DWM 3Q16 Market Commentary

wall-street-vs-main-streetWith all the uncertainty in the news today, a human being might emotionally feel quite anxious. If you hadn’t looked at your portfolio in a while, you may assume it’s not doing so great. But your portfolio does not have emotions and, if properly constructed, is capable of producing in all environments. In fact, if your portfolio did have emotions, it would probably be feeling quite happy as 2016 has so far been a pretty good year performance-wise, at least the portfolios we supervise. The thing is that Wall Street and Main Street don’t operate on the same level. Main Street may be feeling a little down, but Wall Street on the other hand may shrug off those fears and look at the opportunities. Or vice-versa. Case in point: The recent negative feelings of Main Street don’t resonate with the recent positive results stemming from Wall Street.

After a wild finish for stocks in 2q16 thanks to the surprising June 23rd Brexit vote, the US stock market calmed down and continued upward as represented by the S&P500 gaining 3.9% for the third quarter. Other equity markets did even better like small caps* and emerging markets**, both up 9.0%. Outside of equities, both fixed income and alternative markets generally charged ahead, adding to this upbeat 3q16 report.

Let’s start with the results of the major asset classes:

Equities: The MSCI AC World Equity Index registered +5.3% for the quarter and is now up 6.6% on the year. International small cap value***, up 10.5%, was one of the best places to be in the second quarter. That said, the stars of the year remain the mid cap space****, +12.1%, and emerging markets**, +16.0%. The S&P500 underperformance trend continues.

Fixed Income: The Barclays US Aggregate Bond Index, the most recognized bond benchmark, was up 0.5% in 3q16 and now up 5.8% for 2016. Unfortunately, that benchmark doesn’t allocate to the two hot spots in bond land this year: high yield bonds, +5.6% and 15.1%, quarter-to-date and YTD, respectively, and emerging markets debt, +4.8% and 16.6%. Hence, it is prudent to construct fixed income portfolios that contain more than treasury, investment-grade corporate, and agency exposure like the “Agg” and invest into other areas that can provide diversification and potentially better returns.

Alternatives: The Credit Suisse Liquid Alternative Beta Index was up 2.1% for the quarter and 3.2% YTD. Of course, one of the key benefits of alts is that they generally don’t trade in symphony with the rest of the market. But that doesn’t mean they necessarily will go down when equities and fixed income are up, like they were in this quarter. Alts beat to their own drum. What we think is important for our clients is designing an alternatives model with multiple non-correlated alternative assets and/or strategies that collectively produce consistent positive returns.

By looking at the above results and doing some simple math, we can theoretically see that an investor; with a balanced portfolio of, say 50% in equities, 25% fixed income, and 25% alternatives; could have overall net results of 6-8% YTD. And there’s still a quarter to go in 2016! Of course, nothing is guaranteed and there is certainly “uncertainty”. Whereas Wall Street may shrug off lots of things Main Street would not, here is the short list on what is keeping those traders up at night:

  1. The Election – this really is something that is causing more anxiety for Main Street than it is Wall Street. As crazy as it may seem, the market can actually see “good” in either of the major candidates. What the market doesn’t like is a surprise. If results came out opposite of the polls ala Brexit, it could get ugly, i.e. markets would trade lower. We don’t see that happening though.
  2. The European banking sector – Is Deutsche Bank with its thin capital issues the next Lehman Brothers? We don’t think so, but those banks all trade with one another and if one major bank fails, there can be a contagion effect that could even affect us on the other side of the globe.
  3. The economy – If you looked at the companies within the S&P500 and used that as a yardstick for the US economy, you might get a little alarmed to know that 3q16 will almost certainly be the sixth consecutive quarter of falling earnings. That hurts valuations now but we’re cautiously optimistic that that trend will end soon. When actual earnings (and estimates) start to rise, the market could continue to climb (even) higher.
  4. The Fed – What’s next for the Fed? There are two more meetings this year. We think one 25 basis points rate hike is already “baked” into the market. In other words, traders are expecting it. As long as the Fed keeps communicating clearly, they and their actions shouldn’t cause that much disruption.

In conclusion, Main Street is not Wall Street. For many, this Presidential Election is bringing a lot of unnecessary anxiety and we can certainly understand why. Of course, the market is generally efficient by constantly looking ahead at expectations and adjusts accordingly. Unless there are major surprises, it tends to shrug off news that can make Main Street nauseous. So if it’s getting to be too much for you, feel free to turn off the media noise and keep it off until November 9th, the day after the Election. Wall Street will keep doing its thing. More importantly, DWM will be doing its thing, keeping our clients’ portfolios prepared for what’s next.

Brett M. Detterbeck, CFA, CFP®

DETTERBECK WEALTH MANAGEMENT

 

*represented by the Russell 2000 Index
**represented by the MSCI Emerging Markets Index
***represented by the DFA Intl Small Cap Value Fund
****represented by the Dreyfus Mid Cap Index Fund
† represented by the Barclays Capital US Corporate High Yield Bond Index
‡ represented by the PowerShares Global Emerging Markets Sovereign Debt ETF

Election Musings

Trump ClintonAs the DNC convention concludes, we now have our two Presidential candidates and about 100 more days of campaigning before the Election on November 8th.  In a year of unprecedented dislike of both candidates, billions will be spent trying to convince voters.  What a waste.

The Supporters aren’t Changing.  Trump and Clinton supporters aren’t changing their minds.  One Trump enthusiast was asked what it would take for the Donald to lose his vote.  His response: “Nothing. There is nothing he could do to lose my vote.”  To his supporters, Donald Trump is going to make America great again.  “He’s rich and can’t be bought.” “He speaks his mind.” “He’ll get the job done.”  Those who oppose him often believe him to be a narcissistic buffoon, liar, racist, and woman-hater; unfit to be president.

Hillary Clinton’s supporters believe she is the only qualified candidate, the only one capable of being commander-in-chief and, of course, she isn’t Donald Trump.  Those who oppose her believe she is a phony, part of the establishment that caused their economic woes, and has a long history of corrupt episodes including the recent FBI investigation into the “extremely careless” use of her private email server.

For supporters, new information makes no difference.  “It really goes back asswards, lots of times,” said Peter Ditto, a psychologist at UC Irvine.  “People already have a firm opinion and that shapes the way they process information.”  Psychologists call this “motivated reasoning” meaning that once a person selects Trump or Clinton, they tend to downplay or ignore things that paint their candidate in a bad light by forcing new information to fit within pre-existing beliefs.  Even lies don’t matter.  Many people would rather hear an appealing fib rather than an ugly truth. And politicians know that for sure.

Investors like Clinton.  Americans with money in the markets prefer Clinton.  They love divided government and are assuming the Republicans will control Congress and Clinton would be held in check.  Actually, for all their promises of sweeping changes, U.S. Presidents can’t do much without the House and Senate.  Furthermore, Republican House Speaker Paul Ryan has his own ideas, different from Trump and Clinton on taxes, trade and other matters.  So, we’ll likely have a divided government in any case.

Wall Street seems to think that it is highly unlikely that Trump will win.  Of course, think back to Brexit, when the “Remain” camp was certain they wouldn’t lose.  If he did win, Trump would likely move quickly to get the U.S. out of NAFTA and perhaps put tariffs in place on Chinese and other goods.  This could lead to a “trade war” which would most likely hurt the U.S. and world economy.

The Race will likely remain too close to call.  With more than three months remaining, we will continue to be bombarded daily with media coverage, emails and phone calls.  Like Brexit, it will likely come down to voter turnout. There are many angry, disillusioned Americans these days.  They question is which ones will show up in droves on November 8th.

Impact on Investments.  When Britain voted to leave the EU it surprised investors worldwide.  In the U.S., markets initially declined 5-10% and many investors bailed out.  It took the markets just a few days to realize that Brexit is a UK problem, not a U.S. issue and since then the S&P 500 Index and Dow Jones have hit all-time highs though demand remains high for “haven” assets; for example, government bonds and gold.

Investing based on world events is nearly impossible. UK politicians, property owners, businesses and bookies got all it wrong.  Timing the market, both entrance and exits, is impossible.  Longer-term investors know that you need to look beyond short-term events like Brexit, Kennedy’s assassination, the 1987 market crash and 9/11 to see that each had a short-term downside and fear followed by a return to fundamentals.  It’s prudent to leave the short-term noise to short-term traders.

Let’s focus on staying invested in a globally diversified portfolio with an appropriate asset allocation.  Yes, diversification may be boring, but it works.  We can control our behavior, but there are lots of things we can’t control, including the U.S. Presidential election.  So, enjoy the Greek drama as it unfolds. Not sure we are watching a comedy, tragedy or satyr (featuring lustful, drunken woodland gods).   Regardless, don’t let it stress you out.  Enjoy the rest of the summer and focus on what you can control.

DWM 2Q16 Market Commentary

brett-blogWe’ve eclipsed the half way point of 2016; kids are out of school, people are gearing up for vacations, and temperatures are soaring. There are a couple more amazing things of note: 1) It’s July and the Cubs are still in 1st place! 2) Given all the uproar about everything from interest rates to oil to the election and to, most recently, Brexit; investor returns in general are not only positive, but pretty decent.

Think about it: we’ve been bombarded with negative news all year and the second quarter was no different. We had terrorism issues not only abroad, but here on American soil. We had job creation falter with May readings showing the worst month of employment gains since 2010. There’s economic weakness abundant around the globe. To top everything off, on June 23, we had Brexit – the UK referendum that shocked many when results showed more votes to actually LEAVE the European Union than remain! A sell-off in stocks ensued and had some feeling like it was 2008 all over again.

Well, it wasn’t. Markets reversed and many equity benchmarks are actually higher at this time of writing than they were before Brexit. (For more on Brexit, see our last week’s blog by clicking here.) In fact, in the US, the S&P 500 ended the week after Brexit up 3.3%, finishing the quarter with a 2.5% gain. In Europe, the EuroStoxx600 and the FTSE100 finished the week up 3.2% and 9.9%, respectively, in an apparent turnaround of investor confidence.

Investors also flocked to bonds during the quarter and even more so since the Brexit vote, with bond yields setting lows around the world. The Brexit vote actually helped solidify investors’ expectations for global central banks to keep rates down. And since yields move inversely to bond prices, bond investors did very well during this time period.

Let’s look at some numbers:

Fixed Income: The Barclays US Aggregate Bond Index, the most popular bond benchmark, was up 2.2% and now up 5.3% for 2016 – not many would have predicted that at the start of the year. Really almost everything within bond land did well. Corporates, in particular, did great as evidenced by the iBoxx USD Liquid Investment Grade Index registering 4.1% for the quarter & now up 9.0% YTD.

Equities: The MSCI AC World Equity Index registered +1.0% for the quarter and is now up 1.2% on the year. With the Brexit vote, European stocks struggled (MSCI Europe down 2.7% for the quarter & down 5.1% YTD), but emerging markets have done quite well with the MSCI Emerging Markets Index up 0.7% for the quarter and now up 6.4% YTD.  In terms of domestic cap style; in general, mid cap has outperformed small cap which has outperformed large cap. And value continues to outperform growth in a big way this year.

Alternatives: The Credit Suisse Liquid Alternative Beta Index aims to replicate the returns of the broad hedge fund universe using liquid securities.  It came in -0.7% for 2q16 thus indicating that those type of alternative strategies didn’t fare as well as some of the other alternative strategies we follow. For example, it was another stand-out quarter for gold* (+7%), real estate** (+3%), and MLPs*** (+19%). These alts are all up big YTD as well (24%, 9%, 11%; respectively).

So, a diversified investor with exposure to the three major asset classes may see returns somewhere between 3 and 5% for this first half of 2016 – 6-10% annualized – amongst all this so-called uncertainty.  Not bad!

We are also cautiously optimistic about the second half of 2016, however, the negativity and the uncertainty (CNBC’s word of the year so far) will definitely continue:

  • Brexit has really only started – this may take over two years to play out and even though Brexit fears have been shrugged off for now, they could come back. Clearly, European GDP and thus global GDP will be affected.
  • Central banks could be running out of ammunition if things do indeed get worse. Interest rates are NEGATIVE in Europe and Japan. How low can they go? And how much fire power really remains?
  • Here in the US, inflation remains well below the Fed’s 2% preferred target.
  • China growth problems and oil price volatility could resurface.
  • Profits at companies in S&P500 have fallen for four consecutive quarters and are expected to fall another 5% this quarter. Hard for stock prices to continue to go upward in that type of environment.

So, why be cautiously optimistic? There is some positive economic data out there including:

  • US consumer confidence is strong.
  • Retail sales continue to escalate steadily.
  • The Case-Shiller Home Price Index reported an April rise of 0.5%, with prices increasing on a seasonally adjusted basis in most cities.
  • There are pockets of strength to be found here in the US and around-the-world. Lots of exciting opportunities abound that keep hungry investors and companies enthusiastic!

Like we have said before, the key is to stay disciplined to your diversified game plan. Stay invested in accordance to a long-term asset allocation target mix which is in-line with your risk tolerance, and don’t let emotions control you. Unfortunately, that can be difficult to do on your own or if you have improper assistance.  On the other hand, if you have an independent, unbiased wealth manager like DWM, they can help you accomplish this by making the appropriate changes when and where necessary to lead you to the higher ground. Let us know if you have any questions on the way.

  • *represented by iShares Gold Trust
  • **represented by SPDR Dow Jones Global Real Estate
  • ***represented by Alerian MLP

Diversification vs. Chasing Performance: And the winner is…

2016-03-16 Annual Asset Class Performance1Our regular readers have come to expect an updated version of this “Asset Class Performance” chart about once a year.  (Click on it to enlarge.) It’s a little like running the Charleston’s Cooper River 10k Bridge Run once a year.  It puts things in perspective.  Things that go up, also go down.

Take a look at REITs in 2006 and 2007. From first to last in performance. And, Emerging Markets from 2007 to 2008, same thing. Bonds were almost a top to bottom in 2008 and 2009 and after Emerging Markets topped in 2009, it took them two years to hit bottom. Do we see a trend here?  Yes, we do.

As we discussed at our seminars in October, we’re all hard wired to want to jump on to winners and discard current losers.  We have a short memory – we place more emphasis on recent performance rather than long-term.  Furthermore, our emotions are aided and abetted by the media- always happy to make an up-and-comer sound like the perennial winner for decades to come and an asset class that is struggling to appear to have no hope of ever turning around.

We saw it earlier this year.  After a fairly dismal year of returns for all asset classes in 2015, 2016 stock markets got off to a slow start and then accelerated downward as pessimism, exacerbated by uncertainty in the world economy, interest rates, oil prices, U.S. Presidential politics and the media drove down performance until the second week in February.  And then, the pendulum starting swinging the other way, pushing markets upwards for the last four to five weeks.

A lot can happen in just a few years.  If we were looking at this same chart for the ten years ended December 31, 2013, the top performers were much different.   Emerging markets were the top performer, followed by mid caps, small caps, REITs, international stocks and then large caps.  Going back even farther, large caps for the ten year period 2000-2009 were negative.  Of course, they’ve come back strongly in the last five years, up 12% per year.

The key is that there is no “silver bullet”- that is, there is not one asset class that provides a simple and magical solution to asset allocation.  To illustrate this, let’s say we had decided to “chase performance” by investing 100% each year in the top performer of the prior year.  We can start with the results of 2006 and invest in REITs in 2007.  For 2008, we’ll invest in Emerging Markets, the top performer in 2007, and so forth for each of the next nine years.  The result: an annualized return of -4%.

Okay, how about if we invest in the most underperforming asset class instead.  We’ll invest in TIPS in 2007, REITs in 2008 and so forth. Our result is only slightly better, -3% annualized return.

Lastly, how about being a disciplined investor, using all asset classes and maintaining a balanced allocation, for example, of 50% equity, 35% fixed income, 10% REITs and 5% commodities for ten years?  The result:  An average annual return of 5.2%. With annual inflation at 1.6% for the decade, that’s quite a respectable real return of 3.6% per year for the last ten years.

The moral of the story is always the same.  Don’t follow your emotional biases.  Don’t chase performance.  Don’t try to time the market.  Instead, focus on what you can control:

  • Maintain an investment plan that fits your needs and risk tolerance
  • Identify an appropriate asset allocation target mix
  • Structure a diversified portfolio between and within asset classes
  • Reduce expenses and turnover
  • Minimize taxes
  • Rebalance regularly
  • Stay invested
  • Stay disciplined

If you have any questions or need any assistance with any of the above, please let us know.  At DWM, we’re ready to help and are passionate about adding value.

 

 

 

Diversification Means Some Leaders and Some Laggards

eggs in one basketCommon sense tell us: “Don’t put all of your eggs in one basket.” Investment professionals give it a fancier name: “Modern Portfolio Theory (MPT)”, first articulated in 1952 by Nobel Prize winner Harry Markowitz.

The concept is that, regardless of what all the financial pundits and media people say and write, we can’t predict the future. So, we spread our bets across a variety of investments. The trick, mathematically, is to consider how the price of each investment varies in relation to the others. We use the term correlation and recognize that there is a benefit to non-correlation. That is, when some are zigging, others are zagging. The objective with diversification is that for the same level of risk, we can earn higher returns and/or lower volatility.

Here’s the catch: a truly diversified portfolio will almost always have a portion of the portfolio that is underperforming. Behaviorally, all of us hate to lose. Worse yet, we often fixate on the negative, drum up feelings of regret and develop “if only” thoughts.

Let’s take a look at some leaders and laggards over the last 20 years:

Investment returns-2014_Page_1

There’s a lot of data in this chart. Click on it for a full size image. Each color represents a different asset style. Last year, the S&P 500 growth (maroon) was the top dog. MSCI EAFE (grey) was at the bottom of the list. Yet, follow the colors from year to year. Leaders one year often don’t repeat the next year. In fact, sometimes, like “chutes and ladders,” they go from top to bottom. If you have a diversified portfolio, you can be assured you’ll have some leaders and some laggards.

The key is how the elements of your portfolio work together. Let’s look at the first two months of 2015 as an example:

In January, the S&P 500 came back to earth. In fact, it was down 3%, as were small caps. International and emerging market stocks were down about 1%. So, a diversified equity portfolio in January was likely down 2%. On the other hand, a diversified fixed income portfolio was up perhaps 1-2%, and a diversified liquid alternative portfolio was up almost 2%. So, even though domestic stocks were down 3% in January, a diversified portfolio could have been close to break-even.

In February, things changed. Stocks got hot again. The S&P 500 and small caps were up almost 6%. International and emerging markets were up about 5%. Fixed income and alternatives were just about unchanged. So, a diversified portfolio might have been up 2-4% in February.

In each month there were leaders and laggards zigging and zagging. And the big leaders one month were not the same the next month. The key is the non-correlation benefits between the various holdings that can produce higher returns and/or reduce volatility.

We need to focus on the whole portfolio, not the laggards. We have to fight the bias of “fallacy of composition” which causes us to reflexively assign the attributes of one piece to the whole. In investment terms, that’s noticing one asset style doing poorly and concluding, incorrectly, that the portfolio overall is flawed.

Finally, we all suffer in some measure from the phenomenon of “if only.” The “science of regret” is quite complex. A key point is to setting appropriate benchmarks. For example, our clients know that their Investment Policy Statement (IPS) gives us our “marching orders” for managing their portfolio and includes a targeted long-term net rate of return for their portfolio. That’s the appropriate benchmark. Comparing performance results for all your investments to the top performer in the year is not only an inappropriate benchmark, but can be damaging if the result is rebalancing your allocations to chase recent performance.

Focus on diversification- use of all three asset classes: equities, fixed income, and liquid alternatives, and appropriate diversification of asset style within each asset class. You’ll have leaders and laggards. The real key is avoid our behavioral instincts to focus on the laggards and, instead, to celebrate your overall long-term performance and the fact that diversification is working for you.

Liquid Alternatives: Clarifying Some of the Recent Press

We’ve seen some bad press lately about liquid alternatives saying that in general these new funds have not proven themselves. It’s no coincidence that this comes at a time when the equity markets are at all-time highs after a 5 year bull run. This bad press is unwarranted.

Many of these articles fail to point out exactly why alternatives are a necessary part of one’s portfolio. They are there as a diversifier to the rest of your portfolio; the zig to the zag. This diversification comes in quite handy when equity returns decline, volatility increases, and interest rates rise. All of which could happen sooner rather than later.

It wouldn’t make any sense if alternatives were up say 20% in a year stocks were up 20%. If so, those two asset classes are totally correlated. Alternatives best trait is being non-correlated to other asset classes, be it stocks and/or bonds. Frankly, expectations of alternatives are probably too high for most people. Our expectations for alternatives (as a group) would be around 6-8% per annum. But more importantly, our expectations for alternatives is that they won’t be down dollar for dollar when equities have a 10% or worse correction.

And that’s the real beauty. By using alternatives and avoiding a blow-up like many hard-core equity investors did in 2008, you don’t have a huge hole to dig yourself out of.

Investors should know that alternatives come in two categories:

  1. Alternative strategies – that utilize traditional asset classes (stocks and bonds) in non-traditional ways. Examples: Long/Short Equity, Long/Short Fixed, Market Neutral
  2. Alternative assets – non-traditional asset classes (anything that’s not a stock or bond). Examples: Real Estate, Infrastructure, Commodities

*Some alternative funds combine both strategies and assets. Examples: Managed Futures, Multi-Strategy, Fund of Funds.

Alternatives are typically used for four major reasons:

  1. Reduce Volatility
  2. Generate Income
  3. Increase returns
  4. Address A Specific Risk

Most alternatives may only align with one of the four objectives above. Very rarely will an alternative be able to do all of that. For example, infrastructure is really just a “generate income” play. Whereas Market Neutral isn’t necessarily increasing returns or generating income but there to reduce volatility and limit max drawdown. The table below shows how different these alts can be.

Liquid alts

That being said, you need to know what you own to invest in this area. As a portfolio manager, DWM seeks to understand the risk/return profile, market exposure, correlation to traditional asset classes and the manager skill and experience before we make an addition to our Liquid Alternatives Model. We also identify how one fund correlates (or hopefully doesn’t correlate) with the other funds within the model. We think our model blends the above objectives in a optimized way to benefit our clients’ portfolios. We’ve been working with “liquid alts” for a decade now and they have proven to be quite beneficial for us and our clients.

In conclusion, the bad press we see every once in a while on liquid alts is not warranted and typically comes from the misunderstanding of what can be a complicated area. We hope this article has provided some education. For further information on alternatives, don’t hesitate to contact us.

Concentrated Positions: Don’t Let a Torpedo Sink Your Hard-Earned Ship!

No torpedos

One of the many things we do when a prospect comes to us is analyze their current portfolio. We do this so we can assess the current risks in their portfolio that they may not be aware of and identify ways to minimize those risks, thereby getting the overall portfolio working for them, in a way that is in line with their particular risk tolerance.

We see many issues when analyzing portfolios, including, but not limited to:

  • asset allocation that is much riskier than their tolerance
  • lack of multi-asset class benefits by using only one or two asset classes (e.g. 100% equities / no fixed income / no alternatives)
  • heavy cash exposure – we often hear from people that they build up cash as they are hesitant to make a decision on how to invest it. Unfortunately, with cash returning about 0.001% these days it creates a huge drag on the portfolio.
  • the use of securities with high expenses (e.g. variable annuities (typically over 3.5% in expenses) or front-load mutual funds (may charge 5% up-front))
  • management fees that are higher than industry standards – we’ve seen people with significant size portfolios paying over 2% – that’s crazy!

We could do a blog on each one of these issues, but this week the focus will be on concentrated position risk.

So what is a concentrated position? It is a held position (typically equity) that makes up a substantial part (20% or more)

of an investor’s overall portfolio. A common example is a stock inherited from a grandparent. Another situation that we often see is a concentrated position risk stemming from a client’s company stock.

Some public companies offer many ways for the employee to get company stock. Here are just a few examples: restricted stock grants, ESOP programs, deferred comp programs, stock options, company stock within the company’s 401k plan, etc. Many people don’t realize how much these positions may have grown over time or, because of “bucket mentality”, they don’t even think of it as part of the overall portfolio. But they should.

In a recent meeting with a prospect, we identified that her company stock made up close to 30% of her overall portfolio. She wasn’t aware that her position was anywhere near this percentage until we pointed it out, but like many people she didn’t seem too concerned at first.

Here’s the problem: the major risk associated with such a portfolio is a lack of diversification; a concentrated position makes a large portion of the investor’s wealth dependent upon the performance of one particular stock. At DWM, we also call concentrated position risk ‘torpedo risk’, because that’s what a concentrated position can do to your whole portfolio, and hence your overall financial plan. It can hit and sink it just like a torpedo- not good. People tend to think this won’t happen to them, but so did the former employees of Worldcom and Enron.

Don’t let ‘torpedo risk’ from a concentrated position ruin your portfolio and/or financial future. A good rule of thumb is to keep all company-specific positions to less than 6% of your overall portfolio value, if possible.

Of course, there may be reasons for keeping a concentrated position such as restricted stock/options that follow vesting timelines, emotional attachment, low cost basis tax concerns, trading volume concerns, etc. An advisor like DWM can help you work through those issues via different strategies (e.g. dollar-cost averaging out, “collars” and other derivatives strategies, prepaid variable delivery forward contracts, exchange funds, etc.) and help you put together a portfolio that’s working for you, free of unnecessary risk and capable of meeting your long-term goals.