By ELIZABETH GARONE

Q: I’ve worked several jobs since separating from the Army. Some have been contracting positions, others as an exempt employee. Some have been with high-profile international companies. Not once have any of my previous employers or references been contacted. Do references really matter anymore? It seems to me they are even less important than cover letters and the objective statement in resumes.

A: You would be mistaken to think that references hold little weight, especially in the current depressed job market. “References absolutely matter,” says Paul W. Barada, president of Barada Associates Inc. The Rushville, Ind.,-based firm provides pre-employment screening services for large employers such as Emmis Communications Corp. and Acorda Therapeutics Inc.

Some people who are out of work embellish their past job performance, credentials and academic achievements to gain an edge over the competition, Mr. Barada says.

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With applicant pools growing larger by the day, it would be good to assume that employers will be diligently contacting references. “In my experience, references are always being checked,” says Dena Sneider, a career consultant in the San Francisco Bay Area. “In this market, they will certainly be checked since employers have their pick of candidates.”

Remember, too, that just because you haven’t heard anything from a reference doesn’t mean that he or she hasn’t been contacted.

More than ever, it’s essential to choose those references who can best speak to your work abilities and past successes on the job. A problem that Mr. Barada frequently sees is job seekers who list references with whom they’ve never actually worked. “What, for instance, can your golfing buddy know about your management style or job responsibilities?”

It’s important to consider who would be an employer’s ideal set of references. Usually, this is a current or former supervisor, peer and subordinate whom you’ve worked with in the past five to seven years, according to Mr. Barada.

Another mistake job seekers often make is not checking in with their references each time they list them on an application. You don’t want a reference to be caught off guard when he or she receives that all-important call. If you are planning on listing someone, send an email thanking him or her for agreeing to serve as a reference and include a copy of the job description. It couldn’t hurt to refresh a reference’s memory by including a list of your responsibilities and achievements from when you worked together. By providing the necessary information, your references will be much more prepared to take a call and to impress a potential employer.

For Bob Daugherty, who heads U.S. recruiting for PricewaterhouseCoopers, the best references are ones from people who work for the organization you’re looking to join. “Resumes and letters are expected to be strong, and candidates should still have several strong references at the ready, but it is those networking relationships that truly matter the most in getting in the door.”

Mr. Daugherty offers hard evidence that relationships matter more than you might think. At PricewaterhouseCoopers, more than 40% of hires with experience (as opposed to those recruited directly from campus) come through employee referrals, he says. If you don’t already have connections at a firm you’re targeting, seek out references from people in your network.

Write to Elizabeth Garone at cjeditor@dowjones.com. If you have a question for the careers columnists, be sure to put Career Q&A in your subject line.

By SHEFALI ANAND

Trying to time when to get into and out of the stock market erodes investors’ long-term returns, says reformed market-timer Jeff Merriman-Cohen.

His Seattle investment advisory firm, Merriman Inc., was a market-timing money-management firm and newsletter publisher when launched by his father, Paul Merriman, in 1983.

Mr. Merriman used quantitative models to frequently buy and sell stock mutual funds, with the goal of catching the upside while avoiding downturns.

For nearly two decades, Mr. Merriman, and later his son, Mr. Merriman-Cohen, used market timing to manage their clients’ money, and they defended the strategy against criticism that it could not be done successfully.

But over time, father and son have become increasingly convinced by academic research which states that in the long run, most investors are best off in stock funds that trade less by buying the broad market and that charge low expense ratios. The lower costs boost investors’ returns.

Daniel J. Gregory

Jeff Merriman-Cohen

In recent years, Merriman’s financial advisers have been putting new clients’ money primarily into buy-and-hold portfolios with little annual trading.

“We learned, and we grew,” says Mr. Merriman-Cohen.

In this column, we feature model portfolios from large financial-advisory firms that invest in mutual funds and exchange-traded funds. Merriman manages nearly $1.5 billion in assets, primarily for individuals.

The move away from market timing began in the early ’90s, shortly after Mr. Merriman-Cohen joined his father’s business.

Mr. Merriman-Cohen had been impressed by a presentation on passive investing by money-management firm Dimensional Fund Advisors Inc. In 1991, Merriman started offering a portfolio with little trading, and over the years, more clients signed up for this option.

By 2002-03, “we really became more of a buy-and-hold organization that still offers timing,” says Mr. Merriman-Cohen.

Now, more than 80% of Merriman’s clients are in buy-and-hold portfolios, he says. “We really encouraged clients to go to buy-and-hold if they could, because [timing] was much more pricey,” says Mr. Merriman-Cohen. Frequent trading results in higher transactions costs, higher taxes, and the fee for managing such a portfolio is also higher.

Mr. Merriman-Cohen says that market-timing systems can do well in the short term, especially during a downturn by avoiding sharp losses. But they lose out in rising markets, he says, because they likely will miss out on the initial recovery.

“I disagree with the advisers that think they have magical systems that can reliably beat the markets,” Mr. Merriman-Cohen says. “The more complicated [the systems] are, the less likely they are to be effective,” he says.

Merriman still manages some portfolios with a market-timing approach, for clients who get nervous during market downturns, Mr. Merriman-Cohen says. “If you’re going to make changes anyway,” then the firm wants to do it in a structured way to prevent sharp losses, he says.

Both he and his father are no longer actively involved in the day-to-day running of their investment advisory firm.

Daniel J. Gregory

Larry Katz

Here, Merriman’s director of research, Larry Katz, shares a model portfolio used by the firm’s clients who have a moderate-risk profile. The portfolio is for individuals investing in a taxable and buy-and-hold account.

It gained 0.83% annualized over the five years through 2011, according to Mr. Katz. This is net of the firm’s asset management fee of 1% per year or lower, depending on assets under management. The Standard & Poor’s 500-stock index had an annualized return of minus 0.25% over that period.

U.S. STOCKS: The portfolio is primarily invested through funds from Dimensional Fund Advisors, which uses computer models to buy lots of stocks that meet certain risk-and-return criteria and holds them for years.

DFA believes that over the long run, small-company stocks and “value,” or inexpensive, stocks will provide better returns than the broad stock market. DFA’s funds are sold primarily through investment advisers.

When Mr. Merriman-Cohen first approached DFA to buy its funds for clients, he was turned down. “They really didn’t want us as part of their community because we were timers,” he says. DFA relented later as it became convinced that the advisers would not be switching in and out of DFA funds for their timing strategies, says Mr. Merriman-Cohen.

The current model portfolio’s U.S.-stock allocation of 30% is invested in three DFA funds. “They all try to avoid realizing short-term gains” and use other strategies to lower taxes for investors, Mr. Katz says.

There is a 17% allocation to DFA T.A. U.S. Core Equity 2, which buys the broad market but has a tilt toward small and value stocks. T.A. stands for tax-advantaged; the fund aims to minimize federal income-tax implications of investment decisions.

Six percent of the portfolio is in DFA Tax-Managed U.S. Marketwide Value, which buys stocks across all market capitalizations. Seven percent is invested in DFA Tax-Managed U.S. Targeted Value, which owns stocks of small and midsize value companies.

FOREIGN STOCKS: Half of the portfolio’s total stock allocation of 60% is in foreign stocks. “We want massive global diversification,” Mr. Katz says.

He allocates 8% each to DFA Tax-Managed International Value, which owns large-company stocks in developed countries, and DFA International Core Equity, which buys stocks of all sizes but tilts toward small-cap and value stocks.

Another 8% goes to DFA International Small Cap Value.

Despite Europe’s deteriorating economic condition and poor markets, Mr. Katz doesn’t advise cutting back on foreign stocks.

On the contrary, for several clients, the firm’s advisers have been adding to foreign-stock funds to bring them back to their targeted allocation, says Elaine Scoggins, Merriman’s client-experience director, who manages the firm’s advisers. She says that any rebalancing of clients’ investments is done keeping in mind their cash needs “to try and keep trading costs low.”

The portfolio has a 6% allocation to DFA Emerging Markets Core Equity, which invests in stocks of developing countries.

BONDS AND CASH: The 40% allocation is mainly in municipal bonds, which are issued by municipalities and other agencies and are exempt from federal income tax. For many clients, Mr. Katz uses two funds that buy munis from around the country. Vanguard Limited-Term Tax-Exempt, which invests in short-term municipal bonds, gets a 15% allocation, and 18% is in Vanguard Intermediate-Term Tax-Exempt, which buys bonds with five- to six-year durations.

Munis are generally free from state tax in the state of issue. So for clients who live in states with a state income tax, Mr. Katz allocates part of the portfolio to a Vanguard fund that invests in bonds from that state.

The portfolio has a 6% allocation to DFA Intermediate Government Fixed Income, which buys government and government-agency bonds maturing in five to 15 years. One percent of the portfolio is in cash to cover Merriman’s management fee.

Ms. Anand is a personal-finance columnist for The Wall Street Journal, based in New Delhi. Email: shefali.anand@wsj.com.

By JOE LIGHT

Printed on the front of Fabrice Tourre’s performance review was a message: “Not intended for disclosure outside the firm.” At Senate hearings last week he and a few other Goldman Sachs Group Inc. executives learned there was an exception: Congress.

As they grilled the executives about their roles in the financial crisis, senators quoted from the executives’ performance reviews, noting the self-congratulatory tone they regularly used.

“It should not be a surprise to anyone that the 2007 year is the one that I am most proud of to date,” Goldman managing director Michael Swenson wrote in his self-evaluation. The comments could be an argument for a bonus, but Sen. Tom Coburn (R., Okla.) used them to tie Goldman to trades that now have the bank in the hot seat.

Employees long ago learned to watch what they put in emails, which often are monitored, saved and used as evidence. But even human-resources professionals were surprised to learn that self-assessments aren’t really confidential, even beyond their use in wrongful-termination litigation. The revelation of what many considered confidential information could have a chilling effect on an evaluation tool that is ubiquitous in corporate America.

“It’s mind boggling,” says Fred Foulkes, a Boston University professor who specializes in human-resources issues. “No one could have expected that these would become public.”

Self-Promotion

Bankers’ self-assessments could be a rich source of fodder for a Congress keen to bring financial firms under scrutiny. To justify year-end bonuses and argue for promotions, investment bankers commonly brag about behavior that otherwise wouldn’t be made public.

“There are a lot of firms on the street where if you don’t beat your chest like Tarzan, it’s viewed as a sign of weakness,” says Nick Zarcone, a managing director and chief operating officer in Robert W. Baird & Co.’s investment-banking department.

Earlier in the decade, self-evaluations were used as evidence during investigations into the relationship between the research and investment-banking arms of Goldman Sachs and other firms. But, unlike the current hearings, in most of those cases, the names of the analysts were hidden.

Self-assessments can also become evidence in wrongful-termination cases; most people filing suit would expect that to be the case.

But, what many people may not know is that evaluations of co-workers of someone filing suit can be disclosed and used to help make a case, says Daniel O’Meara, an employment attorney for Montgomery McCracken in Philadelphia. Still, the names are rarely publicly disclosed, Mr. O’Meara says.

Chilling Effect

That’s what makes the Goldman case so surprising to human-resources experts. Self-evaluations are nearly ubiquitous at corporations and often are used as part of a “360-degree” review process, in which the employee is assessed by superiors, peers, and subordinates. Most human-resources departments allow only managers of an employee’s group to look them up, says Kim Ruyle, a vice president of HR consulting firm Korn/Ferry International.

Many employers keep them in their files for up to seven years, leaving them open to subpoena. After the publicity of the Goldman case, companies may think twice about keeping them around for so long, say employment experts.

And in the short term until the political pressure dies down, firms might be wary of creating reviews that could embarrass them later, said Peter Cappelli, director of the Center for Human Resources at the Wharton School of Business.

“This can have a chilling effect on the whole process,” says Mr. Foulkes of Boston University.

By JESS BRAVIN AND VANESSA O’CONNELL

The Supreme Court said today that oral arguments over President Barack Obama’s health-care overhaul would begin March 26, and stretch over three days.

The lawsuit, brought by 26 states and joined by the National Federation of Independent Business, a small-business lobby group, relies in part on claims by Mary Brown, an auto-repair-shop owner who argued in court filings she would have had to divert funds from her business to comply with the law’s requirement that, beginning in 2014, most Americans obtain coverage or pay a penalty.

The Wall Street Journal reported on Dec. 5 that Ms. Brown, an individual plaintiff in the case, filed for bankruptcy in September after her business failed.

Because she no longer can claim the insurance requirement would interfere with her business, some legal scholars believe her standing to bring the lawsuit could be jeopardized.

NFIB lawyer Gregory Katsas––who told the Journal he learned of the bankruptcy filing around Oct. 6––notified the court of Ms. Brown’s changed circumstances in writing on Dec. 7.

In this letter, Mr. Katsas, of the Jones Day law firm, said that Ms. Brown’s lawyers would argue in their opening brief, due in early January, why her bankruptcy “does not affect her standing as a plaintiff in this case.”

Ms. Brown is still an NFIB member.

The suit names another plaintiff, retired investment banker Kaj Ahlburg. The government has contested his standing.

The parties challenging the health-care law are deciding now how they will divide up their time, NFIB spokeswoman Cynthia Magnuson said Monday. The states are represented by former Solicitor General Paul Clement, a partner at Bancroft PLLC.

A typical case is allotted an hour for argument, but the court scheduled five and a half hours for the health-care case, reflecting how novel some of the questions are and the importance of a dispute that could define the limits of federal power for decades to come.

The main part of the oral arguments will take place on Tuesday, March 27, with a two-hour argument over the minimum-coverage provision, which starting in 2014 will require most Americans to carry health insurance or pay a penalty.

Challengers assert that Congress lacks authority to require individuals to maintain health coverage. The Obama administration maintains that Congress’s constitutional power to regulate interstate commerce, levy taxes and enact “necessary and proper” laws covers health care financing mechanisms, such as the insurance mandate.

To date, three federal appeals courts have rejected challenges to the health care overhaul, formally known as the Patient Protection and Affordable Care Act, while one has found the insurance mandate unconstitutional.

The challengers, including the 26 Republican-controlled states, contend that if the individual mandate goes, the entire Affordable Care Act must also be thrown out.

Write to Jess Bravin at jess.bravin@wsj.com.