Speaking with several prospective new clients over the last couple of weeks, I’ve been asked if I’m of the “buy and hold” philosophy so I thought I would expand on that a little.

Most mutual fund/ETF (Exchange Traded Funds) providers as well as a whole host of advisors endorse the buy and hold strategy for the long-haul but that’s really a simplistic view of things. In order to build solid 20 year portfolios, we need to understand who we are as investors and as people then put together a reasonably appropriate mix of investments that reflects those parameters. What simply saying “buy and hold” fails to do is take into account our changing personalities and our changing needs.  Expectations for a long-term portfolio are completely different to my 40 year old clients than they are for my 67 year old ones. Our ability to tolerate a recession is certainly different if we are working than if we have just recently retired. You’ve all heard my octopus analogy so let me take that another step and say that not only does our octopus need a variety of legs but, over time, the nature of those legs will need to change as well.

I would suggest we say “buy – hold – adjust” rather than “buy – hold – sit tight with fidgeting fingers and toes.” Too many in my industry have used the phrase “don’t worry, it will be fine/alright/platitude of the day,” which clearly doesn’t sooth any emotional needs. Yes, moving things around too often can be a recipe for disaster (at the least, a healthy dose of fees), but strategically moving things, as a result of our own introspection and adapting to our new environment (meant whichever way you choose), can be the right thing to do at just the right time. If we are aging from a time of accumulation towards one where we are going to need at least some income, then it’s time to adjust. If we can’t bear the thought of another protracted down cycle, then it’s time to if not circle the wagons, at least do a head count of our horses. If we are fast approaching the IRS’s demand for our Required Minimum Distribution then doing a little adjusting can make that hit a little less painful. If we’ve done our financial planning job well, there aren’t fires, just a candle or two that add ambiance rather than fear and panic.

Now if you’re on the young side (chronologically, not those of you who feel young at heart), have no portfolio income needs and the stomach of a hard core amusement park ride aficionado, then, by all means, buy, hold, and park the statement in a drawer (or don’t open the email depending on your choice of delivery method). But, if you aren’t all three, your portfolio is going to need some attention at least periodically so don’t be surprised if I make a suggestion here and there. The world is changing around us and our portfolios need to reflect that. Think of what our lives looked like in the 80s – seriously, would you wear your hair like that ever again??? Perhaps our portfolios should shed the blue eye shadow as well.