Rebalancing for the Future: Why Your Portfolio Needs Attention Now

0:00 It's time for a portfolio review as we reach year end stick around for this episode of something more Welcome to something more with Chris Boyd Chris Boyd is a certified financial planner practitioner and senior vice president financial advisor at wealth enhancement group One of the nation's largest registered investment advisors We call it something more because we'd like to talk not only about those important dollar and cents issues But also the quality of life issues that make the money matters matter Here he is your fulfillment facilitator your partner in prosperity Advising clients on Cape Cod and across the country. Here's your host Jay Christopher Boyd. Thanks for being with us I'm here with Jeff Perry and Brian Regan with wealth enhancement with the AMR team and glad to have you joining us For our segment this time thinking about year-end Considerations for your portfolio review, you know throughout the year We meet with clients regularly every month doing portfolio reviews or annual reviews, which is not strictly limited to the portfolio and It seems as though Some people come in more regularly than once a year, you know, some are quarterly some are semi-annually Well in any case as we get to year-end, we really start thinking about well, what's what's what should we change?

1:25 And that is to say the public thinks this way we're trying to think about it all the time and making adjustments throughout the year Brian is our senior portfolio manager and with each quarter Brian you give a webinar and a newsletter to give our Clientele a sense of the things going on in the market and how that's working into our strategies and things we want to address and adjust But at this time of year, I think we hear a lot more about time to do a portfolio review and Let's talk a little bit about some of the kinds of issues that Listeners may want to be thinking about if they're not doing this or if they're not getting this kind of assistance from their Firm that they work with if they work with an advisor if they're doing it themselves Maybe there's some things they can glean from our council here as far as some things that they should be thinking about and Incidentally, there was an interesting article in the Barron's magazine.

2:29 I still get the paper version on the weekends Get it on online as well, but this one was inspired by one of the contents of the Magazine where they're talking about year-end planning and you know, Brian we just did an episode not long ago where we were talking about some of the thinking about next year and Some predictions and this kind of fits in with Some of that thinking to start with because when as you look at your portfolio You want to be thinking about? What's ahead? How does that impact what I might be?

3:12 Considering as I look at my portfolio and changes that I should be addressing if we haven't a disciplined process We tend to have things drift and move away from where we might have originally wanted them to be Maybe talk a little bit about just that kind of a process that thinking about where things are going is really important, you know go where the puck is going to be right and That notion of having an insight to the thought process about what's happening as Well as the idea that things change over time and you don't want to just be complacent Yeah, we have a process that we call the active allocation and that active allocation is trying to make intelligent asset allocation decisions Not not all the time But you know quarterly we revisit the data and the facts and we try to make smart decisions and you know over time I'm not shy about saying I think it's worked out very very well And we I think we have added value through asset allocation, which you know, many people would say it isn't possible you know, like I've got the facts to back it up.

4:23 You know, it's it's very much possible And I think Chris what you're saying is right, right? we do a lot of things that aren't intuitive I think and that's important right you need to have a thesis and a reason for what you're doing and You know, it did well last year is not it's not a good thesis right and I think you know you You know, we were mentioning earlier that you in Barron's you read that bonds are back. Well, sure it had it so far this year It's upset, you know, the aggregate bond index has done 7% But by definition that means it's less opportunity for 2026 as there was for 2025 So when people wrote similar articles in 2025 about how bonds are dead or the 6040 portfolio is dead They were missing the whole point.

5:13 The bonds were getting more and more attractive for the future, right? So this is a long way of saying, you know past performance is an indicative of future results And you have to think about what's what could happen in the future. What's likely to happen in the future? What's what's more probable than not? You know one of the things That I've struggled with over the last 12 months has been the Huge performance in gold for example, right? How many people have asked us about gold over? any and my reasoning for not owning it has been you know, I don't understand what's driving the price or or or Now that I have I think I have a good understanding of what was driving the price But I also think that could change and if that changes and you get rug pulled You know that doesn't help you, right?

6:04 So the fact that we weren't in it until the fourth quarter You know is tough, but I understand why we weren't in it And I think that's really that's a really important distinction and that differentiates, you know An investor that has a good profit versus Someone that got lucky on a trade right and we invest for decades Hopefully well, you know, I'll have a nice long life and I'll be investing for the next few decades and I rather have processes that will help me continue do well for the rest of my life rather than You know getting lucky with a price movement and you know, those things can be tempting I'll be yeah now that said I mean not of our not all of our clients think in terms of decades because of their age and thinking, you know, I don't know how long I have kind of mindset, but Some of those people do think longer term because they're thinking generationally, but many times they're thinking more About their mortality and their you know, they want to be less Aggressive and less exposed to risk but that enters into their allocation decisions as we think about it when it comes to the investment Decisions that you select, you know, you're doing this review Multiple times throughout the year we have sort of a schedule Of course markets don't always move to our our timing of things and I just want to be clear What we do is not really timing as much as paying attention to what's going on in the world We're not trying to

7:36 jump in and out of markets we're trying to do is see what's happening in the world and where there's opportunities where there's risks and adjust accordingly that that means maybe we want to have a little more of this a little less of that and or perhaps Some sector exposure that you know, or an example of your your reference to gold earlier These are things that we have some core positions that we hold on to and we make some adjustments with some more tactical Positioning based on what's happening with interest rates what's happening with? stock valuations what's happening with yield spreads or whatever it might be There may be drivers that can say, okay We think there's opportunity or conversely we think there's risk and that has an impact When you're thinking about your portfolio and looking ahead It's important to have those kinds of thoughts about what the future may hold and how that can work into your strategy thematically as you said Brian And then not to be complacent.

8:43 We we see this often where people have had investments that have done well and Enjoyed how well they've done but it turns into increasing risk in their portfolio because of outsized growth or and that didn't trim that position to Capture some of that profitability and use it to rebalance buy something That's a little out of favor to benefit from that. We can add risk Inadvertently if we're not paying attention to the portfolio composition what was a 60-40, you know one decade a decade later could be Significantly different if we're not doing a regular practice of making adjustments and rebalancing Anything to add to that before I hit on some other themes Well, I think I think one of the big things that you you touched on that I want to drive home is You know people do a different time residence people are different You know You spend a lot of time when you get to know people Trying to understand their risk profiles and Jeff does too and you know, that's that's super important, right?

9:51 Ultimately we want to We want we want the right amount of risk, right? If you're a conservative investor, which we define as having like a target of 50% stock in their portfolio You know, I'm not gonna take 75% stop That's not gonna happen. We're gonna work within that that framework right but 50% stock You have a lot of levers to pull right you could do sector allocation. You could do more international You could do more growth oriented. You could add more beta. You could have less beta You can underweight a little bit here and there But you know, the target is going to be similar, right? We want we want people to be in this in the long term and Doing intelligent things around the edges to try to drive Performance through asset allocation is what I was referencing before not the strategic asset allocation and the target of your risk profile Which should be static unless you have a big, you know life event You know, we have people who are working and then become retired and guess what you should take a whole lot less risk when that situation happens, right and You know, that would be the type of life event that that I'm that I'm talking about It's not exactly on point for the episode, but this is a really super important If you're working with somebody who really doesn't know you like know Your fears your goals your life changes They're not talking to you periodically to check in, you know to see if anything's changed or you know all the things that can happen in life, it's really advisable to talk to somebody who knows knows

11:21 you personally knows All those things about you because if somebody's giving you advice and they don't know you That's a kind of a red flag that you know, maybe that's not the right person for you. Yeah, I mean that notion of You don't want to get a prescription before you've had the it's a great analogy the the meeting with the doctor to Assess you right? Yeah Same kind of mindset you you want to have that kind of awareness to help inform What what you might? Be appropriate for what's a good solution to the kind of things you want to see in your investment Portfolio, it's definitely not a one-and-done, you know You meet with your advisor and they get a perspective of where you are in any given time period But that that's why we do those reviews that you were talking about quarterly twice a year annually Whatever it is whatever right for the client and the first question that we I Always ask and I know you do too is like what's new and it's not just like social niceties You really want to know like what's new yeah, is there a health development is there cash flow demands is there a big Expenditure planned.

12:37 Did you inherit money? Yeah, it can be good things, right? Did you get a big bonus from work? Did you pay off something? Did you? Whatever the case, but there's so much that happens in this journey of life that it's really important that when those things happen You need to communicate With an advisor who wants to know your situation and make those changes based upon those things that are happening in life And what are you guys saying? Right? You're saying Was there a life event that should change your risk profile and asset allocation, right? If I'm gonna sum it up in one question, you know, well, it doesn't have to even change your allocation though How we want to be Approaching that allocation, right How much are we gonna keep for liquidity and where and how are we gonna do that?

13:24 You know just I don't know. You know what? I mean? Like it's not always even as dramatic as the overall how it all fits together allocation it might be how we compartmentalize that for people and Generate the expectation of where we're gonna take money from or whatever. It might be too, right and it might not be We're on portfolio reviews and but it might not even be portfolio related might be an insurance need or an insurance that you no longer need or Saving for an education, you know in a different way or estate planning or whatever it whatever it is, right? So it's a holistic approach, but the underlying messages your Advisors should be a fiduciary.

14:07 They should act in your best interest, but they should definitely know What's going on in your life some of what this article talked about? I want to come back to and bring Brian around to addressing some of these types of issues in addition to the things we've talked about with asset allocation and Rebalancing and so forth and the idea of diversification in various ways One of the things they discussed was the idea of equal weight Investments versus cap weighted the idea that Perhaps in a lower interest rate environment It can be more attractive to smaller companies and we've heard so much about this concern about concentration at the top of the index I just thought that might be an interesting thing to just weigh in on for a minute or two just Your thoughts as it relates to things like equal weight Index indexes as compared to a cap weighted index anything you want to add to that talk It's interesting that you came around there because I was I wanted to jump in with something along those lines You know that those articles are hard to write right?

15:18 They're trying to trying to do one-size -fits-all and it just it's Don't apply right every circumstance is different individually, but also each market is different, right? So I Get what they're saying with lower interest rates, you might think the smaller cap stocks might outperform But you know, are they indebted in ways? Like private equity or private credit That we've talked about there's shown to be lots of issues in are they more exposed there, right? You know, are they are they more exposed to industrial type companies like real estate for example Which is you know a suffering sector right now Those are things to consider, you know to look through rather than rather than just do rules of thumb when it comes to like Estalcation Chris was talking about equal weight versus market cap weight I'll answer the question, but I want to do it in a little bit of a different way Some people I have found Chris that are obsessed with dividends and they might have a 50 -50 Portfolio and 50% of the portfolio is in dividend stocks And this is a huge mistake right when they look back at their portfolio, they're like, how come I'm blagging so much right?

16:34 I'm I'm a conservative profile I have 50 % in stocks, but you know, my performance is you know The S&P 500 is up 18% and I got 2% on the year, right? My bonds outperformed my stocks and you know, they're left they're left puzzled and this is the kind of thing that you know We try to teach people right? We don't just try to get their business We try to teach them why we're doing things and that's part of the that's part of the quarterly that we do quarterly webinar on the quarterly letter and you guys do an excellent job, you know meeting with people and trying to not just Show them their performance and get to know them but try to explain to them why they have what they have, right?

17:16 And that's and that's that you know, that can make a huge difference, right? So, you know, you could have one investor that's 50% equity and one investor that's also 50% in equity and You know, the investor on my right hand is much wealthier than the investor on my left hand Just because of you know How they've allocated their portfolio one one might have gone with the market cap route and one might have gone with the equal weight route And the one with the equal weight, you know as of today is is not doing nearly as well as the person in the market So, you know there are pros and cons to equal weighting right if you are if you want to equal weight Because you're concerned about you know an AI bubble for example You know might be rational it might be good for you But another thing you could do is just take less equity risk altogether, right?

18:06 You kind of wanted exposure to the winners, right? Chris Chris Pointed me to an email from a client the other day Who is very concerned about an AI bubble and his points were were reasonable, you know, they were rational and You know, my answer was well if I just own the s&p 500 I would have 8% Nvidia But I don't I own, you know, we're a little bit more tactical in our portfolio and I own 5% Nvidia And that we haven't given up any performance being 5% right you make it up other places You have you have other ideas that work elsewhere But I don't think you know and I've been harping on this to anybody to listen it's not an all-in all-out approach It's it's all it's all you Should think of probabilities you think you should think of probabilities when it comes to your asset allocation You should think about how much you how much?

19:04 Downturned you can withstand right? I showed a I wrote an email to a client yesterday comparing two portfolios his existing portfolio in our portfolio and you know, I was comparing both the return and the drawdown metrics and You know this these portfolios were 100% in stock so that the drawdown metrics were large, right and my point was You know look in this portfolio. You're actually getting more return in a very similar drawdown So this is a better portfolio despite it being I know a very large drawdown So that might not be appropriate to be in a hundred percent stock But if it is this is a better portfolio and I can make a less risky portfolio by marrying this better equity portfolio with a fixed income portfolio, so You know, there's a lot that can go into this but you know on the face of it you can look like you're doing the right things and You know, the money just won't follow if if you know, you're not you're not paying attention to and learning What the right things are actually to do Very good Jeff one of the interesting things mentioned in this article As one of the things to think about at year-end was the idea of consolidation Because they said nearly a third of retirees have at least two or more 401ks That they've you know, maybe moved on from Former employers so You know, that's a great example of

20:37 the idea of trying to bring a little simplification I spent time with a client just this week. There was a new client And you know, it's hard to give up What's familiar? Yeah, you know because we get run into routine of like oh, I've got ten bank accounts. I've got you know An investment over there a mutual fund company I've had forever I've got you know, maybe drip stocks somewhere else. I've got brokerage account a B C, you know and There might be reasons of how it all came about but at some point in time you find, you know I don't think this is being managed thematically as Brian was talking about, you know the way we think about portfolio construction Similarly, we want to be somewhat Thematic about why do we have?

21:27 Different accounts and what's their role in the process? Oh, this is my liquidity money. This is my Next source of resources. This is a longer-term money. We want to think about things in different ways perhaps but ultimately when we can we want to try to find ways to streamline what we're doing and be Thematic there's a whole lot of ways in which it can make life a lot easier Yeah, right. I mean to keep track of rebalancing or other issues boy that that can really be a nuisance when you've got So many accounts. Yeah, so that's someone with a lot of accounts who have specific purposes for them and That they are going about a process of rebalancing and keeping their asset allocation Consistent is virtually no one Meaning we have a process we have a system we have a guy Brian, you know dedicated to this stuff full -time but you know the average person that we see coming in as a client and Very common to have multiple old accounts here or there, you know something Maybe they inherited the former employer Maybe they had this savings for a purpose and they didn't need it is that they have them They might not remember them all even we've had clients later discover.

22:51 Oh, yeah I forgot about this one, especially now that we're all online, right? Most people have their account access online You don't always get the paper that you used to get to remind you and it would be the greatest surprise, right? Yeah, I guess that's true. Not a bad surprise. It's been compounding for 20 years. We got all about it, you know You know Declining for 20 years because it was all in some Properly and yeah, yeah that reminds me of those stories you hear that people have like Bitcoin They bought in 2010 on a flash disk somewhere and there's like frantically looking. Oh, that's But to your overall point Chris it does make sense to consolidate You know if you have retirement assets here there and everywhere 401ks and deferred comps or whatever you have It does make sense to consolidate if for no other reason is to make sure that the investments in that consolidated IRA now for example are working with the appropriate risk tolerance that you have today and That it is invested in a way that you are comfortable with today Consistent with your financial plan your goals and your risks as we kind of wind down anyway This is where we wanted to wrap things up I just want to extend the invitation to our listeners as they think about year-end and the beginning of a new year It is the ideal time to think about consulting someone for a

24:23 second opinion if you're doing things yourself, or if you've had some help, but you you find it's It's not proactive they they reach out to you when they Think they might want to sell you a new product or there's a new sales opportunity involved Not what you necessarily want. Are they a fiduciary? Are they looking out for your best interest? Are they planning things? thematically as we're talking about if you're not finding that kind of Guidance or if you're just doing things yourself and trying to say what am I missing?

25:04 I may not be Tuned in we often find people say, you know, I used to love doing this But I find it to be a little bit more of a burden at times Yeah, I want to be out doing other things or if anything happens to me with this cuz come up I had a health scare. I want to make sure that if anything happens to me And my spouse will be okay, right and so, you know, we think in terms of those kind of scenarios where sometimes it does turn out to be a good time to get a little bit of assistance get a second opinion and If we can be that resource for you We're here to help So our information will come as we close out the show here if we can be a resource to you Don't hesitate to take advantage of our two-part complimentary portfolio review process And which involves us putting context of a financial plan together.

26:01 So with that Jeff, thanks very much. Brian. We'll catch up next time until next time. Everybody keeps driving for something more Thank you for listening to something more with Chris Boyd call us for help whether it's for financial planning or portfolio management Insurance concerns or those quality of life issues that make the money matters matter Whatever's on your mind visit us at something more with Chris Boyd comm or call us toll-free at eight six six seven seven one eight nine zero one or send us your questions to AMR dash info at wealth enhancement comm you're listening to something more with Chris Boyd financial talk show wealth enhancement advisory services and Jay Christopher Boyd provide investment advice on an individual basis to clients only proper advice depends on a complete analysis of all facts and Circumstances the information given on this program is general financial comments and cannot be relied upon as pertaining to your specific Situation wealth enhancement group cannot guarantee that using the information from this show will generate profits or ensure freedom from loss Listeners should consult their own financial advisors or conduct their own due diligence before making any financial decisions