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By: Adrian Mastracci
North Shore News
Business Section, “Loose Change”
Sunday, July 4, 2004
Have the 2004 market gyrations made you just a little uneasy?
Is your portfolio getting out of control? Perhaps, you're not alone.
Many investors are contemplating what they should be doing differently to manage their portfolios, in the midst of the uncertainties of today.
Well, it's natural to want to fiddle with your portfolio. You want to do something in search of improvements - such as how to get the highest market returns. Of course, without the wrath of the risky part.
Today's investment climate is full of apprehensions. Three years of stock declines have been overcome, but investors are still on edge.
Investors like worrying a lot. U.S. government deficits are larger than life. Oil prices flirt with $40 per barrel. Inflation is creeping back.
Interest rates are on the rise. Consumers may have acquired a little too much debt for comfort. Just to name a few niggling worries.
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However, it's possible that your investment plan does not exist, or is long outdated. Then, step one is to develop it before you get in deeper.
You get mileage by concentrating on portfolio activities that you have some control over. And control is key, especially during today's uncertain times.
Here are a few controls worth discussing with your investment advisors:
- Focus on your goals and the investment returns required to achieve them.
- Understand your personal investor profile and stay invested within it.
- Know all your portfolio risks being incurred.
- Make sure your portfolio is sufficiently diversified to meet your specific needs.
- Review the suitability of your asset mix in equities, bonds, cash and real estate.
- Understand your investments currently owned and being contemplated.
- Adopt a strategy for dealing with gains and losses; particularly the losses.
- Resist the temptations to jump onto hot investment bandwagons.
- Examine the duplication of stocks among the mutual funds you own.
- Tally your investment costs, such as the invoiced ones, fund MERs, front and back end loads.
Your investment plan should not change without a valid reason. Thriving investors know that asset allocation has a significant impact on portfolios. Clearly, it's the focus among my clients.
Let's put the investment worries in perspective. Early last year, the economic sentiment was much less upbeat than today's.
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. Count on volatility to stay around, sometimes with some steep ups and downs.
You are unlikely to influence the direction of the markets. However, you have plenty of hands-on control on how you interact with the markets. Ultimately, you may have to make changes if the markets don't feel right for you.
Exercising control manoeuvres your portfolio into better position. Hold your steering wheel tightly, the investment road is not without bumps.
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