Nest Egg Rebalancing Plan.  By Natalie Pace.

March, April and May comprise the top performing months on Wall Street for the past decade. The worst performing months for the last decade are October, February, January and June, in that order.  This gives a whole new urgency to Sell in May and Go Away (an old Wall Street adage). 
Combine the monthly trend with election year trends -- that the second year of the Presidential term is anemic, at best, and has been negative on average for the last decade -- and you have a good reason to rebalance your nest egg as soon as possible.  (Please note that I’m not encouraging you to jump in and out of the market – market timing – but rather to have a good, diversified nest egg that you annually rebalance.)
Below is an easy 3-step plan that can protect you from a devastating downturn, while also allowing you to capitalize if we end up having a 2010 Rally.  (2009 scored 40 cents on the dollar in NASDAQ and 15 cents gains on every dollar in the Dow Jones Industrial Average.)
1.    Get Safe.
2.    Overweight more safe if you are a Nervous Nellie
3.    Diversify the remainder of the pie chart into 10 funds.

Here are more details on each step.

1.    Get Safe.

Draw a pie chart, allocating a percentage equal to your age safe, i.e. in Treasury bills, FDIC-insured money markets and/or high-rated bonds.  FYI: if you have hundreds of thousands of dollars in this “safe” side, it’s time to start thinking of cash-positive, low-risk hard assets, like real estate, income property, etc. 

2.    Overweight more safe in a recession.

Overweight 10-20% additional safe, if you’re concerned or worried about where the markets are heading.  When you are exceedingly optimistic about the future of stocks, that’s when you might consider overweighting more into select Exchange Traded Funds (ETFs).  This is where your risk tolerance comes into play.

3.    Diversify the remainder of the pie chart into 10 funds.

INSERT THE PIE CHARTS

Note that the four funds listed at the top of the pie chart are 4 Hot Industries.  These will change year to year.  For instance, this year, you may wish to include information technology, which was one of the top performing industries of 2009. 

The remaining six funds are diversified by size and style -- small cap growth, small cap value, mid cap growth, mid cap value, large cap growth and large cap value.

Picking Exchange Traded Funds
Here are two websites where you can easily find ETFs that are diversified by industry, size and style.  Each fund has a page where you can click or scroll down to see the top holdings and top industries. 

a.    PowerShares.com
b.    iShares.com

Hot Industries
What’s hot this year?  It is predicted to be another challenging year for consumer spending.  However, the Stimulus Bill is pouring a lot of money into improving efficiency, particularly in education, medicine and government – which translates into revenue for technology companies.  When inflation becomes a concern, gold is typically strong.  Clean energy is another line-item focus of President Obama’s Stimulus Spending. And people will still go to their doctor and take their medicine in a recession.  Thus, I would expect to see strength in info tech, gold, clean energy and biotechnology.  What industries do you believe are hot? 

This is a lot to take in, I know, which is why I’m also available to answer your questions on my Facebook page and on my BlogTalkRadio.com/NataliePace show.  Tune in and get involved in the education and dialog!

Nest egg strategies, hot industries, annual rebalancing and more are the subject of my book, You Vs. Wall Street.  Buy You Vs. Wall Street wherever books are sold.  Readers call it a “must-read financial bible” and it is endorsed by TD AMERITRADE chairman Joe Moglia, Nobel Prize winning economist Dr. Gary Becker and spiritual guru Michael Bernard Beckwith. 


About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street and host of the Pace and Prosperity radio show on BlogTalkRadio.com/NataliePace! She is a repeat guest on FoxNews, CNBC, ABC TV and has contributed to Forbes.com, Sohu.com and BestEverYou.com and Magazine. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on http://www.facebook.com/pages/Natalie-Pace/416616285568, on BlogTalkRadio.com/NataliePace and on YouTube.com/NataliePaceDOTCOM For more information please visit, http://www.nataliepace.com