Managing Your Portfolio

Some managers prefer to add flair to portfolio management by taking unnecessary risks. That is not the approach discussed here. This approach involves using evidence-driven principles to manage your portfolio, supported by a team that purposefully applies continuous monitoring, rebalancing and tax management. This is done with significant discipline—regardless of market, economic or political news.

On the surface, this approach may sound boring—but with investing, this strategy can potentially improve your outcomes.  It isn’t about “buy-and-forget.” Rather, this approach reduce the emotional and irrational hubris in portfolio decisions.

Managing the Emotions of Investing

As you start your investment journey with your advisor, you’ll likely feel excited for the future. As markets oscillate, however, we know many investors experience emotional cycles. Even the best investment strategy is moot without the discipline and conviction to stay invested through rough market patches.

That’s why good investment outcomes come from marrying a good strategy with predictable behavior. This is done to anticipate some of the inherent emotions—from excitement to fear to relief—coming from market cycles that can otherwise affect better decisions.

The Roller Coaster of Investor Emotions

Greatest Potential Risk Greatest Potential Opportunity Optimistic Excited Elated Concerned Nervous Alarmed Frightened Relieved Optimistic “Time to re-evaluate.” “Time to sell.” “This is only temporary.” “Time to buy.”

Preparing for the Rough Patches

A good start to the investment journey may involve setting an Investment Policy Statement that will guide how to respond to different market environments. Because, as history shows us, market declines are not uncommon.

Despite the frequency of market hiccups, a long-term perspective highlights the potential benefit of staying invested. Plan for market declines, because it is known that, on average:

  • One in every three months, stock markets lose value
  • Every eighteen months, stock markets decline by 10 percent or more, which is generally considered a market correction
  • Every three to four years, stock markets decline by 20 percent or more, which is generally considered a bear market

Stick to the evidence. Don’t make changes to your portfolio based on economic, political or societal events. These events matter, but your portfolio should already be prepared for their shocks. It’s part of the Evidence-Driven Investing™ strategy and another reason for diversification—to help manage for and withstand short-term rough patches, keeping you on track to meet your long-term goals.


Keeping Your Portfolio in Balance—So You Can Focus on What Matters

Markets move every day–that’s expected. Your advisor’s job is to monitor your portfolio year-round to ensure that it stays in-line with your tolerance for risk.

  • As your portfolio moves out of balance, you’ll see them sell some of what’s done well and buy some of what’s done poorly.
  • This is called rebalancing, and it enforces a discipline of buying low and selling high.
  • If stocks have done well and have grown over pre-defined target values, they may sell stocks and buy bonds to keep your overall portfolio risk aligned.

Discover how rebalancing can manage risk.

The Process of Rebalancing

Turning Losses into Tax Breaks

Sometimes investments lose money. In fact, some may be worth less than what you bought them for. Yet, these can be used to help offset gains and limit taxes. This is known as tax-loss harvesting and its benefits are key:

  • Identifies and replaces losing assets
  • Locks in losses to offset taxable gains
  • Keeps the portfolio in-line with targeted allocation
  • Can reduce overall tax burden

Combine Gains

With Losses

Reduce or Eliminate Tax Bill

See how tax-loss harvesting adds up during volatile markets.

Changing Your Portfolio as Your Life Changes

Life isn’t linear. That’s why monitoring your portfolio should be combined with reviewing your plan and financial goals.

Based on your circumstances, the likelihood you will be able to meet and exceed your goals may change. As a result, an advisor may recommend adjustments, such as saving and spending changes, to maintain a healthy probability of future success.

As your situation changes and your goals evolve, it is important to evaluate the impact on your plan.

See How Different Life Changes Can Affect the Probability of a Successful Outcome

Managing Your Financial Future

An advisor using Evidence-Driven Investing™ will constantly study the financial landscape, the economic drivers and market events that make an impact—keeping you informed at every step.

They won’t try to outsmart the market using tactical shifts or other trendy strategies. Relying on research, they will design portfolios to be resilient to a variety of market environments. And the initial portfolio is just the beginning of your journey together. They will work with you to constantly align your plan to your portfolio, using your Investment Policy Statement as a roadmap.

↓ Take the next step on your investment journey