Bob Veres (left), Inside Information publisher and Financial Planning columnist, hosted a panel discussion on Wednesday at the FPA 2011 Retreat in Bonita Springs, Fla., which focused on advancements in portfolio strategies in the wake of the 2008-2009 market crisis. In addition to Veres, the panel included Christopher Cordaro, chief investment officer with Regent Atlantic Capital; Michael Henkel, managing director with Envestnet/PMC; and, Jerry Miccolis, principal with Brinton Eaton Wealth Advisors.
Cordaro began by noting conventional wisdom at the time of the crisis may have led him to act in a less-than-prudent manner in the days and weeks following the record sell-off.
"It's been ingrained in us not to market time or chase performance or make panicky trades," he said. "When money markets were threatening to break [the $1 mark], we moved all of that money to treasuries, which we thought was a pretty smart move. But we didn't even think about getting out of equities; we didn't have that debate with our investment committee."
While ultimately the decision to stay invested in equities was a good one and those that moved from equities had trouble getting back in, Cordaro was concerned that not one member of the investment committee even considered the possibility. As a result, he said, in the wake of the downturn, the firm no longer rules anything out and ensures traditionally held biases are thoroughly vetted.
"We're more disciplined and more flexible, which I know sounds like an oxymoron," he adds. "We're more disciplined in our valuation of our asset classes. At the same we're more flexible in not having to allocate to overvalued asset classes."
Cordaro also mentioned the number of solutions now available in response to the crisis, "silver bullets" he said won't work with the next generation of "vampires."
"They're producing solutions that won't work the next time this happens, because the situations will be different the next time this happens," he said. "You'd better make sure you're prepared with silver bullets, wooden stakes and lots of garlic."
Envestnet's Henkel (left) mentioned that although it's not currently popular, he in a big believer in asset allocation and efficient market's over time.
