Smart Money: What are you doing with your investments?

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William C. Fisher
William C. Fisher

It's a question that bears close examination, particularly now: Given the current economy, what are you doing (or not) with your investments?

The stock market rally that began in early March has been fueled by a string of evidence indicating that credit conditions are improving and the economy is stabilizing, or at least poised to recover. Though the market may be seen as fairly valued by some, the economy and the banking system are far from operating under normal conditions.

Forefront to our concerns is the expansion of credit, which impacts the long-term growth rate of the economy. Credit growth has collapsed.

The economy stabilizing with less credit implies the future growth rate will not be as impressive. American businesses need credit to spend and grow. Meanwhile, the government is printing money to offset this gap, which leads to a weakening dollar, higher interest rates and higher risk of inflation.

The frothiness in the stock market has charged ahead of underlying fundamentals. This is not unusual in the early stages of an economic recovery. However, these conditions are making the market very susceptible to a pause or even a decline.

The correction might be more than a minor price adjustment and could test the peace of mind we have been enjoying.

Given these types of conditions, it's important to make sure that your investment adviser is vigilantly overseeing your investments. Speak with your adviser to discuss what adjustments, if any, should be made to the current investment portfolio given the year-to-date performance.

Now is the time to be proactive about your investments: Update the investment policy statement, review the benchmarks, provide transparent reporting and review fees. Most nonprofit organizations work very hard to increase fundraising, and it is prudent to apply the same diligence to managing the investments.


William C. Fisher is president of Investment Advisory Group, LLC, a business development company partnering with some of America's leading financial companies to provide independent financial services to nonprofit organizations.