Market Wrap-up for Dec. 17 - Time to Review Your Portfolio

Market Wrap-up for Dec. 17 – Time to Review Your Portfolio


As we enter the final days of 2014, investors have a lot on their plates. After yet another year of gains for broad equities, markets are looking for the next major signal to push them higher. Unfortunately, headlines as of late have focused on crude oil’s rapid demise, somewhat overshadowing a positive year. With fiscal 2014 coming to a close, now is the time to take a look through your portfolio and ensure that you are properly positioned for 2015.

Rebalance, Reassess

Taking a fine tooth comb through your portfolio at the end of every year is a healthy exercise that often leads to more successful investing. The idea is to take a look at how some of your positions have moved over the year and to make sure that your overall investment still aligns with you objectives. Here are a few important questions to ask yourself when taking a look at your portfolio:

  • Are there any holdings that have been hit hard, or are perhaps too volatile for the future? Sometimes it makes sense to sell a stock that has underperformed or one whose future has soured in recent months. You made investments for the long-term, so do not be too quick to sell, but be careful not to rule it out either. For some investors, stocks like McDonald’s (MCD) and big oil names like Exxon Mobil (XOM) may fall under this category.
  • Is your portfolio still balanced? With positions jockeying back and forth all year it is not uncommon for a portfolio to develop a skew towards one sector or stock. For example, let’s say you own a stock that has jumped well beyond anything else in your portfolio; as it has gained value, it may be too big of a position for a diversified portfolio. You may want to sell some shares in this stock to bring it in line with the rest of your portfolio.
  • Are you as aggressive/defensive as you would like to be? A lot can change in one year, and markets can have a totally different outlook. With that in mind, some investors may wish to get more aggressive or more defensive with their overall portfolio. Take a careful look at your overall strategy to ensure that it aligns with how aggressive you want to be in 2015. You may find that you want to trim positions in riskier stocks or that you want to add to them (and the same goes for defensive stocks).
  • Do your dividend-payers still look stable? It is always a healthy exercise to check in on your dividend stocks, the basis for your income stream in your portfolio. Make sure that their payouts and value placed on dividends matches your wants and needs. This may be especially important with oil stocks and MLPs, as the plummeting price of crude could make it tough for some to increase or maintain strong dividends.

An annual review of your investments is something that you should get into the habit of doing, if you have not already. You may find that you want to keep things exactly the way they are, which is fine. But you also may spot a few things that you would like to change to help position you better for your future. For more investing and portfolio tips, see the following articles:

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