The Herald Bulletin

Morning Update


April 20, 2013

'Big Joe' Clark: Your portfolio might be at risk

There used to be a time when all stocks would rise and fall together. Investors could throw a dart and hit a winner, no problem. John F. Kennedy said in a 1963 speech that “a rising tide lifts all boats.” Well the tides have changed and while it’s been rising, some boats seem to have a leak. The days of traditional diversification have at the very least gone on vacation and at worst have changed forever.

Americans have been encouraged and instructed for years that they simply need to hold a mix of equities and bonds and they will be okay in the long-run. Trust the markets, stay diversified and relax was the mantra of many in the investment product sales force. Many that followed this strategy saw their portfolios catch fire during the Financial Crisis of 2008. In September and October of ‘08 Barclay’s Aggregate Bond Index fell nearly 16% with the S&P 500 fell nearly 40%.

Eventually the bonds were able to recover as even equities continued to slide. This period of time had many investors pulling their hair out and questioning their financial futures. For a couple of months it seemed that nothing was safe and nest eggs were at risk. It’s this type of “everything goes down”-type market action that causes investors to make emotional changes to their investments which can have long-lasting negative impacts. Remember fear and greed are at the root of most emotional movements in the market with fear always being the stronger of the two.

Fast forward to present day we can see that general passive diversification within equities doesn’t produce the type of returns many have grown to expect. Before the recent bout of weakness in the S&P 500, the equity index was up over 10% year-to-date. However, the same cannot be said for each specific sector of the market. As of last Thursday the Materials sector was down 8.7% and the beloved Technology sector had fallen 5.7% from the start of the year. Turning our attention to gold, which since 2009, and more or less 2002, seemed like it could never go down has entered its own bear market. Gold is off over 20% from its October 2012 high.

Passive strategies have fallen to the wayside of smart investing. For millions of Americans that are approaching retirement we are at a critical juncture. Simply picking up a few mutual funds and calling it a day no longer holds the weight it once did. Diversification is important, but the way we diversify is vital.  Correlation among asset classes is constantly changing, and while it may not be crucial to follow and actively trade equities, bonds, and commodities on a daily basis – understanding how markets work and what’s going on within a portfolio is paramount to having a successful retirement. The world has changed. The tax code is fluid and you need to be prepared in order to enjoy your life after work.

Joseph “Big Joe” Clark, whose column is published Sundays, is a certified financial planner. He can be reached at or 640-1524.

Text Only
  • OPN - Mootry column mug [Duplicate] [Duplicate] Primus Mootry: There is a poet in each of us April is National Poetry Month. Throughout the country, colleges and universities, elementary and secondary schools, libraries and various publications have hosted poetry readings or featured unpublished poets.

    April 23, 2014 1 Photo

  • underwood mug [Duplicate] Scott Underwood: Nightmares from high school proms past I wore a salmon-colored tuxedo with a cummerbund and tails to my senior prom. I was 6-foot-6 and 175 pounds. A beanpole.

    April 21, 2014 1 Photo

  • Hayden, Maureen mug Maureen Hayden: Judge in gay marriage decision no activist

    When U.S. District Judge Richard Young recently ruled in favor of a lesbian couple seeking recognition of their out-of-state marriage, opponents of same-sex unions called him an activist judge who was unilaterally trampling the law. The label didn’t resonate with those who know Young well.

    April 20, 2014 1 Photo

  • Charo Boyd mug [Duplicate] Charo Boyd: Social Security goes green on Earth Day and every day For years, Social Security has been at the forefront of offering convenient, easy-to-use, and secure online services. We, along with those we serve, have saved a lot of paper, shipping costs, and fuel — and cut back on a lot of carbon exhaust and pollution — by going online instead of doing things the old-fashioned, less efficient way.

    April 20, 2014 1 Photo

  • Tim Kean: Can we have a 'A New State of Mind?' I have recently read some great articles about people coming together to make a difference in the lives of children facing food insecurity. The collective effort of a group can provide some much-needed food to kids who may not have a meal when they return home from school or during the weekend.

    April 19, 2014

  • SPL - PT041014 - Ken de la Bastide column - Ken sig Ken de la Bastide: County may eliminate Data Processing Board

    Action two weeks ago by the Madison County commissioners to close Data Processing Board meetings to the public might run afoul of the Indiana Open Door law, and a local resident is considering filing a complaint with the Public Access Counselor’s office for a determination.

    April 19, 2014 1 Photo

  • Timmons, Theresa mug Theresa Timmons: Dinosaurs run amok at mamaw's house I love my new job as a grandparent. It includes playing imaginary tennis with imaginary tennis rackets, making elaborate tents in the living room, and hair-pulling.

    April 19, 2014 1 Photo

  • Stringer, Maleah mug Maleah Stringer: Volunteers needed to spend time with shelter animals Shelters can be extremely stressful places for many animals, particularly those who have been in a loving home. This is why we want people to come into the shelter and spend time with our animals — to help keep them adoptable so that when the right person comes along they are ready.

    April 19, 2014 1 Photo

  • Bailey, Jim mug Jim Bailey: Wages were much less back then, but so were prices If you have any questions about what economists mean by inflation, just look at yesterday’s buying power. Those old western movies talked about wages of $1 a day. That wouldn’t even buy a burger at a fast food joint today by the time sales tax is added in.

    April 19, 2014 1 Photo

  • Clark, Big Joe mug [Duplicate] 'Big Joe' Clark: Understanding the risks within fixed income investments Many retirees associate the concept of taking “risk” with the equity markets. However, as 2013 demonstrated, there is also principal risk in the fixed income arena if an untimely liquidation requires you to sell bonds and generate income.

    April 18, 2014 1 Photo

Featured Ads
More Resources from The Herald Bulletin
AP Video
Raw: Deadly Bombing in Egypt Raw: What's Inside a Commercial Jet Wheel Well Raw: Obama Arrives in Japan for State Visit Raw: Anti-Obama Activists Fight Manila Police Motels Near Disney Fighting Homeless Problem Michigan Man Sees Thanks to 'bionic Eye' Obama to Oso: We'll Be Here As Long As It Takes Bon Jovi Helps Open Low-income Housing in Philly Pipeline Opponents Protest on National Mall Hagel Gets Preview of New High-tech Projects S.C. Man Apologizes for Naked Walk in Wal-Mart New Country Music Hall of Fame Inductees Named 'Piles' of Bodies in South Sudan Slaughter SCOTUS Hears Tv-over-Internet Case Chief Mate: Crew Told to Escape After Passengers Iowa College Finds Beauty in Bulldogs

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
Helium debate
Front page

Do you plan to attend any of the local Little 500 Festival events in May?

What events?
     View Results