Leonetti

Like many advisers, the team at Leonetti & Associates is holding mostly short-term bonds because they would lose less value than long-term bonds in the event interest rates rise, which many expect.

More Cash, Less Anxiety Shefali Anand 2011

"We're looking at large momentum shifts, versus just short-term volatility," says Mr. Leonetti.

More Cash, Less Anxiety Shefali Anand 2011

Mr. Leonetti has long followed a momentum-investing strategy.

More Cash, Less Anxiety Shefali Anand 2011

And frequent switching in investments can increase transaction costs, though Mr. Leonetti says his firm is able to keep trading costs "so low that it doesn't have that big of an impact."

More Cash, Less Anxiety Shefali Anand 2011

To prevent large swings in client portfolios, financial adviser Michael Leonetti of Buffalo Grove, Ill., and his investment team are constantly assessing when to raise cash.

More Cash, Less Anxiety Shefali Anand 2011

In March, as stocks were falling, Mr. Leonetti trimmed stock exposure and raised some cash.

More Cash, Less Anxiety Shefali Anand 2011

The firm doesn't use momentum investing "because we think it's giving long-term better returns," says Mr. Leonetti.

More Cash, Less Anxiety Shefali Anand 2011

He founded Leonetti & Associates LLC in 1982, and the firm currently manages $480 million in assets, primarily for individuals.

More Cash, Less Anxiety Shefali Anand 2011

Mr. Leonetti is a founding member and former president of the National Association of Personal Financial Advisors.

More Cash, Less Anxiety Shefali Anand 2011

Not adviser Dick Bellmer, who's selectively bullish on tax-exempt bonds A Just-in-Case Portfolio: Adviser Richard Smith favors flexible funds as a hedge against market uncertainties To make these calls, Mr. Leonetti engages in "momentum investing"—a strategy that involves selling stocks that have been in decline for a while, based on the logic that what goes down often will keep falling.

More Cash, Less Anxiety Shefali Anand 2011