From Kiplinger’s Personal Finance Magazine, September 2006:
Recent market volatility may leave you feeling queasy, but it should also spur you to reexamine your investments – and make sure that they (and you) can withstand further turbulence.
Start by revisiting how well you take risk. If you break out in a sweat with each market dip, you may need to trim your stock holdings. If you haven’t rebalanced your portfolio lately, check your mix to make sure you aren’t too heavily invested in any one sector. Don’ worry if your allocation has drifted a few percentage points. "But if you’re 10 percent or 20 percent off, it’s time to take a serious look," says Thomas Belisari, an adviser with Key Financial, in West Chester, Pa. In that case, trim positions in funds that have had large run-ups and move into areas that haven’t done as well.
Revisit the reasons you bought a fund – and determine whether they’re still valid. Keep in mind that over time, some funds shift investment focus. And don’t dump a good fund because it hasn’t done as well over the short term.
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