Altfest Insights

ArticleWhat are the most important words for your portfolio right now? Position, position, position



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Lewis AltfestBy Dr. Lewis Altfest, CFA, CFP®, CPA, PFS, Ph.D., Chief Executive Officer, Altfest Personal Wealth Management

Let’s be clear: The traditional 60% stock/40% bond portfolio is not managing inflationary or recession risk as well as we think it can be handled, particularly now, with inflation soaring and interest rates on the rise. Instead, our strategy at Altfest Personal Wealth Management is to be much more selective in what stocks our portfolios own.

We are buying securities of more-defensive businesses, favoring an allocation to alternative investments beyond stocks and bonds that can reduce risk and can keep up with high inflation. We have even created an alternative portfolio at Altfest that allows our clients to benefit, not suffer, when interest rates are going up.

Our firm is positioning our portfolios to mitigate volatility and to find opportunities to enhance long-term returns at a time when both stocks and bonds are struggling. In light of all that’s happening economically and in the markets, our goal is to stay nimble and defensive in our clients’ portfolio allocations, not be bound to traditional ideas about the 60/40 approach that have outlived their usefulness.

Playing defense in today’s market

For example, our risk exposures are much more defensively tilted toward health-care stocks, natural resource stocks, utility stocks and other infrastructure assets that can actually do well in a higher inflationary environment. These investments tend to have stable cash flows and their revenue actually can increase with inflation. What we’re avoiding or minimizing are more-cyclical businesses whose performance will be much more dependent on the strength of the economy.

We’ve also shifted some money into longer-maturity bonds, as they do well in periods of slower economic growth and reduce risk in your portfolios.

Finally, while at Altfest we don’t think all alternatives are interesting, certain ones, like infrastructure stocks, real estate and those that use options to manage risk, are now included in client portfolios, along with the potential to participate in our own private real estate offering, the Arden Woods Real Estate Fund. The fund targets attractive returns from discounted residential property investment, rehabilitation and resale as an option to hedge against the uncertainty in the stock market.

In sum, I think smart positioning will make the difference between just surviving and thriving financially in today’s heated inflationary environment.

How’s your portfolio positioning?

If you have questions or concerns about whether your portfolio could be better positioned to better achieve your financial goals, please book some time on our calendar for a complimentary consultation.



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