Opportunities are everywhere, if you know where to look. Our investment team is constantly looking for opportunities in your portfolio, both to add value and to reduce risk. The strong market rally in 2017 presented us with numerous opportunities to “tend the garden” of our clients’ portfolios and make adjustments where need be.

The most significant opportunity that has emerged over the past year is the growth in our clients’ stock positions, which has shifted the mix of stocks and bonds within portfolios. Left unattended, these portfolios would have contained more risk than clients may find they can tolerate, making a market pullback like we experienced this February more stressful. Instead, our team has been trimming gains in equity portfolios regularly over the past year, selling stocks as they reach new highs and reallocating those profits to safe fixed income positions.

In the same way, 2017 was an even better year for international stocks and emerging markets than it was for U.S. stocks.1 We know that global diversification is a valuable tool in lowering risk in portfolios, but we want to ensure that the mix of U.S. and international stocks in client portfolios does not drift out of alignment over time.2 So, we’ve been intentionally selling more international and emerging market stocks recently than we have U.S. stocks.

These actions aren’t the result of our predictions on where the markets might go next, they’re part of our disciplined approach to investing which prioritizes the activities that produce successful long term outcomes. This is the same successful approach that we’ve taken when faced with a strong bull market in the late 1990s, the tech bubble and 9/11, the global financial crisis and many more significant market events (see the chart below, “Markets Have Rewarded Discipline,” for the growth of a dollar, 1970-2017). So, the next time you hear a friend worrying about the markets, or you see a newspaper headline predicting the next crash, know that we’ve already been preparing your portfolio for this possibility. Know too, that with corrections come opportunities of their own, and your investment team is standing by waiting to capture those as well.


  1. Source: Morningstar Direct, data as of 12/31/2017.  International large companies represented by the MSCI EAFE NR Index, U.S. large companies represented by the S&P 500 TR Index.
  2. Source: “Considerations for investing in non-U.S. equities,” Vanguard, March 2012.

NOTE: The information provided in this article is intended for clients of Carlson Capital Management. We recommend that individuals consult with a professional adviser familiar with their particular situation for advice concerning specific investment, accounting, tax, and legal matters before taking any action.