From the April 2009 issue of Investment Advisor • Subscribe!

April 1, 2009

Dealing With the Downturn: In Her Own Words

Debra Brede does all the investment selection for her clients' portfolios. Here's how she describes the adjustments she's made over the last few months:

"I've seen that there's been a lot of opportunity with dividend-paying stocks, so I've done more shifting that way. I pared back some on the international. You tend to make more money with international when the dollar is weaker, so I was paring back on that toward the middle of last year anyway. Not big amounts, but we took some profit off the foreigns. With bonds, we're looking to be sure on our bonds, so we went through our municipal bond portfolios to make sure they were all higher quality bonds.

"When we saw the financials falling apart we just took an extra look on everything to [determine] how much risk we had and where we could get hurt. Because we do a lot of retirement income planning, we've always had the client have at least five years of what their income needs are in bonds or cash--where they're able to get at it if the stock market falls apart. Some people will have 10 years of their income needs, whether it's laddered bonds or bond funds that aren't going to get killed in bad markets.

"We've always kept diversified, but I do have to say that last year there was really nowhere to hide. Even municipals were hit. It was just Treasuries and money markets that actually held up well. It was a very tough year that felt like, 'Nothing works here.'"

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