This fall, I read endless articles touting headlines such as "Devastated Retirees Pick Up The Pieces" and "Rebuild Your Portfolio." I have encountered many stories like these over the past year, and I still feel a knot in my gut every time; I truly hate to see people suffer. What makes these stories even more difficult to stomach is that in almost every case, without fail, the devastation was preventable through proper financial planning.

Often the errors cited were tactical ones. People went hard into energy funds because oil was hitting new highs or into Citigroup and other financial stocks in mid-2008 because the dividends were good.

For most, the mistakes were strategic. Either they had a bad strategy or no strategy whatsoever. Some were betting big on equities-either individual stocks or sectors-in hopes of making their money back quickly. Others were convinced the recent rally was a bear trap and were in things they perceived to be safe, such as bank certificates of deposit or gold.

Most people do not even realize they have a strategy problem. You hear this in their discussions about what they are doing now. They either are trying to make their losses back quickly, or they subscribe to the bear trap theory and are therefore investing in sections of the market that they perceive to be safe.

What I am reading this week: portfolio reports for the quarter ended Sept. 30, 2009. For our clients, the headline could be "Crisis? What Crisis?" From looking at our results, you would never know that we had endured arguably the worst financial and economic conditions since the Great Depression. Many of our clients made money over the last 12 months, and those that did not are nowhere near devastated in terms of their financial health.

Contrasting our numbers with the traumas of the past year speaks volumes. Further, it helps to explain why some of our clients are still quite anxious despite having escaped most of the damage.

You had to have been in a coma if you thought the last year was as uneventful as the numbers imply. It makes little sense, given where we have been, that we would be where we are now. I'll get back to client issues in a minute. For now, let's talk portfolio management.

AVOID TRENDS

I do not know exactly where our results would rank against the portfolios of other advisors around the country-and I will make no effort to find out. We manage for client-specific goals, not rankings. Nonetheless, you may be curious about what we did.

Let's compare a set-it-and-forget-it approach for asset allocation with the more active approach outlined in Kenneth Solow's excellent book, Buy And Hold Is Dead (Again), and somewhere in between is where we will be. Like Solow, we believe that valuation matters. His discussion about the creation and management of client expectations and dealing with being wrong is an excellent reminder to anyone contemplating a change in approach that all methods present potential issues with client perceptions and behavior.

That said, I find something else more interesting than what we did. First, grab any article written in the last year with a headline asserting that buy and hold, diversification, asset allocation, modern portfolio theory or other old ways failed or won't work in this new era. Now, in the article, find the most vocal critics of the old ways and chances are excellent that what they were touting is what we did not do.

We did not abandon the stock market altogether. We did not shift money to fund managers who "side-stepped the panic" or whose "picks held up better than the S&P 500." We put no money in hedge funds, long-short funds, managed futures, private equity, absolute return or even private placement real estate. We did not shift sums into sectors or stocks that were supposed to benefit from the General Motors bankruptcy, infrastructure spending, government bailouts or renewable energy. We bought no gold or commodities. And we spent zero time searching for the bottom.

Generally, these things did not add much, if anything, during the fall and spring, nor have they been much help since. If they did help you, congratulations. Our issue, though, is that they weren't part of our clients' plans for very specific reasons. And those reasons still existed during the crisis.

STICK TO THE SCRIPT

We kept our focus on the people who matter most to us professionally, our clients. Their accounts did not fall as far as the broader stock market because the financial planning we did led us to be sure they were not too heavily exposed to stocks as a matter of course. Clients' exposure to the markets was determined by their goals; their time frames; their capacity, tolerance and perception of risk; their family resources and obstacles; and their liquidity and cash flow needs-all informed by their prior experiences and complemented by our own expertise and experience.