Despite all the drama, we are starting the second half of the year mostly intact.  The past month alone brought government interventions, weekend summits, democratic referendums, sovereign bailout packages, and more.  However, the overall direction of the markets and global economy is still near the trend established late last year. Inflation is tame, lending rates are still low, and consumerism is still growing.  In these shaky moments, we should seek opportunity versus satisfaction.

My reference to satisfaction is exemplified by those who chase returns of a certain asset class.  For example, you might peruse through the list of funds in your company sponsored 401(k) and find yourself more attracted to the funds with recent positive performance.  Then, you might take the next step to sell low performing funds in exchange for the better performing funds.  You do this because we want progress.  But is this the best path to progress?  Or are you seeking immediate satisfaction over best opportunity?

Here ( is a marketing piece from Franklin Templeton Funds illustrating the annual rotation of asset classes.  Although your eyes may be drawn to top rows, take a good look at the middle and bottom rows too.  Note how most asset classes swing from best to worst to the middle, etc.  Also note how most asset classes do not experience multiple years in the same position.  Do you agree this illustration makes a pretty good case against buying last year's best performers?

There are many types of investment strategies.  Mine are designed with a tactical component.  First I have a diversified mix among various asset classes.  Second, I focus a portion of a suggested portfolio allocation to an asset class which has not recently performed well.  This portion increases in size according to the portfolio's risk objective.  The purpose of this position is to buy something that has not performed well recently, but will likely perform well in the future.


The following is a brief list of assumptions I have for the next year (give or take).  These make up some of my portfolio’s current tactical allocation:

1.)  Economic recovery and development in asian economies (China and Japan in particular).
2.)  Relaxing US dollar exchange rates (the dollar is high compared to other currencies).
3.)  Stabilization in the Euro-zone once the Greek situation is sorted out.
4.)  Oil is low priced compared to expected future prices.
5.)  Emerging market economies will thrive in the next few years.

Since the objective is to buy low so we can later sell high, my strategy is to buy when I see opportunity.  This objective does not imply I buy on the lowest price, rather, I try to buy at a “low price”.  But what is a low price if the price continues to move lower after it is bought?  Simply put; I compare acquisition cost to my planned selling price.  I don't need the best prices, I just want an adequate reward for the risk.  If the prices continue to move lower, and additional cash is available, I may suggest additional purchases to lower the average cost per share (aka: dollar cost averaging).

In summary, I am encouraging you to be patient.  Stay the course.  Trust the long term strategy, not the short term ripples.  If you don’t have a strategy, get one.  Call me, another advisor, get educated, buy a strategy, or something.  Doing nothing is not a good action.  Also, if you are going to read the news where opinion is injected, be sure to find an opposing view so you can hear both sides and make your own opinions or assumptions.  Go do what makes you happy.