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February 10, 2012
Lisa M. Krieger: Man with defibrillator demands access to his own heart's information
David G. Savage: Why activists may not be in a hurry to have High Court rule on alternative marriage
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Laura McMullen: 10 Least Expensive Public Schools for Out-of-State Students
Kimberly Palmer: How to actually enjoy -- relaxing, financially -- your vacation
February 8, 2012
Warren Richey: Why momentous Prop. 8 ruling might not satisfy gay-rights groups
Menachem Wecker: Though Controversial, LL.M.'s Can Lead to Specialized Legal Jobs
The Kosher Gourmet byDana Velden: Going to the bother of making soup? You know it better be good. This CREAM OF TOMATO SOUP certainly is! And it's a cinch to make, too (Includes techinques and serving secrets)
February 7, 2012
Frank J. Gaffney, Jr.: Caught off-guard? President's Super Bowl interview with Matt Lauer gives those who need a reason not to vote for him, a darn good one
Suzanne Bohan: Leaping lizards! Tiny reptiles advancing robot design
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Jonathan Tobin: Iran Threatens Israel With Destruction, But the New York Times Doesn't Hear It
Jeffrey Fleishman: In newly democratic Egypt, tens of democracy activists jailed, to stand trial; their groups are 'threatening the stability of the homeland'
Julie Deardorff : Researchers say antioxidants may not be that effective and could do more harm than good
Mark Clayton: How did Anonymous hackers eavesdrop on FBI and Scotland Yard?
February 3, 2012
Edmund Sanders : Israeli official says Iran is creating missile that could reach East Coast of US
Victoria Kim: Immigrant-smuggling ring used black drivers to avoid racial profiling
February 2, 2012
Jim Carney: Wrong number call may have saved her life
Reza Kahlili : Ex-CIA spy in Iran's Revolutionary Guard: What Obama doesn't grasp about striking deals with Tehran
Tina Susman: For woodchuck rescuer, every day is Groundhog Day
February 1, 2012
Brian Bennett: US officials see increasing threat of domestic attack from Iran
Emily Brandon: How to Take Advantage of New 401(k) Fee Disclosures
January 31, 2012
January 30, 2012
Paul Richter and Ramin Mostaghim: Misreading Teheran's limits -- deadly and economically devastating as they may be -- is a risk administration, Europe seem willing to take
Suzanne Bohan: Warning: Nap-deprived tots missing more than sleep, study finds
Meg Handley: Banks Revamping Rewards Programs to Woo Customers
January 27, 2012
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Yochonon Donn: In liberal New York City, fervently-Orthodox Jews may soon be getting a district to call their own
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Katy Hopkins: New budget rules may affect how much money you get for college
January 26, 2012
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Jeannine Stein: Mental illness struck one in five U.S. adults in 2010: Report
January 25, 2012
Richard Simon: House passes two bills endorsing the use of religious symbols at military memorials
Fred Weir: Putin: Multiethnic Russia cannot survive as a US-style 'melting pot'; must find its own way
Susan Johnston: 5 Sneaky Coupon Strategies Consumers Should Watch Out For
January 24, 2012
Carol Clark: The price of your soul: How your brain decides whether to 'sell out'
Caroline B. Glick: America lost most in 'Arab Spring'. Sadly, many voters still don't grasp the extent
Warren Richey: Drug criminal scores win in GPS ruling from conservative-leaning high court
Erika Bolstad: Black conservatives gather to talk about gaining strength
January 23, 2012
Melissa Dribben: Jewish voters to play a key role in Florida's Republican primary
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Ali Safi: U.S. envoy gives Taliban terms for peace talks
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January 13, 2012
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Alexia Elejalde-Ruiz: Thriving through touch: Gentle massage helps older people with low mobility improve in mind and body
January 12, 2012
Warren Richey: Landmark Supreme Court ruling a 'resounding win' for religious groups
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Katy Hopkins : Consider This Before You Pay for an Online Degree
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January 11, 2012
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Tom Hussain: Pakistan -- recipient of more than $21 billion in civilian and military aid -- speeds pursuit of Iranian pipeline, defying US
David G. Savage: High court signals it won't be loosening TV's 'indecency' rules
Stephen Ceasar: Oklahoma's Islamic law amendment can't go into effect, court rules
January 10, 2012
Reza Kahlili: From an ex-CIA spy: US must exploit new split in Iran's Revolutionary Guard
Karen Kaplan: Study: Nicotine replacement products ineffective when used in real-life situations
January 9, 2012
Michael Doyle: Put through legal hell over dream home, couple fought back hard --- all the way to Supreme Court
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Jewish World Review
Feb. 19, 2009
/ 25 Shevat 5769
Rebalancing being put in different light
By
Gail Marks Jarvis
http://www.JewishWorldReview.com | (MCT)
Normally at this time of year, financial advisers would be running their clients' money through an annual ritual that's almost a religion in the investing profession.
It's called "rebalancing," the practice designed to make investors' money grow by doing the opposite of what feels good at the moment.
For example, after last year, many investors feel comfortable shying away from stocks and clinging to Treasury bonds. But with rebalancing, their financial adviser would try to talk them into moving some money away from the safe bonds or bond funds and put it into stock funds.
Historically, such a practice has tended to work well because stocks and bonds go through cycles - falling for a while, but then climbing at unpredictable times. Financial planners typically try to increase the chances that clients will be positioned for the upturn by rebalancing.
But this year is unusual. With investors gun-shy about stocks and the economy struggling, many planners are putting their usual practice of rebalancing on hold.
David Darst, the chief investment strategist of Morgan Stanley Global Wealth Management and author of "The Little Book That Saves Your Assets," said he wouldn't be in a hurry to rebalance: "You could start rebalancing, but in stages - taking little bites, or adding a little to stocks every quarter."
Before he'd rush to rebalance, he said, he wants to be confident that the financial system will strengthen.
To understand rebalancing, investors must realize the practice assumes investors set up their portfolios thoughtfully - dividing their money into stocks and bonds based on when they would need it for a goal, such as retirement. When stocks plunge, it upsets the original mixture, leaving a lower percentage in stocks than at the outset. Rebalancing restores the original mix.
For example, Darst said a person who typically would have 60 percent of his or her money in stocks and 40 percent in bonds probably would need to move about 15 percent out of bonds to restore the 60-40 mixture.
To assess whether you should rebalance, you have to do a gut check and be particularly careful if you are in or near retirement.
Instead of rebalancing, you might have to cut back more on stocks if you're uncomfortable.
Rather than the traditional fear that you will miss out on an upturn, many professionals are focusing on the consequences of a downturn.
Some financial planners have learned that many clients were taking more risks than they could stomach.
Glenn Kautt, a McLean, Va., financial planner, said one of his clients had 80 percent of his money in stocks prior to the downturn - an amount he did not consider overly aggressive because retirement was more than 15 years away.
But in October, the person became nervous and Kautt cut back stocks to just 60 percent. When the client was still stressed in January, Kautt cut back again so the person will retain just 40 percent of his savings in stocks.
Kautt won't change it when the stock market climbs because he learned that the individual becomes nervous during harsh downturns, and another could occur.
For people in their 40s and younger, Kautt said he would rebalance and move money into stocks - perhaps having 70 percent in stocks if the person remained calm in this environment. A person with a 401(k) could do this without actually moving money: They could simply start putting new savings into stock funds.
For retirees living off savings, Kautt has put rebalancing on hold because of "the unparalleled turbulence in the market." Retirees need to pull money from their savings each month for living expenses, and given the inability to predict the potential effect of downturns on those savings, he is keeping more in bonds and cash than he might have in the past.
To understand how a retiree could survive with their portfolio, Kautt suggests this: Look at what you have in bonds and cash and assume you will use all of it during a lengthy bear market. How long would the money last?
Say you have $100,000 in bonds and cash, and need to withdraw $1,000 a month. As you divide $100,000 by 12, you see your money could last just over eight years. That makes Kautt comfortable because bear markets tend not to last more than five years.
But that's not always true, and Denver financial adviser Charles Farrell said he isn't assuming anything because the market is so unusual. Rather than rebalancing, he has geared back on stocks so that a retiree who would have had 50 percent stocks might have 30 percent now.
Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
Gail Marks Jarvis is a personal finance columnist for the Chicago Tribune and author of "Saving for Retirement without Living Like a Pauper or Winning the Lottery." Comment by clicking here.
Previously:
02/04/09: Diversification doesn't always offer insulation
01/27/09: Taking steps can help regain some control
01/20/09: How to save for college during a recession
01/12/09: Bonds still risky option to stocks
12/24/08: Some predict mid-2009 for return to investing joy
12/09/08: A small dose of short funds may be useful
11/11/08: Mutual funds can get caught in downward spiral
10/27/08: Investors can bounce back from even the worst of times
10/20/08: Want to sell? Look at 401(k), but don't leap
10/16/08: Want to be like Buffett? There are ways
09/29/08: Money protection only goes so far, so know the risks
08/26/08: Retail stocks may not be best fit for investors
08/20/08: Rear-view mirror investing can be dangerous to a portfolio
07/01/08: What do we do? My daughter didn't get a scholarship
02/25/08: Before abandoning your mutual fund
02/14/08: Dirty little secret of some funds may be haunting
01/29/08: Sorting out the stock market
01/03/08: One word for 2008 crystal-ball gazers: Caution
12/11/07: Buy and hold isn't necessarily tried and true
11/26/07: Translating the falling dollar's implications for investors
11/13/07: Gradual retirement may not be key to happiness
11/05/07: Rate cut won't offer immunity to investors
10/29/07: Employers set to help workers save in 401(k) accounts
10/22/07: Playing bounce may be costly to stock investors
10/10/07: Investors find boring often can be fruitful
10/01/07: Make up lost time with swift, smart action
09/24/07: Balance is key for investing by retirees
09/18/07: Homeowners who wait see options fade
09/04/07: Easy matter to rate fund's performance
08/27/07: Mortgage mess could be good for savers
08/17/07: Small stocks are coming with large caveats
© 2007, Chicago Tribune Distributed by McClatchy-Tribune Information Services
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