How was your investment advice in 2013?

Every year we have provided investment advice, we gain more confidence in our investment philosophy.

As 2013 comes to an end, we are more confident than ever in our investment advice and our approach to providing advice to our clients.

As 2013 began, the focus was on the fiscal cliff (remember that?). There was uncertainly and concern about the economy. Expectations were certainly not for double digit stock market gains.

We have always remained focused on providing long term advice for our clients. We don’t make predications and guess which stock or market sector will outperform. We have structured our clients’ portfolios to be truly globally diversified, with minimal costs and very tax-efficient. And this has worked.

As 2013 ends, we are confident in the continuing economic recovery and in our strategy. We were thrilled that Eugene Fama, one of the academics who did the initial research which provided the basis for our investment strategy, was recognized with the Nobel Prize in Economics this year.

We are positive and optimistic, which is a key to investment success. We recognize that there will be down months and down years. But with good planning and conversations with our clients, they will be prepared for such time periods.

The transition from one year to another one is a time to reflect. It is a time to evaluate what went well and what did not. It is a time to think about how each of us can improve, and how you can improve your financial situation.  Should you be evaluating your relationship with your current advisor? (or how well you do it yourself?)

Have you actually tracked your financial performance? How did you do in 2011? 2012? 2013?  Did you track it against a globally diversified benchmark? Did your financial advisor help you move other matters forward, such as estate planning or insurance coverage?

For many, change can be difficult. Starting new relationships can be very positive. However, you need to take the initiative, to have the courage to take the first step.

We wish everyone a healthy and prosperous 2014.



Target security breach: What you should know

If you shopped at Target stores between November 27 and December 15, 2013, and paid with a credit or debit card of any type, you need to be concerned about the Target security breach. You should actively monitor your accounts over the coming weeks and months.


Based on Target’s public statements, they have resolved the security breach and you should not be concerned about shopping there now and using a credit or debit card.

If you did shop at Target during the above period, and used a credit or debit card, you should be diligent about monitoring the future activity of the specific card(s) that you used during those visits.

  • If you paid with a Target Red credit card, you should monitor your Target credit card account online, at least weekly.
  • If you paid with any type of debit card (Target or any other bank debit card), then you should monitor that account activity. You should monitor the bank account which that account is tied to, to verify that there are no unauthorized withdrawals, now or in the future.
  • If you paid at Target with another credit card (such as an American Express card or Chase Visa, for example), then you need to monitor those credit card accounts going forward.

The Target security breach was related to the scanner devices used when you swiped your card. Based on statements by Target and other security experts, there is not a concern that social security numbers were taken.  Names, the account numbers and the expiration dates on the respective cards is the information that was “taken.”  The main concern is that duplicate cards will be illegally produced and used in the future.

Our recommendation is to regularly monitor any affected account that is tied to a card that was used at Target during this time period.

  • If you do find improper usage, report it immediately to the respective bank or credit card company.
  • Any improper activity is more likely to appear in the future, than to have already occurred.
  • Consumers are generally not responsible for fraudulent card activity,  so you will be reimbursed by the financial institution or Target, especially if you timely report any improper activity.
  • There is no way to know how many card holders will actually be affected by the Target security breach.

A few banks have taken steps already.  Chase is limiting debit card purchases and ATM withdrawals. If you used a Chase card at Target during the affected time period, you should have received an email from them directly. Chase is planning to issue new cards to all affected customers over the next two weeks. As of this time, Target is not planning to issue new RedCard debit or credit cards. Target is likely to provide credit reporting monitoring to affected card holders in the future.

The Target security breach did not involve, their online website. It only affected Target retail stores where cards can be swiped.

For further information directly from Target, click here.

Other recommendations:

Do not provide your social security number or any account number  in response to an email from what looks like a financial institution. For example, I recently received an email from Chase, that looked very much like it was from Chase, but was not. Whoever sent the email had created it to appear very similar to a Chase email notification.  Also, do not click on links within emails from financial institutions or be careful if you do. You can always originate an email yourself, call the company or go the company’s website yourself. That is safer than clicking on a link provided in an email that is sent to you from what you think is a financial  institution.

See this blog post, Truly Free Credit Reports, for information on checking your credit report. This is a good practice to do at least annually. However, I don’t think this is the best preventative measure in regards to the Target security breach.

If you have any questions about these matters, please contact our office. We are always striving to provide you and your family with financial security.


Stock Market and Interest Rates: What We Think Now

Many major US stock market indexes are at or near all time highs. Today’s November jobs report continues the trend of steady but not spectacular job growth. The unemployment rate continues to decline.

Our commentary and information can be helpful to provide you with important perspectives.

In general, we take a long term view of the stock market and do not react to singular events such as a jobs report.

What does the current economic news mean for you as an investor?


Today’s news is positive, as the more employment improves, the better the overall economy will be. That should translate into greater corporate earnings, which is good for stocks. A better economy should cause interest rates to rise to more normalized levels over time. This is good for individual bond holders and those whose portfolios are heavily allocated to fixed income investments, who desire more interest income.

Interest Rates:

For this article, short term rates are defined as maturities less than 3 years and mid-long term rates are defined as the 10 year Treasury bill.  For short term rates, the Fed has stated that these will continue to remain very low, likely below 1-2% for a long time. Today’s jobs report and the next Fed meeting will not significantly change short term interest rates.

For longer term interest rates, it is likely that these will continue to increase, as they have done throughout much of 2013, though not in a straight line. The focus will be on upcoming Federal Reserve meetings and how/whether they adjust the quantitative easing program (QE).  Under QE, the Fed purchases $85 billion of bonds monthly, as a way to hold down long term interest rates.  It is likely that the Fed will begin to decrease their monthly bond purchasing in the near future, from the $85 billion level.

The Fed has dual goals, to increase employment and to keep inflation around 2% annually. For the Fed to be reducing the QE program, the economy would be improving and more workers are being hired.  From a societal standpoint, this would be good.  As QE bond buying is reduced, or anticipated to be reduced, long term interest rates are likely to rise.  Some may be surprised by how quickly or how dramatically this could happen.  Earlier in 2013, the 10 year interest rate was 1.6 -1.7%. In late October it was 2.5%. Today, it is around 2.9%.  These are big changes in relative terms.

While the Fed has consistently been incorrect in their future economic predictions (providing even more evidence that the best, brightest and most informed cannot consistently make reliable economic forecasts over time), they feel inflation is under control and is “persistently below its 2% objective.”  These comments and the limited growth of employment indicate that the Fed will be slow and moderate in ending the QE program.

Stock Market:

We feel that the economy is steadily improving and the stock market is reflecting the resiliency that we have discussed many times over the past few years. Corporations continue to increase earnings and cash flow, are making huge stock buybacks and refinancing their balance sheets to take advantage of low interest rates.

Your attitude towards the stock market has to reflect your emotional perspective and factors such as your time frame for investing.  This is like a glass half full or half empty opinion. Which do you have?

We have a long term positive focus. We look at historical data and facts to determine our investment strategy. The economy has improved much better than many people recognize. Data such as housing starts, car sales, home prices and employment growth have all been positive.

There will always be some economic or political concerns.  The annual federal deficit has reduced dramatically, but the overall federal debt is still a concern. The new healthcare law is a great worry for many. Instability in the Middle East is always a concern.  What unknown event could occur that impacts the market or the economy?


We welcome the opportunity to discuss the current economic information with you and its impact on your portfolio. We strive to help you achieve a sense of financial comfort and security. We help you to organize, manage and grow your resources, so you don’t have to worry about the Fed or labor statistics.


Why I Am Thankful

As we celebrate Thanksgiving, I am thankful for…..


Our clients who have chosen to work with us…who are loyal, trust us and recommend us to others.

Wonderful families that each of us have.

Our good health.

To have won the lottery. Warren Buffett has explained that being born in the US is like winning the lottery, for the opportunity it provides.  While no country is perfect, there is no better place to succeed and live a good life, no matter how each of us defines this. For this, I am truly thankful.

The investment strategy we adopted when we began our firm, which we are more confident in every year. And for the results it has provided to our clients and us.

The business partners we have, who provide us with excellent support and advice throughout the year.

The opportunity to bring a 16 pound book to St. Louis for the BAMAlliance National Conference which enabled me to meet Seth Godin. It was not the autograph which was important, it is the lasting memory and inspiration he provided.

Outstanding medical care. I am so thankful for the incredibly skilled and caring staff of the University of Michigan’s C.S. Mott Children’s Hospital, who performed spinal fusion surgery on my daughter last January.  She is fully recovered and very healthy.

And the health insurance we have to afford this and other medical procedures our families have had this year.

My partner Keith, who trusted me to go on our own and allowed us to focus primarily on wealth management.

Jane, our wonderful and extremely efficient office manager.

The ability to prioritize and value time with our families, which enables each of us to attend our children’s or other relatives’ activities. Also, for each of us to be involved in charitable or other activities which are important and meaningful to us.

Our re-designed website and the creativity of Carl Richards, whose sketches add so much clarity to the advice we provide.

Being an avid reader, Twitter and the connections I have made with people who teach and inspire me so much, including Jason Womack, Lisa Adams, Alan Weiss, Bob Burg, Carl Richards, Seth Godin, Nick Murray and Larry Swedroe.

Being an entrepreneur.  For being willing to take risks to grow a business, to travel to conferences and seminars to learn new things and meet new people. For not being satisfied with the status quo. For striving to always be better.


We hope you and your family have a wonderful holiday and have many things to be thankful for.

Welcome to our new website!

After months of work, we welcome you to our new website.

We are excited by the new, modern look of our website. We hope you enjoy the sketches that are incorporated throughout, which provide clarity and insight better than words and pretty pictures.

Our previously separate blog is now fully integrated into the website. We look forward to writing more frequently, about investment topics, issues our clients face and planning concepts.

Special thanks to our web designer (and also my son),  Scott Wasserman, for his excellent work, suggestions and creativity.  We would also like to thank Carl Richards, who has provided a unique method of financial clarity with his sketches. We appreciate his creating a sketch for our firm, which is at the top of the Working With Us section of the website.

A few weeks ago, Keith and I attended the BAMAlliance National Conference, where we heard an incredible keynote speech by Seth Godin. He conveyed so many messages in one hour.  Seth focused on connections and relationships, taking risks and the concept of change.  He pointed out how the world is continuously changing and that we (all of us) need to adjust and change as well.  He stressed the importance of being different and bold, in a positive manner.

This website is different than the typical website of most financial advisors and wealth management firms. We think it is different in a very positive way!  We think Seth would like it.  And we hope you do as well.


What Would You Have Done?

She was sobbing hysterically in the luggage claim area of the airport. All by herself. No one helping her.

I realized I had seen her a few minutes early, at 7:30 pm in the main terminal, begging an airport staff person to help her. “I lost my cell phone. No one is helping me.”  Assuming she would be helped, I just kept walking.

In luggage claim, she needed help. I stayed with her. I kept asking a nearby airport visitor information volunteer to call security, the police or EMS. “I can’t find my license. I can’t find my cell phone. I have no boarding pass. How can I get back through security?”   She was young, scared and overwhelmed. She was having a panic attack. She looked like she was going to pass out. I bought her a bottle of water. The volunteer said he made phone calls but no officials appeared.

I have friends at gate 5a. They have my carryon. I don’t have my medication. I need medication.”   She would calm down, then another panic attack would overwhelm her. I could not leave her. She found her boarding pass. I got her first name, her mid-20s age. I got the name of a friend at gate 5a, but no one from the airport was contacting them. She could not remember her mom’s phone number. She was flying from California to upstate New York. She finally found her drivers license.  She finally remembered her dad’s phone number. She couldn’t breathe. She couldn’t stand up. She needed help. What should I do?

I stayed. I helped.

I was returning from the 2013 BAMAlliance National Conference and BAM Masters Forum meeting. I had been in St. Louis for 5 days and was tired and needed to meet my wife to take her for a medical test. But I needed to stay. This young woman needed help. So I stayed, as she needed me more than Felicia did at that moment.

Speakers at the conference talked about relationships, authenticity, trust, doing the right thing, taking chances, showing up, giving first and without the expectation of anything in return. Seth Godin. Jerry Greenfield. Dr. Robert Cialdini. Carl Richards. Jason Womack. They were all different, but essentially their messages had a common thread. Care. Be present. Do the right thing. How could I just walk away and ignore her?  She needed help.

She could get through security, but she was not physically able to get up. She kept collapsing. “Where are the police?,” I asked the volunteer. Can you get EMS?  She is close to passing out I kept repeating.

Finally, after almost 30 minutes, one police officer arrived. I gave him the information I had written down on a yellow sheet of legal paper. Her name. Her friend’s name. Where she was going. Then another officer arrived. They said I should go. They would handle it.

So I left. Worried. Would she be OK?  Would she be physically able to make her 9:25 pm flight to NY state?  I got on the shuttle bus to get my car. The only other person on the bus worked at the airport. “Is she OK?  he asked. I was startled.  What was he talking about? He said he had seen me with that woman in the luggage area. He said he saw the whole thing. “Did I know her?, he asked. No, I said. I was just trying to help her.

As I drove from the airport to get my wife, thoughts flew through my head. Why did the airport employee I talked to on the shuttle bus, who watched this all unfold, do nothing? Why didn’t he try to help?  Why didn’t the people in the Delta office help? Or just make a phone call?  Why did it take so long for the police or other emergency people or even security personnel at the airport so long to respond?

Today, the next day, I feel good that I tried my best to help this young woman. I didn’t even think about it. On Monday morning, in the calm of a beautiful hotel, surrounded by colleagues and friends, Seth Godin said to do what our gut tells us to do. Be vulnerable. Take chances. (And to write more). Last night, on Tuesday evening, I wasn’t thinking about Seth Godin’s speech. I was just trying to help another human being who was going through a crisis situation.


I can’t get her out of my mind. I don’t know if she was able to overcome the panic attacks to make her flight or if she needed further medical treatment. I’m worried about her. At some point in this 30 minutes with her, I wrote down my cell phone number for her on the back of my business card, if she needed more assistance.

I hope I hear from her. I just want to know that she is OK.

Nobel Prize in Economics, Our Firm and You

“The envelope please.  And the winner of the 2013 Nobel Prize for Economics is…”

We’re quite sure that not many of you were glued to your TV for this announcement at around 7 am Monday morning. However, one of the 3 winners has had a significant impact on our firm and our investment philosophy.

Who is Eugene Fama and why is his research important?

Eugene Fama was awarded the 2013 Nobel Prize in Economics for his research that concluded: attempts to pick stocks and time the markets were often fruitless. This research led to the development of index funds and our approach to investing. Fama is widely recognized as the “father of modern finance” for his academic work in developing this “efficient market hypothesis.”

Fama was the principal scholar whose groundbreaking research inspired the founding of Dimensional Fund Advisors (DFA), the mutual fund company through which we primarily implement our stock investment philosophy. DFA is now one of the top 10 mutual fund companies in the US, managing over $300 Billion. Fama serves on Dimensional’s Board of Directors and its Investment Policy Committee. Fama has been a professor at the University of Chicago Booth School of Business since 1963.

What does this mean for stock picking?

Fama was selected for his research beginning in the 1960s which show that stocks prices are “extremely hard to predict over short (time) horizons.”  As stock prices react so quickly to any new information, he argues this leaves little opportunity for profitable efforts by actively managed mutual funds and hedge funds.

At a conference in September, Fama said that since markets are efficient, he challenged the Wall Street notion that investment managers such as high-fee hedge funds could outperform market returns. His advice “…would be to avoid high fees. So you can forget about hedge funds” and other high cost mutual funds.

How has our firm incorporated Fama’s research into your investments?

We believe in the thesis of Fama’s research, which won him the Nobel Prize for Economics. To extend his research, we do not feel it is possible to identify in advance investment managers that will consistently outperform a respective benchmark over a long period of time. There is a significant academic research which supports this position, especially if fees and trading costs are considered.

Thus, we adhere to an index or “passive” philosophy, which minimizes your costs and invests in a particular asset class. We have chosen to primarily utilize DFA’s mutual funds to implement this strategy based on their performance and very low costs.

Fama has continued to play a major research role in the investment approach of DFA.  Further research developed the strategies to tilt towards small and value companies, both domestically and internationally, as they have greater expected returns.


It is our role to be independent, intellectually curious, and advise you in the manner that is best for your interests. We are pleased that Professor Fama has been internationally recognized for his research that has led to such a rationale investment approach. His continued guidance and work with DFA is truly valuable. Keith and I have each heard him present at conferences in the past and look forward to this even more in the future.

Note: This is the letter that is accompanying the third quarter, 2013 statements being sent to our clients.

Federal Shutdown, Investing and Your Planning

The Federal government is again on the brink of another self-imposed “crisis” brought on by political dysfunction. The impending Federal government shutdown is the result of Washington being unable to govern in an effective manner.

It is not our role to point fingers and assess blame. As we often say, we focus on things which we can control. We cannot control or affect Washington (thankfully!).

What are the implications of the Federal shutdown and how should investors react?

We do not believe that investors can accurately time the market on a day to day basis. We focus on the long term. As the Federal shutdown continues, it is possible or likely that the stock market may decline. When the matter is resolved, it is likely that the market will rebound. We do not advise selling investments with the intent to repurchase them when you anticipate that the Federal shutdown will be resolved. You have to be right twice; timing when to sell and when to buy. Also, you have to know the information before others do, as the markets react immediately.

The lesson from similar government situations in recent years is that patience is generally the best strategy. While it may not feel good during a crisis, you should recognize that “doing nothing” is an important decision. While others may react and try to trade on the daily volatility of the markets, most will not do it successfully. You will be more successful over the long term by adhering to your investment plan.

Do you have an investment plan? Have you reviewed it recently? Have you tracked your investment performance against appropriate benchmarks? If not, maybe the lack of planning in Washington is a good reminder that you should have a well developed investment plan. We can’t help Washington, but we can help you.

A Great Book and a Not So Good Op-Ed Piece

Reading a book can have a lasting impact. It can educate.  It can provide new and vivid perspectives, even to events which have recently occurred.

The outstanding book The Alchemists, by Washington Post writer Neil Irwin is one such book.  The Alchemists, Three Central Bankers and A World on Fire provides insight to the challenges that the world’s central bankers faced during the financial crisis since 2008 (and still face now). Irwin explains how they dealt with the non-stop issues, how they interacted with each other and how they developed new and innovative approaches to economic challenges.

I read and closely follow financial matters on a daily basis, through many types of print and electronic media. Still, I was amazed by how much I learned by reading this book. Irwin’s work reflects how perspective and information can sometimes only be gained through reading a book.

What did I learn from this book?  How will it benefit my clients, as their financial advisor?

Irwin started the book by attributing central bank actions (or inactions) in previous time periods as causal factors to economic depressions and worldwide instability, such as wars. Irwin vividly showed that Bernanke and the other world financial leaders needed to be brave and take actions that were often “wildly unpopular.”

Bernanke’s academic background as a student of The Great Depression, his ability to build consensus and develop creative responses to unpredictable events helped to prevent further economic catastrophe. While some may disagree with the central bankers’ policy decisions, I agree with Irwin’s conclusion.

Will this book help me to predict the future of interest rates?  No.

Will this book help me predict who the next Fed chairman will be? No.

Will this book help me to explain economic events more clearly to my clients? Absolutely yes. And that is one of our roles as their financial advisor, to provide clarity and explanations of complicated topics.(Note: Chapter 20 on the Chinese economy and their banking system are particularly worthwhile, as were sections on regulatory legislation after 2008-09.)

Having just completed this book, I was quite surprised to read the August 20th Op-Ed column in the New York Times titled Wanted: A Boring Leader for the Fed, by Amar Bhide, a professor at Tufts University. He said “we need to return the Fed to dullness and the chairman to obscurity.”  Further, the author wants to “scale back what we can expect of” the Fed.

After living through the turbulence since 2007 and reading The Alchemist, I cannot disagree more with Bhide. While one can argue about specific decisions that the Federal Reserve and Bernanke have made, I do not want in the next Fed chairman to be boring. Boring is defined as monotonous, tedious (which implies dull slowness), tiresome, humdrum (commonplace, trivial, or routine) and uninteresting.

The Fed chairman should be the direct opposite of boring. The chairman needs to be strong, bold, innovative and a leader willing to take risks that he or she feels are necessary for the good of the country and world. While Bhide calls for the Fed “to return to dullness” and the chairman relegated to “obscurity,” the opposite is necessary.

The Fed chair has to rapidly deal with unexpected events, such as the collapse of Lehman Brothers and AIG, as well as set monetary policy. The Fed chair needs to effectively interact with world bankers, fellow Federal Reserve governors and staff, politicians and the media.

The Fed needs to continue to clarify and improve its communication to the financial markets. The financial markets react negatively to uncertainty. The chair needs to act with decisiveness and be willing to speak publicly, as Bernanke has done by adding press conferences after certain Fed announcements.

The term of Federal Reserve Chairman Ben Bernanke ends in January, 2014. President Obama’s naming of Bernanke’s replacement is surely one of Obama’s most important decisions. I hope it will be an effective and experienced appointment, who can lead with consensus. But not a boring choice.

What if something happens to your Financial Advisor?

Do you work with a financial advisor or stock broker? Do you work with one person, or do you have a relationship with a team of financial advisors?

What if something unexpectedly happens to him or her, or the team?  Have you planned for this? Has your advisor thought how this would impact you, as his client? We have thought about this and we did something about it.

We have a fiduciary responsibility to plan for our clients as well as ourselves. We want our clients to plan and be prepared. They should expect that we would do the same. And we have.

Our firm uses a team approach, so that my partner and I generally meet with most clients. We are both familiar with our clients and their investment strategy. We work together, as it benefits our clients to have both of our input.

If something happens to both of us simultaneously, as unpleasant as this is to consider, we have made arrangements to provide continuity for our clients. We recently completed an agreement with our back office firm, BAM Advisor Services, for them to immediately take over our practice if this were to occur.

While this scenario is very unlikely, this is an example of the kind of forward thinking and coordination we have with BAM. We want to ensure that our clients are provided for in the future. We have confidence in the long term benefits of our investment strategy. We have confidence in BAM, as our partner, that they would take excellent care of our clients.

We have planned for the unexpected, so that our clients can be confident of their future and sleep well at night. Isn’t that what you want from your investment advisor?