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Changing Markets Call for Changes to Portfolios

| August 08, 2019

How is your portfolio handling the volatility? 

Three changes we’re making to portfolio’s & Three questions you need to be able to answer about yours.

Right now is one of the best times to evaluate your portfolio and look at the amount of risk you are taking, especially if you are near or in retirement. 

There are 3 main ways that we are striving to lower our clients risk exposure given the current market conditions:

  1. Growth investments have dominated the market over the last few years but now it’s time to look at companies that have consistently increased what they’ve paid out to investors. Why is this important? Typically these companies have a strong balance sheet and have outperformed non-dividend paying companies during downturns in the market.

  1. We are purchasing income investments that have longer durations rather than shorter. Why would you do this? Picture a see saw, yes one of the childhood playground toys where one child is on the ground and the other in the air. Now instead of children imagine on one side you have the value of your investment and on the other you have interest rates. As interest rates decrease - the value of your income investment increases and vice versa. During these conditions, the longer the duration you hold, the more inverse movement to interest rates you will experience, and less if shorter.

  1. Managing your upside/downside capture is critical when we approach market peaks. What does this mean? If the market goes up you want your investments to participate in the growth as much as possible. BUT when the market goes down you want your investments to hold their own and go down less than the overall market. There are a number of ways you can achieve this but we started incorporating minimum volatility funds in portfolios last year which have significantly outperformed the S&P 500.

Now the magical questions:

How much of these do I own if any?

How much do I need in each investment? AND

Where do I pull from?

That is going to be different per person which is why we are happy to offer a complimentary consultation and show you how much risk you’re currently taking and what adjustments we would make.

Schedule a Call Today

Yours Truly,

Paolo Quiroga

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Investing involves risk including loss of principal. No strategy assures success or protects against loss.