This year most investors have such good looking investment figures over the last year- a ravishing view.
I advise them to look at a few points beyond figures: For the big picture look at your accumulative net performance since the year 2000. This will put 2003 into proper relation.
Verify whether your performance figures are really net after all charges. Check out tax deductions at source, transactions costs and bank fees. Some banks do present figures in a peculiar way. Question them.
Are there any products in your portfolio you do not understand? This is a potentially dangerous situation – get back into the driver's seat.
Are there a lot of structured products all issued by your depository bank, some with an undue long life to maturity? Make sure you know about possible hidden costs in these items that will go into the pockets of your banker. Question whether there may be a conflict of interest situation of a sell-side broker.
While you are at it also check on the fitness of your portfolio for 2004:
Here are a few points to consider:
Does your portfolio contain a reasonable allocation (5% to 15%) into alternative investments such as:
* Diversified reputable Hedge Funds
* Private Equity Funds
* Commodity Funds or commodity related investments
* Gold or Gold related investments
* Other precious metals
* Real Estate Funds
Does your investment strategy include Capital Protected equity alternatives and yield enhancement products such as GOALS, Revexus, BLOCS and TOROS ?
Some of these products are really good but you should judge whether they fit into your personal parameters and not just listen to highly pressured salesmen.
Is your currency mix still in line with a reasonable risk exposure towards your home currency?
Nice currency gains on AUS$ and NZ$ can now be realized if there is an over exposure.
Finally make your personal judgment on the prevailing and ever-changing environment:
* The US currency is in a downtrend and the EU and other parts of the world are getting worried about it (and may try to act soon).
* Interest rates are still on record low levels – for how much longer?
* US twin deficits are on a record high, Government debt in USA (but in other countries too) per capita has never been so high and also the increase of personal debts is worrisome.
* Major economies are not able to create sufficient new jobs (or when do redundant workers no longer show in the statistics ?)
* Yes, it is a US election year again – maybe with a more efficient vote counting this time. And it seems Mr. Greenspan is willing to help.
* With just over a month into the New Year we again have financial irregularities at two major internationally operating large companies – Parmalat and Adecco. Doesn't this sound a bell? And wasn't it just recently that we had the investigations (with heavy fines or compensation payments) first of investment banks, then their affiliated research departments, going on to the Mutual fund industry and NYSE Big Board directors? Who will be next?
* This sure doesn't cover all yet (there are geopolitical and more issues as well) but this is just some food for your own thoughts and last but not least keep in mind: – It is all of you and the crowd out there together making the markets move.
Best wishes for successful investments, trades and fun in the further course of 2004.