Thursday, August 11, 2011
PENSION PARAMETERS COMMENTS ON RECENT ACTIVITY
12:17 PM | 
Posted by
pensionfinancialservices |
For most investors who already have a portfolio that is well diversified among asset classes and within them—and have enough liquidity to meet short-term needs, the answer may be
to just sit tight. The ride may be bumpy over the next few weeks or longer. But
there often is greater danger in dodging in and out of the market than sticking
with a solid, long-term plan. History has shown that near-term market declines,
although unnerving at the time, are often followed by rebounds. Investors
should give their investment plans time to work for them- over the entire market
cycle.
“Historically, the timing of this market correction is not very typical, ” says Kevin McCormack of Pension Parameters. “The fact that it tied in with the S & P ‘credit downgrade' is unfortunate. It’s important to note that we don’t rely on ratings agencies when making investment decisions for our mutual funds. The fund managers and credit research analysts we rely on perform their own proprietary research and analysis on every security purchased.”
According to McCormack, many of our customers are invested in funds from Fidelity, which believes that it is critical for policy makers to develop a long‐term credible plan for fiscal sustainability and to provide the markets with concrete direction over time. Having said that, if market moves pushed investors’ portfolios far from their target asset allocations, it may be time to consider rebalancing.
If investors are concerned about market volatility, now may be a good time to revisit their investment objectives, while taking into consideration their tolerance for risk and time horizons.
You may want to:
- Consider your mix of Treasuries or other government bonds. If you are considering diversifying your bond holdings, think about investment grade bonds from corporations, many of which may be flush with cash now. If Treasury bond prices move lower, corporate bond prices could follow. However, they may decline less. Also think globally, as there are many interesting opportunities in foreign investment grade and high yield corporate or sovereign debt to consider. But be aware that high yield credit and foreign securities can carry significant risk.
- Check your liquidity. As always you want to have enough cash on hand, so you don’t need to tap your investment portfolio if the markets hit a rough patch. Having an adequate emergency fund is important. And if you are retired, you may want to check your income plan to help ensure that you don’t have to tap your portfolio too heavily in a market downturn.
Contact Kevin McCormack at 732-583-1313 to set up an appointment to look at the opportunities that are available to you – and whether or not you should be considering rebalancing.
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Rebalance
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