Dear Clients and Friends:
The first quarter of 2015 has come to a close and as always there is plenty to worry about in the financial markets. Political instability around the world and economic concerns both here at home and overseas make investing a difficult endeavor. However, as you go back in time, it is hard to find a period when there have not been concerns in the markets. And when there are few concerns, the markets are typically at very high levels which should worry those who realize that the next hiccup can lead to a big drop. I remind you, as always, that investing should be pursued as a long-term proposition and short-term concerns should not dictate your portfolio. The majority of professional investors can not time the market or beat the market averages and therefore we should be careful not to believe that we can do so either. Long-term investment returns should get us to our long-term goals and that will be our reward.
The Dow Jones Industrial Average of large stocks closed the first quarter almost exactly where it started. A 0% return is not what we hope for. However, if you maintained a simple diversified portfolio of large and small U.S. stocks, international stocks, bonds and REITs, you would have realized a return for the last three months of approximately 2.5% (appropriate portfolio allocations and specific results would differ for each investor). We can never predict in advance which sector of the markets will be the outperformer but if we maintain a proper diversified portfolio then we can benefit by the sectors that will do the best. And diversified portfolios reduce your volatility and risk along the way.
It is worthwhile to review your portfolio semi-annually or at least annually to discuss changes in your life that may require modifications to your investment mix or to otherwise rebalance back to your target allocations.
Thank you for reading my posts.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com
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