5 ways to protect your money from market hysteria

How to safeguard your investments from market uncertainty, even when everyone else is acting like Chicken Little
OCT 03, 2013
The federal government shutdown, combined with looming discussions on whether Congress will raise the debt ceiling and anticipated tapering by the Federal Reserve, means that uncertainty is here to stay for the foreseeable future. But that does not mean that you cannot insulate your portfolio from market volatility. Here, professional financial advisers share their tips for how you can successfully position your portfolio. Park in cash “Sometimes, cash is the best place to be,” said Chris McIntire, an investment adviser representative and founder of McIntire Retirement Services. “With the stock market having a strong performance for the year, it's not a bad timing to take some profits off the table.” The S&P 500 has risen more than 18% since the beginning of the year. Mr. McIntire said that historically, October has been a volatile month for equities, but considering that volatility typically tends to come down in November and especially in December, investors can take advantage of the end-of-the-year rally to reinvest their cash. Diversify “The basic principles still apply,” said Chris Cook, portfolio manager and president of Zero Commission Portfolios. “Have a diversified portfolio across all sectors and diversify within equities, too, because sectors react differently to the environment.” If existing diversification hasn't been working, investors should adopt an active approach and reallocate selectively to undervalued sectors. Dip into high yield “We like high-yield bond funds,” said Mr. McIntire, who added that a rising-interest-rate environment isn't as devastating to high-yield bonds as it is to 10-year Treasuries. This is because interest rates typically start to rise when the economy is doing well, which takes away some of the default risk. The upper ranks of high yield, such as BB-rated bonds, tend to be the most attractive because they have adopted a conservative approach and are paying down debt, which could prompt them to be upgraded to the investment-grade category. Shorten durations Investors should also reduce maturities of their government bonds to less than two years to avoid the impact of rising interest rates. “You really can't take too much risk there,” said Mark McCarron, chief investment strategist at Drexel Morgan Capital Advisers. “However, that has a very little yield.” The two-year Treasury yield was 0.36% as of Sept. 25. In addition, Mr. McCarron recommends focusing on shorter maturities in the high-yield sector where investors can get a little more yield while still being shielded from rising interest rates. Look overseas “International investments in general, but especially developed and emerging markets, can be and should be a part of a portfolio, even in retirement,” Mr. McCarron said. Investments can be riskier but they can also bring higher yields, which retirees or those nearing retirement still need. “You need to grow your assets because retirement is lasting much longer,” he said.

Latest News

Morningstar rolls out agentic AI platform built on its research
Morningstar rolls out agentic AI platform built on its research

Launch of Direct AI follows a model portfolio tie-up with Envestnet as advisors juggle AI adoption and private-market due diligence.

Advisor moves: Osaic draws Equitable advisor overseeing $245 million in assets
Advisor moves: Osaic draws Equitable advisor overseeing $245 million in assets

Meanwhile, Cetera's streak of Commonwealth recruitment continues in Washington, and an LPL advisor hops over to Raymond James in Maine.

AlphaCore adds $400M Blue Rock in Mid-Atlantic push
AlphaCore adds $400M Blue Rock in Mid-Atlantic push

The Sussex County wealth firm, built around business-owner clients, extends the California-based aggregator's footprint in the East Coast.

Bluespring Wealth builds $1B team with Family Wealth Counseling deal
Bluespring Wealth builds $1B team with Family Wealth Counseling deal

The Kestra-owned RIA acquirer merges the planning firm into KDI Wealth Management, creating a majority woman-led advisor team

Gen X and millennials are rethinking retirement as pensions disappear
Gen X and millennials are rethinking retirement as pensions disappear

Eight in 10 pre-retirees say the US retirement system wasn't built for them and most still haven't planned how to make their money last.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor