Having the opportunity to follow the market frequently gives you the opportunity to see if you need to reevaluate your portfolio. But reevaluating your portfolio shouldn't trigger a sell signal so frequently.
I'm a big believer in investing for the long term, and the decisions you make shouldn't be made if the economy is good or bad at a specific time.
We continue to advise that investors remain committed to a patient, long-term outlook and that the best way to do well in stocks is to use a disciplined, time-tested strategy that has the benefit of empirically tested results over a variety of market environments.
Even defensive portfolios should be changed from time to time, especially if the securities purchased have an apparently excessive advance and can be replaced by issues much more reasonable priced.
It's critical to have a disciplined investing approach and stick with it.
The average mutual fund holding period for equity or fixed income is only about three years. It's too short.
What I'm trying to say is that for the average investor, what I would encourage them to do is to understand that there's inflation and growth. It can go higher and lower and to have four different portfolios essentially that make up your entire portfolio that gets you balanced.
Owning a variety of asset classes means that some part of your portfolio will be doing well when the cyclical turmoil arises. A broadly diversified portfolio includes large capitalization stocks, small cap, emerging markets, fixed income, real estate and commodities.
I've found that when the market's going down and you buy funds wisely, at some point in the future you will be happy.
Like wildebeest and zebra migration across the Serengeti, investment managers and consultants, too, have a habit of running together and, every now and then, changing direction.
Don't focus on weekly or monthly returns.
A hedge fund manager whose clients demand monthly performance reports has different needs than any individual investors with a 20-year time horizon. The needs of that long-term investor differ markedly from someone who is retiring in three years.
Let's take a timeout. Let's allow investors the opportunity in a period of market calm to re-examine what's happened and to deploy new strategies into the marketplace.
We believe that people moving their portfolios to an overweight in bonds will be disappointed over the long-term and will significantly underperform an asset allocation that over-weights equities.
No one knows what the top-performing asset class will be next year. Lacking this prescience, your next-best solution is to own all of the classes and rebalance regularly.
Stock market goes up or down, and you can't adjust your portfolio based on the whims of the market, so you have to have a strategy in a position and stay true to that strategy and not pay attention to noise that could surround any particular investment.
Simply put, investors should own less equities, more bonds, more global investments, more cash and more dry ammunition.
We try not to have many investing 'rules,' but there is one that has served us well: If we decide we were wrong about something, in terms of why we did it, we exit, period.
In the back of my mind was the nagging discussion: where do we take the portfolio? You can get rid of TV, fine, but then you are in lighting and in health, and those don't have a lot to do with each other.
The bottom line is this: Cash, in modest increments, has a role in any portfolio. But unless you are Warren Buffett, you should limit it to 2 or 3 percent.
