Portfolio changes: Connecting the Dots to Protect Your Money

The way we invest is much like connecting the dots between events, changes, or trends. As we piece the puzzles together, a picture begins to form.

The picture we’ve seen developing lately is the prospect of increasing market volatility. This could mean more “bounciness” in stock and bond prices. Few people get too concerned when prices bounce up. But many people get anxious when prices bounce down.

So, we’ve made some changes, and will be making a few more. The goal is to mitigate the downside volatility of both stock and bond investments.

Last year we added an investment that can offer protection, like the brakes on a car, if the stock market goes downhill. Also last year, we modified the bond side of the portfolio in anticipation of rising interest rates. The changes were intended to protect the portfolio when interest rates rise, as they did in the latter part of 2016 and into early 2017.

This year we will add another investment designed to help dampen the bounciness of the portfolio. This investment doesn’t depend on the stock market to go up in order to make a positive return. It can “zig” when markets “zag.” In the investment world, this is called “non-correlated”—a good thing when market prices are falling.

No one knows what the future will hold or if these changes will work as expected. We will continue to connect the dots, monitor progress, and stand ready to make additional changes if appropriate.


Information in this report is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be a complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The identification of specific funds and model portfolios is being made on the assumption that an investor would participate in that investment on a long-term basis (in excess of four years). With respect to any such identification, there can be no assurance that the fund or group of funds will in fact perform in the manner suggested by the investment profile provided with that fund or group.