​Guideline for Investing at Record Market Highs

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​Investing principles to provide you comfort during exuberant markets.

• When markets reach new record highs, you wonder, “Is this a bubble?”
• When markets head the other way, you wonder, “Is this a crash?” 

Your biggest question: How do you keep your head during what is an unprecedented time. It might seem the stock market and the economy are not reading the same news. 

There’s an effective medium, though, between doing nothing and panicky trading. These guidelines can keep you level-headed even while the markets twist and turn and record new highs.

Revisit your ISP (Investment Policy Statement) and if you don't have one, now is the time to put one together. An IPS is a written planning document that describes your investment objectives and risk tolerance over a relevant time horizon, along with the constraints that apply to your portfolio. An IPS serves as your guardrail so you don’t veer all over, chasing investments or changing your strategy as markets ebb and flow.

This document should be designed, built, and discussed prior to constructing and implementing your investment portfolio. The IPS creates a link between your unique considerations and your strategic asset allocation. The IPS is also an operating manual, listing key ongoing management responsibilities. You and your financial advisor should review the IPS regularly and update it whenever changes occur either if your circumstances change or the capital markets environment changes.  

Your ISP should include the following:

1. Background and Investment Objectives
2. Current Balance Sheet - assets & liabilities
3. Risk Tolerance
4. Investment Time Horizon
5. Investment Parameters - asset preferences or constraints
6. Liquidity Needs
7. Tax Considerations
8. Rebalancing Guidelines 
9. Capital Market Expectations
10. Implementation Strategy & Process
11. Duties & Responsibilities - who, when, what
12. Annual Review of IPS and Investment Objectives

A well-constructed IPS has several powerful advantages.

​One advantage is that the IPS encourages investment discipline and reinforces your commitment to follow the strategy. This advantage is particularly important during adverse market conditions, like we've just experienced recently.

A second advantage is that the IPS focuses on long-term goals rather than short-term performance.

Third, the IPS provides evidence of a professional, client-focused well thought-out investment management process, with the fulfillment of fiduciary responsibilities.

By having an IPS you’ll know what to do and exactly when to do it – not just when your emotions want to move you.