A Second Opinion....Now More Prudent Than Ever

“Dr. Archer gave me your number and said I should talk with you“.

I have received a number of these calls over the last year and a half. And now they are coming in more frequently than ever as the stock market and financial sector in general continues to convulse in the wake of the economic tsunami the U S is experiencing along with the rest of the global economy.

The calls have all been pretty much the same…“My portfolio is taking a beating, and I think it’s time for a second opinion”.

And so our phone conversation continued and Hal shared with me that he was a busy medical professional and had no time to “watch” his portfolio or manage it himself. He wanted to meet with me to discuss some alternatives. A date was set for Hal and me to meet at my office.

During our meeting Hal went on to explain that his portfolio was with a major financial institution and had been managed by them for a while. He went on to say that his current account manager and broker called infrequently and when he did it was usually to “re-balance” Hal’s portfolio to achieve more diversification in the market. On the occasions that Hal called to ask why his portfolio was underperforming, he was usually told that his portfolio needed to be “re-allocated” a bit more to achieve less exposure in a particular sector and “better” diversification to weather the present storm.

Hal then said that after a year or so of persistent market losses he wasn’t so sure the ‘plan‘ was working. He had heard about ’Alternative’ investments from his colleague and golf partner Dr. Archer and decided that he wanted a 2nd opinion.

At my office we reviewed Hal’s portfolio. What we discovered was that even though it contained a broad and diverse mix of domestic and foreign stocks, some bonds and exposure to real estate through REITS, his assets were still traditional offerings that were for the most part negatively impacted by the same forces: interest rate changes, government policy announcements, and sagging economic conditions both in the U S and abroad. What’s more, many of the holdings were illiquid and lacked the transparency Hal wanted to know exactly what was going on with his account.

Hal went on to say that his friend Dr. Archer did his own research and due diligence into Alternative investments and had re-positioned part of his portfolio into Forex. At that point I went on to explain that with an average daily volume of $ 4½ trillion, almost 5 times more volume than all the U S equity markets combined, Forex is arguably the largest and most liquid market in the world. Furthermore, with Forex you have 24 hr opportunity, with true global diversity and unprecedented transparency. I then mentioned that while there is risk involved in all investments, the many features of Forex offers unparalleled tools available for risk management. We then talked about the Managed Account programs that we offered for Forex and how he could easily re-allocate a portion of his assets, (including 401K and IRA funds) to a Managed Forex Account.

When we meet the following week we set up Hal’s account and re-positioned part of his existing portfolio to fund the program.

As with Hal, many other investors would not think twice about getting a ‘Second opinion’ regarding a major medical issue or even a major auto repair, yet seldom think about that option when it comes to their investment portfolio. But with the past and ongoing turmoil in the markets creating even greater anxiety coupled with the uncertainty about the economic future, now more than ever, getting a second opinion may be even more important and prudent.