Preserving wealth in a down market
Zeller Kern's Bear Market Wealth Preservation Strategy:
Questions and answers
Q: How can Zeller Kern help preserve my investments in a bear market?
A: In this uncertain environment, proactive portfolio management is essential. At Zeller Kern, we make investment decisions based on sophisticated technical models that help us analyze market trends and investment selection. In 2008, when our models indicated a serious deterioration in market conditions, we moved into cash equivalents, avoiding much of the decline and helping to preserve the value of our clients’ portfolios.
Q: What tactics does Zeller Kern use when the markets turn down sharply?
A: Our discretionary trading platform lets us shift into preservation mode very quickly. We can adjust all of our clients’ portfolios in a single day. Clients appreciate knowing that we can respond quickly to changing conditions – especially if they are traveling or unreachable.
Q: Why don’t more advisors move clients into cash equivalents when markets turn down?
A: If a firm is compensated by commissions or fees from a standard allocation product such as a wrap account with a set asset allocation, it has no incentive – even in a down market – to move clients to cash. If it does, it will lose its source of revenue. That’s why Zeller Kern is a fee-based firm. We are compensated not for making investments, but for making investment decisions. And when the best decision is to move into cash, that is what we do. There is no conflict of interest.
Q. Can you grow my money in a bear market?
A: If the economy is in a significant deflationary contraction, we will remain focused on portfolio preservation strategies. In our opinion, a “buy and hold” strategy will not work in this type of contraction. However, even an extended down cycle can have periods of stock market appreciation. Our technical models will help guide us into participating in these brief upturns. We may also use non-correlated asset classes (e.g. managed futures, long-short funds, etc.) that historically have provided positive returns during stock market declines. That being said, we believe it serves our clients’ best interest to help preserve their capital for a significant market bottom. When that bottom occurs, it should be an outstanding opportunity for those with capital to invest. Past performance is no guarantee of future results.
Q: How will you keep me informed about my portfolio?
A: We’re strong believers in communicating with clients often. Our written communication includes a weekly investment monitor, two quarterly publications, a biannual newsletter publication, and email. We also provide quarterly performance reporting, quarterly wealth advisement statements, and in-person annual reviews as well as client events. We communicate with clients, in one way or another, an average of 100 times a year.
Q: I’d like to know more about how you would manage my portfolio. Can I arrange a consultation?
A: Yes. Please contact our office to arrange an in-person meeting with one of our advisors. We understand the severity of this financial crisis and the level of worry and uncertainty that investors are feeling. It is crucial that you find the best possible means of preserving your investment asset and wealth, and we are willing to help you in any way we can.
Please call our office at 916‑436‑8270 or toll-free at 866‑536‑6131. You can also email us to arrange an appointment. Thank you for your time and consideration.