be easily done.

Don’t accept an investment muddle that limps along. Reshape it to match the personal profile. That’s a wise investment.

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.