Rebalancing

Greetings Clients and Friends:

The markets have resumed their panicked selling today, with the S&P 500 Index of large US company stocks currently down about 6% after rebounding 6% yesterday. The index’s cumulative year-to-date decline through last night is 21%. Our balanced, growth and aggressive portfolios are down 12%, 17% and 21% year-to-date respectively.

Even with indiscriminate selling, our higher quality investments are holding up better than the indexes, and we expect this premium to increase as we work through the immediate uncertainty, and as the government stimulus response becomes more clear.

We are beginning to rebalance your portfolios (and ours).  This means selling a small portion of bonds that have appreciated and buying the stock funds that have the largest declines.  This discipline can feel counterintuitive, and it will yield significant benefit. In many cases it will help get people to their goals faster. Here is a great article about it that one of you shared with me on Monday.

Please let us know if you have any concerns, particularly with regard to your taxable accounts, which could be used without penalty for unexpected cash needs.

Hang in there. As a friend’s mom wrote, “The world is experiencing an event that generations will remember. Let’s hope some positive things will come from this and at the end of the tunnel become a kinder, more thoughtful and responsible one.”

Sincerely,

John