Taylor&Williams - personal wealth advisor

APPROPRIATE ALLOCATION MODEL

As April 2011 ended, the Dow Jones Industrial Average (DJIA) closed at 12,810.  While not at the 14,000 high near the end of 2007, the DJIA is almost double the 6500 low from March of 2009.  Back in 2008 and 2009 we were all understandably concerned about the future of stock investing and many considered decreasing the amount invested in stocks, if not eliminating them all together.  We encouraged clients to hang on (if emotionally able) and to not sell stock at such a low point.  That seems a lot easier to say and do now then it was back in the midst of the fear and painful loss.  We certainly didn’t have a crystal ball to know exactly when or where the market would turn, but following the simple, yet truthful, thought: add to stock when the market is low, reduce stock when the market is high.  In hindsight, adding to stock and making your portfolio more aggressive anywhere near the end of 2008 or beginning of 2009 would have been a great move. 

Now that the market has moved higher though, this may be the time to consider lowering the risk of your account to a more conservative model if you are nearing a time frame that a change would be appropriate.  I am including here a general guideline:

Seasons of Life	Stock Percent	Bond Percent	T&W Model
15+ years until retirment	100%	0%	Aggressive
5 – 15 years until retirement	80%	20%	Growth
0 – 5 years until retirement	60%	40%	Moderate
Mid – Late retiement years	40%	60%	Conservative

 

This time table is just a guideline as temperment and other factors may increae or decrease the appropriate risk model.  If you are not sure, the Risk Tolerance Test on our website can help confirm:

  http://www.taylorandwilliams.com/resources/forms

We believe that no one knows for sure where the market and economy are headed.  If your season of life has you near a point of changing to a more conservative model, now may be a good time to consider.  (Certainly better than 2008 or 2009)  If you want to talk this over, please give us a call or email.

 

MARKET FALL PROTECTION

In the middle of 2010, we told you about some research attempting to find a way to protect more from big market drops.  See the May 2010 write up:

http://www.taylorandwilliams.com/news/news/market-correction-or-bear-market

The descirbed triggers did hit in July and portfolios were adjusted accordingly.  Although the signal turned out to be false, we would still make similar adjustments if the triggers were to hit again.  With the DJIA dropping four days last week, it is a good time to revisit the protection in place if the market continues to drop.  At the time of this writing, neither trigger is close.

 

Hope this information brings some peace of mind.  Thanks for allowing us to serve.  Feel free to pass this along to anyone you think would benefit.  If we can help anyone that you know with Investment Management or Financial Planning, we would love the opportunity.