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Remain Calm
September 4, 2011
Bradley R. Newman, CFP®

Let's quickly review where we currently stand - European economies are in distress, the U.S. recovery is moving slower than hoped for, our government is acting dysfunctionally and the stock market's volatility has returned at levels not seen since the fall of 2008 - and you say "remain calm". Okay, I'll admit that everything may not be perfect; however, with an appropriately managed portfolio, this is certainly no time to panic.

Not much "new news"
In terms of the old news, the issues ranging from European debt concerns, the U.S. deficit, the consternation in our political system, housing issues and unemployment have all been in the headline since at least May of 2010 and many issues have been with us since 2008.

The only piece of substantial new news is the August 5th downgrade of U.S. credit rating, which has had no discernable impact. To put the downgrade into context, 1) please note that it has not lessened anyone's appetite for purchasing U.S. Treasury bonds and 2) consider the fact that the downgrade came from Standard and Poor's (S&P), the rating agency who completely missed the entire sub-prime debacle and rated Bear Stearns and Lehman Brothers at AA-and A respectively the day before they each declared bankruptcy.

Do You Have An Appropriate Strategy?
The recent volatility provides yet another reminder to go back to the basics and determine if you have an appropriate strategy.

You have an asset allocation, either by choice or by default, but the real question remains "is my allocation appropriate for my situation?" Your investment portfolio should be based on your specific circumstances; unfortunately, too often there is a significant disconnect between a person's goals or risk tolerance and how their portfolio is invested. Is your portfolio well suited to your circumstances?

This Has Been A Time For Action
Please note that action does not equal panic; however, the advice du jour of many advisors to simply "ride-it-out" or "hunker-down" is completely incorrect.

While most of the outlined events are not "new news", they have had a very real impact on the stock markets, the bond markets and very likely on your portfolio over the past several weeks. These events have been unfolding over the past four months and our firm began making adjustments to our client's portfolios in May when serious concerns began to emerge.

Assuming that you are already operating under a clear and appropriate investment strategy, based on your circumstances, the recent environment presented select opportunities to both reduce/eliminate more volatile holdings and to rebalance core positions up to their target levels in a disciplined fashion.

Repetition Is The Key To Learning
The recent volatility is nothing new, we experienced this type of volatility, only worse, just three short years ago and it should have served as a wake up call for everyone. If you were severely impacted by the 2008 - 2009 financial meltdown, but made no changes to how you managed your investment portfolio, shame on you.

As with most things in life, financial lessons will be repeated in various forms - tech bubble, financial meltdown, debt crisis and lessons yet to come - until the lesion is learned.

The question is, when will you take the steps necessary to adapt your strategies to protect yourself from this type of market volatility?

Bradley R. Newman, CFP from Roof Advisory Group, Inc., an independent investment management and financial advisory firm based in Harrisburg. The firm is a fee-only Registered Investment Advisor that provides portfolio management and financial planning services for individual and institutional clientele. The firm's email address is

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