Your allocation should be based on what’s going on in your life and not in the lives of your neighbors, friends, co-workers and certainly not based on the views of media-hungry financial prognosticators. None of them knows you or what you’ve planned out for yourself and your family.
If you come into a year like 2013 with 20 percent-plus in stock-market gains without clarity about your financial course and without an allocation prescription already in place, you will be buffeted around by the market swings and you will be seduced by the new highs. But don’t jump in without a plan of your own; and if you do have one, don’t change course abruptly.
Promise yourself you won’t go into 2014 without giving your money purpose and without laying out a course that has a high probability of meeting your goals and an allocation (this percentage in stocks, that percentage in bonds) that suits your temperament and your goals. If you keep this promise to yourself, you will not be plagued by second thoughts at every up and down of the market or by every hint from whatever the source that you are missing opportunities.
Donald E. Askey, a fee-only financial adviser and planner at Oakmont Partners LLC with offices in Amesbury and Boston, can be reached at email@example.com.