Our hearts and hopes are with Japan. The earthquake, tsunami and nuclear crisis are inflicting untold suffering on the people of a proud and noble nation. We wish them a quick and safe return to some semblance of normalcy.

While our hearts think only of the human toll, with our heads we think about our clients’ portfolios. We spent time over the weekend and these past few work days considering what, if any, changes we should make to our investment strategies. At the moment, we will do very little.

The stock market is declining this week, but we thought it was overvalued anyway so we’re not buying. Treasury bonds are rallying (prices rising; yields falling), but we thought yields were too low anyway, so we’re not buying. We are taking the opportunity of a strong bond market to sell some of the longest maturity bonds in a few client accounts.

In the broader picture, the disaster in Japan does not much alter our macro-view of the domestic and global economy that much. It could put a damper on economic growth, but we expected some dampening anyway. The dollar has rallied strongly, but we believe that will be short-lived and currencies will gradually return to previous levels. We have specific positions in both stocks and bonds denominated in foreign currencies. Should a dollar rally extend even farther as the crisis unfolds, we might consider adding to non-dollar positions.

Some have asked whether we see an opportunity to buy Japanese stocks due to the strong selloff they have experienced. The answer is no, they have not sold off enough to make them a compelling value opportunity. In general, we do not make country-specific foreign stock bets anyway.

There are many unknowns still to become resolved in this crisis — particularly the outcome of the nuclear plant damage. We already had in place a relatively conservative and diversified strategy for our clients, and we will largely stay the course until market conditions (ie, prices) change significantly.