Recent Investment Commentary {Conclusion}

Of course irrespective there are certain things you should always be doing.  Below I’ve listed and highlighted a few basic concepts we think all investors should think about.  

Develop a long-term game plan that takes into account all of your net worth.  These include: investment accounts, retirement plans, insurance, real estate, etc.  You should have an asset allocation based on your own personal risk/reward criteria.  If you are investing by yourself then you need to do some research about how your investments are deployed.  You also need to have a realistic conversation with yourself about how much risk you can stomach.  How much risk you are willing to accept is something only you can answer and it may change at different stages of your life. Your plan ought let you sleep at night and ought to give you some idea of what might happen when the next bear market arrives. If you work with an advisor then you need to make certain that both of you are on the same page regarding allocations, risk and goals.

Within the framework of that overall allocation you need to understand how you are invested.  How is your portfolio constructed?  Are you invested in individual stocks, bonds, mutual funds, ETFs or insurance products?  How does each fit into your tolerance for risk and into your overall investment picture?

There are statistical, well-understood reasons for diversifying a portfolio. But understand that diversifying with a broader mix of assets likely means you will always have some asset class or sector that underperforms the overall market, just as you likely will have some sections of your portfolio that do better.  You will always in your mind have too much of what’s underperforming and not enough of what’s hot.

Understand what you are paying for—fees, taxes and hidden costs. 

Rebalance the portfolio if necessary, especially if an asset class or sector becomes significantly out of line with your original portfolio allocations.  Take care to understand any tax consequences that might occur from doing this.   

Tax harvest.  In taxable accounts use strategies that pair off any losses you might have with any pre-existing gains.  Don’t compound a rotten year in stocks by paying Uncle Sam next April when you could have done something about that now. 

Note also you can follow us over at our blog:  Solas! { http://lumencapital.blogspot.com}

*Long ETFs related to the S&P 500 in client and personal accounts.

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