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Ed Meek
CEO/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, playing and following basketball, playing golf, and participating as an advisory board member for Breakthrough Urban Ministries.

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New Stock Market Highs – Buy, Sell, or Hold?

Gain insight from our guest contributor Roger Wohlner, a fee-only financial advisor in Arlington Heights, IL.

On March 8, 2013 the Dow Jones Industrial Average closed at 14,397, an all-time record high.  The index achieved several consecutive all-time high closes during the week.  By one measure we've now gotten past the financial crisis as the prior high was reached pre-crisis in 2007. The S&P 500 is also near record territory.

The Dow is a pretty narrowly focused index of 30 stocks of very large companies. While this index is influential and widely followed it is not really a good indicator of much of anything. Perhaps a better index to look at is the S&P 500. This index hit bottom during the financial crisis on March 9, 2009 closing at 677. It closed at 1,551, just a bit shy of the 2007 all-time high of 1,565.

What should you do now?

So what should you be doing now? The experts interviewed on CNBC last week were all over the board. Some say wait for a pullback to commit new money, others say this is just the beginning and the market has a lot of room to run higher. I heard Jim Cramer say, "We are slaying the bear market” and also use the phrase “end of bear market thesis” on the program.

I would defer to the advice of a real expert, fellow NAPFA member Diahann Lassuss a New Jersey and Florida-based fee-only financial planner. She posted this on Twitter recently: “Looks like a good time to review your investment allocation. :)”

Time-tested advice

My suggestions that for the current market environment are the same as I would have offered a year ago, five years ago, or ten years ago.  They are the same suggestions that I would have offered at the depths of the 2008-2009 financial crises as well.

·         Review and rebalance your portfolio.  A market high is always a good time to review your 401(k) account and your overall portfolio to ensure that things are not too far out of balance.  Ideally you have a written investment policy including target allocations for your  investments.  Generally if a client’s allocation varies by more than +/- 5% of the target we consider rebalancing.  Given how quickly the market has risen this year your portfolio might need some attention.

·         Revisit your existing financial plan, or have one done.  A market high is a good point to take stock of how you are tracking toward financial goals such as retirement.  Are you ahead of schedule?  If so perhaps this is a good point in time to not only rebalancing but to consider reducing the risk profile of your portfolio.

·         If you watch enough of CNBC or other cable financial news shows, or read enough articles on the web about investing you can probably find someone who will support any position ranging from an impending stock market Armageddon to someone saying this Bull Market will run for another five years or more.  The route to go in my opinion is to largely ignore all of this hype, get a financial plan in place, and invest your 401(k) and other investment holdings as a total portfolio in line with the goals and risk tolerance that flow out of the financial planning process.

All of this hype is great for the brokerage firms and the media. To you, the individual investor it should be pretty meaningless.  The issue is not whether you should buy, sell, or hold.  The real focus should be on your financial plan.  In times of market upheaval (highs or lows) a financial plan is a great tool on which to rely in determining what to do next.  Standing pat is an active strategy if that’s what the financial planning process suggests.

Roger Wohlner, CFP®, is a fee-only financial adviser at Asset Strategy Consultants based in Arlington Heights, Ill., where he provides financial planning and investment advice to individual clients, 401(k) plan sponsors and participants, foundations, and endowments. Roger is active on both Twitter (@rwohlner) and LinkedIn.Check out Roger's popular blog The Chicago Financial Planner where he writes about issues concerning financial planning, investments, and retirement plans. Roger also contributes a weekly post to the US News Smarter Investor Blog.