The most important component in a diversified portfolio is investment-grade fixed income. High-grade bonds and full-faith-and-credit-pledge Treasuries are the most reliable fixed-income counterbalancers.

The balance between Treasuries and equities is a function of (1) your age—the younger you are, the larger your equities percentage; (2) your financial resources; and (3) your need for current income. No two investors have exactly the same risk/reward profile. For that reason, you won't ever see a model portfolio listed in Intelligence Report. Instead, I'll bring you the best investments so you can custom-build your own plan

Once your Treasuries positions are in place, you need to make adjustments and additions from time to time depending on your changing needs and available new cash for investment. But under no conditions should you cross over to the right-hand side of your portfolio. Never rob Peter to pay Paul. You want to maintain balance at all times. Why? Because I, like you, do not have tomorrow's newspaper. We do not know the future. In Intelligence Report, I'll show you how to arrange your stock or stock/mutual fund portfolio to adjust for varying market conditions.

NEXT: Don't invest based on events of the moment