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Success is achieved by developing our strengths, not by eliminating our weaknesses. -- Marilyn vos Savant, American magazine columnist, 1946

During the last twelve months you’ve probably heard the numerous investment commentaries, cable programs or news articles suggest ways to potentially reduce financial risk. In life there are things we have control over and things we don’t have control over. Deciding which category things fall under is the challenge. Kids, dogs, husbands and the “market” are things we have no control over.

How we participate in the stock market is something we do have control over. Buy low, sell high is the old adage.

Trying to pick a low point for even what are historically stable and reliable sectors can be costly during times of high volatility. Allocating your assets among thoughtfully selected sectors (financials, industrials, healthcare, consumer goods) and different asset types (stocks, bonds and cash) is a prudent approach. The actual amounts and percentages invested in each is a very personal and customized process.

As I often remind myself and investors, market timing is extremely risky especially in times like these. It may have been tempting to try to time the bottom of the financial services sector at the peak back in October 2007. Between January 1 and June 30 of this year, the financial companies in the S&P 500 experienced a 31 percent decline. In June, the entire S&P 500 has shown a drop of 20 percent since its last market peak, which is historically a psychological signal that the bottom may be near. There is no guarantee that more difficult times aren’t just around the corner.

Even if the market is bottoming, the recovery could be extremely volatile given current economic uncertainty. Consider these facts: we’re getting closer to the presidential election in November, The Federal Reserve decided to hold rates steady at its June meeting, and it remains to be seen how they’ll balance a potential recession with rising inflationary pressures, and let’s not forget the housing market.

When the market recovers it could bode well for the financials, provide a ceiling for oil and commodities prices and improve strength for the dollar. But again, do we have control over these matters?

The economic stimulus package appeared to provide some relief in the early part of the second quarter. How did you spend (or save) your check? This is spurring some representatives in Congress to call for another round in the fall. However, the White House pointed out that not all checks have been mailed from the first round and downplayed the likelihood of additional measures in the foreseeable future. And who really is providing the money for those checks? Tax payers of course.

Historically elections are positive for the capital markets. In 10 of the previous 11 election cycles markets outperformed compared to historical results. Past performance is not indicative of future results. It will be interesting to see whether that trend holds true given the complex circumstances in 2008.

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Darcie Guerin is a financial adviser and branch manager at Raymond James & Associates Inc. at 606 Bald Eagle Drive, suite 401, Marco Island. Contact her at Darcie.Guerin@raymondjames.com, 389-1041 or toll-free (866) 343-0882.