My largest concern is that we are trying to make changes to asset allocation similar to helping protect northern Indiana from a hurricane. Could 2009 repeat what happened in 2008? ABSOLUTELY! We read about that occurrence in 1930 and 1931 with losses of 28 percent followed by another loss of 57 percent, and shocking the investment world, not to mention the investors both professional and private. So I ask, would the 1930s have been a good time to invest? Clearly, not any time soon in the early 30s, and even much later that decade, but if we looked today the obvious answer is ABSOLUTELY! The same would be true for crash of 1987 and the recession of 1991.

For the record, we in no way believe that people should have static portfolios, nor do we suggest you should hold tight and trust the eventual market outcome. We simply want to bring to your attention that results seem to be based on self‐imposed ending points and as media centers find ways to "update" you on the current situation, the ending points seem to come faster and more often - neither of which is good.

Assuming you are getting my gist, then the discussion needs to be more than the yard stick measurement of point‐to‐point returns and should include more discussion over application of the strategy as it is used to determine which course of action to take in the future. Should I throw out the canvas, paint over the mistakes and continue on the present course? Or take the canvas I have to adjust the art to fit what we know to be true and what we expect in the future?

The three key points of the last 1,000 words is this: Should you make you a change based on the data points from October of 2007 through today? What adjustments should be made and how do you absolutely convince yourself that you will not drastically change again in the future over another data point good or bad? In other words, are you saying the world has absolutely changed and you are willing to make a drastic change this one time but never again, or at the very least not for the foreseeable future? Lastly, if the data point measurements are incorrect, how do you measure how well the plan is working? Tough questions indeed.

Selling out entirely at this point and going to cash will remove the opportunity for more principal losses, but removes the ability for income appreciation versus inflation. The action would guarantee that what was "lost" in the markets will not be able to return. If this is the course of action you choose - in my most humble opinion - you need to either promise yourself you will not get back into the market at any point and time, or have clearly and ironclad written details of what re‐entry point you will take to move back into the market. I can recite dates that would have paralyzed you financially for re‐entry (or exit) at the wrong time. Sadly, I can provide names of people who did exactly that and their fate haunts me to this day. My years of experience seem to say the action that causes one to change is based on market prices (data point of measurement), much more than economic issues, which are never absolutely certain. In other words, you cannot allow yourself to get out on "low prices" on the notion that they could very well go lower, if you will allow yourself to buy back into the market merely because prices are higher without actual real change in the investment climate.

Jumping in or out of the pool at any given time allows for very shocking experiences! Hot water, cold breezes, hidden rocks and trees, alligators, misquotes and the scorching heat of the sun on an August day in the desert. The same jump could provide refreshing cool waters, the warmth of God's sunshine, even the visit of a butterfly. Are you willing to risk the bad circumstances in exchange for the hope of the good one? Our recommendation again is to wade - wade into the pool and wade out. Move from the market when your strategy dictates and move into the market when it dictates.

1 | 2 | 3 | 4 | 5 | 6 | 7 |