Protecting your nest egg in a recession
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But the biggest mistake we see, and why a lot of new clients come to us, is that they never sell. Buy and hold is becoming outdated. It's easy for the adviser or the trust company or the mutual fund manager to do it from the standpoint of just buying across the board and just hanging on.

It reminds me of the index funds. You're buying 500 companies in the S&P 500 and whether there's an Enron in there or whatever, you're holding it until you're forced to sell or S&P has finally decided to eliminate it from the index.

Remember to take profits and redeploy them into lesser-risk, low-expectation areas. The best example of what we're doing now is in the energy sector. It's been very hot so we're overweight, but we're decreasing our overweighting. If you still want energy exposure and income, sell some of the high-flying energy companies that have done so well and buy some of the leaders in natural gas.

For the long-term investor, it's a nice way to reduce risk in one area that's done so well for years and still participate in the energy sector, but with less risk.

Cash and CDs
Cash is important and it's part of profit-taking. For example, when we take profits in tech, as it becomes more and more favorable, if we don't find other places to redeploy those assets we'll put it in cash. And if you're close to retirement, having that cash or fixed-income component is going to be critical.

I think (high-yield) CDs are a good route. I wouldn't do Treasuries because the flight to quality this summer has depressed those yields. High tax-bracket individuals should select high-quality municipals. They're at historically high yields now compared to what you can do with a CD.

If we're not finding the bargains to redeploy as we're taking profits in these areas that are moving up, our cash just automatically builds up. If a client is closer to retirement and more conservative, there will be fewer bargains to buy because we're not going to buy aggressive-growth-type companies, so their cash would build up more quickly than an average investor or younger investor.

The other big mistake I see the average investor making is not being aware of cost or risk. If you're in a quasi-index fund, make sure you don't have extra fees and costs. What I've seen throughout the country is people selling these good, low-cost funds and then charging 1 percent or 2 percent to asset allocate them. That means you're getting an index-type performance, but now you've guaranteed yourself the cost of the fund plus the 1 percent or 2 percent you're paying an adviser. So, you're guaranteed to underperform the market by 1 percent or 2 percent. If you can get active management for that, why are you paying for an asset allocation? If you can put together your own group of mutual funds and avoid the added cost, many times you're going to be better off.