Personal Wealth Management / Expert Commentary

Fisher Investments’ Founder, Ken Fisher, Discusses the Right Time to Do a Portfolio Review

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher shares his approach to an effective annual portfolio review. Investors may handle this process in a variety of ways—some focusing on day-to-day single stock performance, and others on end of year performance. However, Ken suggests asking yourself several simple questions instead: What goals do you have for your portfolio (such as funding your retirement, leaving a legacy for heirs, etc.)? And, what types of investments will help you accomplish these goals over your investment time horizon?

As Ken points out, if your long-term goals require equity-like growth, a higher proportion of equities in your portfolio may be advisable. If reducing volatility is a high priority, you may consider fixed income instruments. Ultimately, the most important aspect to reviewing your portfolio is confirming it’s structured to help you reach your long-term goals.

Transcript

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Title screen appears, “Fisher Investments’ Founder, Ken Fisher, Discusses the Right Time to Do a Portfolio Review.”

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Ken Fisher doing hand gestures time to time explaining.

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Ken Fisher: Long about this time of year, people often ask me how do I go about doing an annual portfolio review?

And it's an interesting question because I think it's touchy for

a lot of people in that a lot of people are different than a lot of other people and some people watching

their portfolio all the time, but maybe too focused on the

prices and not focused enough on what it is that they're trying to accomplish with the portfolio.

Other people are looking at the portfolio much less often,

like maybe once a year and then saying to themselves

A or B or some variation in between,

like, it did great.

I should be really pleased with what I'm doing, hoorray! Or it did lousy, I should be really unhappy, make some changes so it'll do better ahead.

None of those are really the right

kind of way to think about it.

The right way to think about it is pretty simple.

Ken Fisher: What is it you're trying to accomplish? What is it you're wanting your portfolio to do for you? And what are the kinds of things you

would have in it in a broad brush

sense, that would accomplish that for you? Intuitively, those two things, what do you want it to do and what are the kind of things you need to do that for you, are really central to what you should be looking at.

So, for most people and some people of course, are very different than others, but for most people there's answers to very simple questions that you ask yourself and you know your answers.

Ken Fisher: They’re what do I want my money to do for me? Well, for most people it's something like take care of me and my spouse the rest of our lives.

Maybe leave some money to our offspring, maybe give some money to charity.

Maybe there's some other uniqueness like that.

But you know what they are.

I can't answer those for you, but you know what they are.

And then you say, so then, how long do I have? And most people have an investment lifetime ahead of them

that is much longer than they think they have because except for what might be deemed as the tragic foolishness of youth that relates to things like drug addiction, this,

that and the other, for the most part, older people tend to keep living longer.

Ken Fisher: The best guide to how long you'll live is: a) your family's genetics before you and b) how you conduct your lifestyle compared to how they conducted their lifestyle and then see any incidental, unique happenstantial, health problems that you may have compared to what they had. In that, let me just say simply that for most people, if you have a very long time horizon, you want an equity-based portfolio, you don't want to overthink it.

I don't know you, I can't speak for you personally, but said simply, you want to make it simple.

Said simply, it's fine to be a passive investor if you can do it and hold on to it.

It's fine to have a managed portfolio if it's aimed right down the middle at not trying to be too weird, not trying to hit home runs, not trying to

snatch defeat from the jaws of victory.

Ken Fisher: And in that you want to see, is my portfolio simply aimed at accomplishing my long-term goals?

Are these kinds of things without trying to second guess every stock, unless you think you're like a

super special stock jock that knows how to do that, which if you think you are, you're probably not, because not very many people are.

Are these the kinds of things that in the long term should get me to where I need to go? For the most part, in the long term, stocks

do better than other liquid forms of assets.

Ken Fisher: And for the most part, as you age, you need a fair amount of liquid assets, which would be in that form.

It's also fine as you get much older and your time horizon gets much shorter to dampen your volatility by

adding portion of bonds, maybe a little more fixed income.

But as you get older, actually, real estate gets tougher to do because it requires activeness, and you want to

just keep thinking on an annual basis is what I have in the format that will get me to what I need in the long term? It's not a lot more complicated than that.

Thank you for listening to me.

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A series of disclosures appears on screen: “Investing is Securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice or a reflection of the performance of fisher investment or its clients. Nothing herein is intended to be a recommendation or a forecast of market conditions. Rather it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated here. Not all past forecasts were, nor future forecasts may be, as accurate as those predicted herein.

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