Your investments: Get the hametz out of your portfolio

With the Passover holiday quickly approaching, many of us are knee-deep in over cleaner and last minute preparations to make sure that there is no vestige of hametz left in our possession.

By AARON KATSMAN
Shekel money bills (photo credit: REUTERS)
Shekel money bills
(photo credit: REUTERS)
With the Passover holiday quickly approaching, many of us are knee-deep in over cleaner and last minute preparations to make sure that there is no vestige of hametz, or leavened bread, left in our possession. According to the Ramban (Nachmanides), the goal is that hametz not be found even “in your mind,” it’s like dust in your eyes. The questions is why is hametz so bad that we need to get rid of it, but a week later our attitude towards it changes and it is once again permitted? I only have about 750 words and I need to tie the idea into personal finance, so here is a very condensed answer.
Rabbi Ezra Bick writes, “Without being overly symbolic, I think it is clear that the process of leavening represents the development of powers inherent in something. Matza is simply flour and water, baked. Bread is the same ingredients, but when you leave it around, unwatched and unbothered, it magically rises and grows, realizing a hidden potential and expressing it. Is this bad? Not at all! It would not be exaggerated to say that this is the goal of Torah life in general. But the Torah is warning us about something on Passover. This process of growth and development, when left to unfold of itself, wildly, can be catastrophic. The raw powers of the human spirit, unguided, are anarchic precisely because they are powerful, precisely because they represent real growth and vitality. The first step, when granted freedom, is not to run and let all the repressed inclinations and urges fly out. Even then, especially then, one should eat matza and beware the hidden powers bursting to free.”
An element of only eating matza is for us to get back to basics, and to create a proper structure for us to grow as human beings, without any of the extra trappings symbolized by bread.
Make Seder
Since I am writing on the business page I will transition to investing. Clean up your portfolio and get back to basics. Inves tors should use this time of the year to clean up messy portfolios.
In fact it is probably more important than cleaning your windows where there is no hametz.
You need to create a financial plan, and start understanding what your short- and long-term needs and goals are. You can speak to a financial adviser to help you define those goals and needs. When creating the long-term plan, it’s important to take into account future expenses. For example, the purchase of a car in five years, marrying off children in eight, 10 and 12 years, is all relevant information necessary for the adviser to give you an accurate picture of what you need to do in order for you to be able to meet these future expenses.
Once you have defined your goals, it’s time to look at your portfolio. Have you skewed from your optimal asset allocation? Is your portfolio a hodgepodge of random stocks that were bought on a whim, but with no underlying strategy? Do you own stocks that you won’t sell because you are “waiting for them to go up to where you bought them?” The world is always in a state of change. Investors should take the time to make sure that their portfolios are well positioned for current conditions. Be smart about your investments. Pick a strategy and stick with it. Owning random stocks with no strategy is a recipe for disaster, and even though you may have emotional reasons to hold onto certain positions, now is the time to put emotions aside and be more rational. Asset-allocation is the best way for most investors to grow wealth. As I wrote about last week, one of the most overlooked aspects in long-term investing is the need to rebalance a portfolio. Rebalancing is important for two main reasons. First of all, it keeps your portfolio in tune with your long-term goals and second, it keeps your asset allocation in line with your risk level.
Now is the time to get back to basics.
Happy cleaning and have a hag kasher v’sameah .
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates
aaron@lighthousecapital.co.il Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing , and is a licensed financial professional both in the United States and Israel.