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Retirement Planning 2011
We felt the rally in US Equities that spanned from August 2010 to July 2011 presented several significant problems. First, we felt that underlying economic weakness would come back to bite investors who were unprepared. Second, we noted that market volume was consistently reported as thin, evidencing institutional – but not private – investor interest. We felt this was not a good indication. Third, the overall economy was anything but robust, with employment, real estate and lending continuing to face serious declines. Given these factors, we advised our clients to maintain a very conservative position during the period. We expected a correction of at least 10% after April, and in August, 2011, this warning proved accurate.
For many, traditional retirement planning was based on a set of assumptions about asset allocation and diversifying portfolios. We feel this approach has been discredited in the wake of the market crisis of late 2008 and 2009. Further complicating this sea change in portfolio management approaches, computerized algorithmic trading has led to the serious consequence of various asset classes correlating rather than differing in their performance and risk characteristics. For these reasons, we recommend that your retirement planning should include our forecasting and consequent investment approaches.
No two plans are alike but we see many clients of other firms, who through inattention, unwillingness to forecast, and to provide economically-sensitive advice, missed opportunities or were overexposed to risk over the past year. No matter what kind of retirement plan you have, we recommend that you have us take a very close look at personal objectives, investment performance, investment selection, and possible outcomes.
Changes in your investment strategies and retirement expectations are in order. Making, refining and closely monitoring your plans now could mean the difference between highly contrasting outcomes. It is widely accepted that people who engage in strategic planning on a routine basis can become more effective and confident through exposure and experience, and we encourage this via our quarterly Cyclical Review Process®.
The need for review covers not only retirement assets that are held in private accounts for your benefit, but also corporate retirement accounts in which you may be a participant.
Be certain to consult with us about this all-important dimension of your long-term security.
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