New Orleans Dental Conference and LDA Annual Session Journal ...

LDAwealth managementChad Olivier, CFP ®Wealth Consultant/LPL Branch Manager, The Olivier Group, L.L.C.Emotions can race when the stock market tumbles,as well as rises. More often than not, poor decisionsare made when investing on emotions. To stave off theseshort term feelings of excitement or panic, a strategyshould be implemented and discipline prioritized.This past year, the economy has tested some of theestablished methods that many investors uphold. Nowlet’s take a look at what we learned about these basicrules of investing and how each should be modified.Buy and Hold. This is a strategy that looks goodon paper, but truly needs to be modified to: Buy,Hold, Monitor and Adjust. There have been and alwayswill be great buy and hold investments. Nevertheless,continuously monitoring these investments is vital.Numerous examples exist of companies that have hadexcellent growth rates sometimes attained becauseof the company’s cutting edge technology, lack ofcompetition and/or successful management. A changein the factors contributing to a company’s growthat any point in time could greatly affect the results.Buying and holding investments with a long-termstrategy can be beneficial, but it is also critical tomonitor the investments and not be afraid to make theadjustments when necessary.Diversify with Stocks and Bonds. This rule makessense, but needs to be expanded beyond the basic twoasset classes of stocks and bonds. The new modifiedasset allocation models should include stocks, bondsand alternative investments, such as real estate. Addingmore diversification in a portfolio could lower volatilityand increase return over time.*An investment that claims to be largelydiversified should not drop as much in a bearmarket. Most investors found out the hard way thatthis rule is not true. The big question that reallyshould be asked is: What is a diversified portfolio?Many investments may be considered diversified intheory, but are far from it. The new rule: Make sureyour portfolio is truly diversified and use the past bearThe New Rules of Investingmarkets as a gauge.** It is important to look at thedetails of all of your investments and make sure youhave the correct percentages of each type of assetclass in your portfolio. Then do the research to seehow that particular investment performed in goodand bad markets.Keep a high percentage of equities in retirementbecause we are living longer. This perception hasbeen pushed on us by Wall Street for decades. Instead,the rule should be to have the least amount of equitiespossible in retirement. Yes, equities over time havegotten higher returns than any other investmentcategory. However, if a high percentage of a retiree’sassets were in equities during any of the downturnsor bear markets their portfolio would have beendiminished at a more rapid rate because of the neededdistributions for retirement income. This can lead to asignificantly lower retirement distribution and possiblyforcing the retiree back into the workforce.These modified, new rules of investing may be adheredand followed to help attain and maintain wealth.* Investing in securities is subject to risk, including loss of principal.**Past performance is no guarantee of future results.Chad Olivier is author of “What Medical School Did Not Teach You about Financial Planning”and owner of the firm The Olivier Group, LLC in Baton Rouge, La., which specializes in retirementplanning and wealth management for physicians, dentists and other affluent individuals andfamilies. If you have any questions about this article or future topic suggestions, please call (888)465-2112 or visit us on the web at www.oliviergroup.com. Securities and Financial Planning areoffered through LPL Financial Member FINRA/SIPC. Please note that the above article is forinformational purposes only, nor is The Olivier Group specifically endorsed by the LDA. Financialplanning requires detailed individualized analysis of each person’s specific situation.CFP®, Certified Financial Planner and are certification marks ownedby Certified Financial Planner Board of Standards Inc.Winter 2009 31