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April Financial Tip - Dennis Grinestaff `94

Our April financial tip focuses on the rebalancing of portfolios. Dennis Grinestaff `94 shares his opinion how to do so.
The first quarter is in the books, and it was an excellent one for stocks. The S&P 500 rode a resilient US economy, easing inflation, rising corporate profits, and the anticipation of cuts from the federal reserve to solid gains in March…the fifth straight winning month and the best since 2019.
With stocks having done so well, it is time to think about bringing your portfolio back into balance. If you have not rebalanced in a while and hold more equities than their original targets, shifting from stocks to bonds and even money markets funds makes sense at this time.
Rebalancing is the concept of returning your portfolio to its original allocation. In times of market appreciation, rebalancing will find your portfolio selling high and buying low, while maintaining the integrity of your original portfolio which will match your risk tolerance and investment objective. You may notice right now that certain sectors have outpaced others. Rebalancing is the appropriate way to reset your holdings without the stress of where to go next.
If your investing timeframe is long, the case for trimming equities is stronger because evaluations matter more 3 to 5 years out. If you are focused on the next few months, consider that the latest data suggests the economy is growing steadily and inflation pressures continue to ease.
If you are an older investor and have taken outsized risk in the last decade (and been rewarded), because rates were low, now is the time to rotate out of your overweighted equity portfolio. There are many options from money markets to ultra short-term income funds and ETF’s that will offer you lower risk and annual interest between 4 and 5%.
Solid fundamentals and history suggest investors should stay the course, although an allocation shift may make sense for those overdue for a rebalance. Investors at or near retirement should consider rotating out of equity positions and taking advantage of high yielding, safe assets. Risk seems manageable at this time based on one’s time horizon and objectives, however inflation, high interest rates and geopolitics will be a focus in 2024 and beyond.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Investing involves risk including loss of principal. No strategy assures success or protects against loss.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.