ITA Wealth Management

While my crystal ball is no clearer than other gazers, I am willing to go out on a limb and make a few suggestions for investors currently working.  I will save my “retirement” suggestions for another post.  This morning, I will concentrate on recommendations for those currently employed.

• If you are currently working and saving, continue to do so.  In fact, increase your savings if possible.
• Rebalance your portfolio back to your strategic asset allocations.  Investors are almost guaranteed to have a lower percentage in stocks due to this severe bear market.  This is the time to move cash back into equities or stocks. If you do not know what a strategic asset allocation (SAA) is, do a search on this blog and you should find some detailed descriptions.
• For those Premium subscribers, examine the projected annual returns for the “Big Six” asset classes and skew your asset allocation percentages toward those classes that show the higher projected annual returns (PAR).
• Should the market test the November lows (check Yahoo Finance for these values), or even go lower, apply some Tactical Asset Allocation (TAA), and increase your SAA for equities another 5% or even 10%.  Simply put, move 5% to 10% from cash and bonds over to stocks or equities.  One possible place to make this move is with VBK as the small-cap growth asset class historically does well following a severe bear market.  If investors do not call this a severe bear market, then I never want to see one. This TAA move is based on probability arguments and the evidence is that dollars invested in equities will bring higher returns in the future.
• As mentioned in #1, save more per year than normal.  I know this may be difficult for many and impossible for some.  However, if possible, put more dollars to work so as to take advantage of a market recovery.  If your company offers a 401 (K) or 403 (b) plan, do not leave any money on the table but take advantage of all matching dollars.  Follow “The Golden Rule of Investing.” Scroll down to see this entry.

There are also a lot of things investors should not be doing at this time and the one high on my list is – do not sell equities.  Stay invested in the market and add more.

Lowell Herr

Photograph:  Otto as pup.

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