90/10 Rule

"Risk comes from not knowing what you are doing." — Warren Buffet

It only takes a bit of practical experience, not the genius of Warren Buffet (the second richest man in the world) to realize that the financial markets change unpredictably. But what you may not have considered is that these changes rarely affect all your holdings equally as well as the significant and often overlooked effect this has on investment performance.

You see, depending on what news is "carrying" the market into a particular direction, certain assets in a portfolio tend to be more affected than others. For example, a change in interest rates may affect the valuation of bonds but possibly have no effect on blue-chip equities. And, in the end, such everyday occurrences can throw out of balance the original mixture of the various assets brought together in a portfolio and consequently increase the level of risk for the investor.

Ultimately, this raises the need from time to time to assess whether we should "rebalance" the mixture of the assets in your portfolio (or possibly accept the new allocation if new circumstance surrounding your life deem this to be the proper risk tolerance for you). But all this must come from working with you and knowing that what we are doing is appropriate - which is where the sage wisdom offered above by Warren Buffet comes in.

Why all the attention on asset allocation? The fact is that up to 90% of the variation in returns is based upon your asset allocation—something we simply can't ignore.

Please call me to schedule a mutually convenient time for this review—I really can't encourage you enough. I hope all is well and look forward to speaking with you soon.