Defend your portfolio against volatility

RANCHO CUCAMONGA – Darren Vilardo, who founded Inland Retirement Advisors in a down economy, has lately found himself providing advice to investors faced with up-and-down markets.

Vilardo started his company in February 2010 after working as an adviser for other firms. Officially, the recession ended some nine months before that time, but the local and national economies have been mired in a sluggish recovery.

That slowness has continued, but the political brinkmanship and wild markets of recent weeks are two factors that have led many to wonder whether the United States is heading back into recession.

National politicians spent much of July fighting over the national debt ceiling in a debate that left some officials and commentators openly wondering whether the country would default on its debt obligations.

That didn’t happen, but ratings agency Standard & Poor’s took the unprecedented step of downgrading the U.S. government’s credit rating from AAA to AA-plus on Aug. 5.

In the week that followed, the Dow Jones Industrial Average moved more than 400 points four consecutive days, swinging down, up, down and then up again in a tumultuous frenzy never before seen in the index’s history.

The Dow then seemed to be on the upswing early last week, but fell Thursday and Friday to settle at 10,817.65.

The question of when investors can again expect long-term market stability has been a big one lately, said Vilardo, giving his view that long-term confidence in the stock market, a trusted adviser and the right investments are all necessary to avoid panic during unusual times.

“Those are the only three things that are going to keep people invested when markets are getting ugly, as they have been lately,” Vilardo said.

For investors with questions on their retirement, Vilardo has scheduled a public workshop to begin at 6:30 p.m. Sept. 1 at Total Wine, 8201 Day Creek Blvd., Rancho Cucamonga.


Question: We’ve seen a very volatile market lately. What is the No. 1 question clients have had in the past few weeks?

Answer: Are we done going down? (Laughter). The most common question I get is, do I think the worst is over as far as the downside?


Q: Are we going down?

A: I’ll give you my standard answer. I don’t have a crystal ball, but let’s talk about your portfolio and how you can protect against downside risk.

Let me expand on that. I think volatility is going to be with us for a while. … News out of Europe, news out of Washington. Very little of it is (about) sound economic principles. It’s rumor du jour.


Q: What kind of advice do you plan to discuss at your public events?

A: In the events, we talk about specific issues related to someone who may have recently changed jobs, or recently retired and has questions about what do with their retirement plan.

We talk about some different strategic vehicles that can be used for strategic investments in volatile times.

Q: Are you able to discuss, in generalities, how you can defend against volatility?

A: Absolutely. There are vehicles out there, I hate to use the term products, but there are vehicles that allow you to capture the upside of the market.

If the market goes up, you’re going to capture the upside. If the market goes down, the worst you’re going to do is a zero-percent return.

Q: Are you able to identify what those vehicles may be?

A: We could say annuities. Equity-indexed annuities are really what they’re called. Its also true with equity-indexed life insurance.


Q: It’s easy to get caught up in the day-to-day changes in the market, but how should someone plan for long-term exposure to the stock market.

A: They still need to have exposure to the stock market. The stock market has had returns that historically outpace inflation. … So you still have to have market exposure, you can’t go to a strictly bond portfolio …

They won’t be able to keep up with inflation and the rising costs of health care if they keep their portfolio too conservative because of fear.