Dodge the road to financial ruin with Consuelo Mack

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If there’s one point that Consuelo Mack, host of the PBS series “Consuelo Mack WealthTrack,” wants to drive home, it’s investing for the long term. She sometimes jokingly refers to herself and her show as the Cramer antidote, because her stance on investing opposes the active-trading mantra of popular TV stock analyst Jim Cramer. Key to Mack’s long-term rally cry is diversified investing. She cites numbers that were researched by T. Rowe Price to demonstrate how pricey it can be to time the market: If, say, between Dec. 31, 1997, and Dec. 31, 2007, you had stood pat with all your stock market investments, you would have had an average annualized return of 4.22 percent, excluding dividends. Had your money been out of the market for the 10 best performance days during that period, your average annual performance would have sunk to minus-0.48 percent.

Mack follows the advice of finance expert Peter L. Bernstein, who says that you are never truly diversified until you own something that makes you “uncomfortable.” For many investors that means emerging-market stocks or bonds, she says, adding that she believes that each should make up 10 percent to 20 percent of your portfolio. Mack also advises you to protect against “extreme outcomes,” such as the market meltdowns experienced last fall. Mack believes in investing in gold (3 percent to 5 percent of a portfolio) as a hedge against market freefalls, because the value of gold has historically risen during market downturns.

Mack’s portfolio mix consists of approximately 75 percent stocks, invested globally among all market caps and sectors, 10 percent global bond funds, 10 percent gold and 5 percent cash.

S. Berg