How to consistently buy low and sell high

Our goal is to help you reach your financial and life goals, through good investing and excellent advice.

For your stock investments, one of the ultimate goals is to buy low and sell high.goalsbg

But how can you do this consistently and with confidence?

How can you and your investment advisor have an approach that is rational and logical, which is not based on predictions and forecasts of what may happen in the future?

Through our disciplined investment approach, we can do this. And it will make you feel more comfortable and confident about stock investing and your financial future.

With individual stocks, it may seem impossible to consistently be able to buy low and sell high. It is challenging to try to guess or predict when a stock is low (and you should buy it) and how to decide when to sell (and know it is at a high). This is not a game we recommend to play.

We recommend investing in very low cost asset class mutual funds, which each hold large groups of stocks, in categories such as US Large, International Value, US Small Value, real estate investment trusts (REITs) or Emerging Markets.

When we develop a portfolio for a client, we first set an overall allocation of stocks and bonds/fixed income. Then we determine the allocation targets for each asset class, based on your needs and goals. For example, US Large may be 20% and REITs may be 5% of your stock allocation.

As the markets change, we make our buying and selling decisions based on a rational approach called “rebalancing,” not based on guessing.

We first review the overall allocation, to see if the stock and fixed income mix of your portfolio has changed. If stocks have done well, we would sell stocks “high” and use those proceeds to buy more fixed income. This keeps your exposure to stocks around a pre-determined percentage, to avoid excess risk in your portfolio.

In the late 1990s, most investors did not sell as their gains mounted. They let their stock gains continue to grow until they crashed and disappeared. Our rational approach allows you to sell high and prevents taking on more stock exposure than you intended.

If US Large has done well and that allocation has grown from 20% to 25% of the allocation, we consider “selling high” (after reviewing the tax ramifications) and reinvesting in an under-performing asset class. This is truly the discipline of buying low and selling high.

How does this work in the real world, for our clients?

Last year, Emerging Markets underperformed most other asset classes. If a client added money late in 2015 or early 2016, we would have over-weighted the purchase of the Emerging Markets asset class, if that asset class was appropriate for them.

As of this week, Emerging Market stocks are far outperforming all other asset classes for 2016, except the real estate asset class, with returns of approximately 15% year to date. This is about double the return of the S & P 500 for 2016. This is the benefit of being disciplined and rebalancing on an ongoing basis.

Having a disciplined approach to deciding when to buy and sell is a key component of our investment philosophy. It enables our clients to buy low and sell high. It enables our clients to understand us and provides them with a greater level of comfort.

Wouldn’t you be more comfortable and confident with our approach, versus you and/or your broker constantly guessing when is the right time to buy or sell Apple or Facebook?

We think buying low, selling high, being rational, confident and comfortable are all in your best interest.


Passion. Excellence. Dedication. Intensity. Caring. Drive.

These describe some of the thoughts I had after watching a number of episodes of “Chef’s Table,” a Netflix series which profiles some of the world’s top chefs.

I highly recommend watching Chef’s Table.  The videography and storytelling is outstanding. Each episode tells the story of an individual chef and their restaurant through interviews, vivid photography of the food they cook and where it comes from.Chef's table 2

These are not just the best chefs in a city, state or country, which would all be great accomplishments. These are chefs who are so passionate, driven, talented and inspired that they have become the very, very top in their field. These are the top 1% of the top 1% of all the chefs in the world.

Watching these episodes has led to conversations between my wife and I of how each of these chefs has a unique and interesting story of how they got to where they are now. Chef’s Table tries to explore the drive, successes and failures, and life events they each have experienced, all of which contribute to their remarkable level of success. The producers of these episodes help’s us viewers begin to understand the passion that motivates each chef to excel.

I have thought about the qualities these chefs display and the commonalities which exist in me and my firm. While I’m certainly not stating we have reached anywhere near the recognition or stature that these individuals or their restaurants have, there are lessons to be learned.

Most of these chefs knew early in their life they had a passion for food. One shared how they learned to cook while under their grandmother’s kitchen table. And they were driven and motivated, regardless of various obstacles. Since a teenager, I have studied personal finance and knew that one day I would become a financial advisor. I just didn’t know what the route would be. I have read the Wall Street Journal almost every day since I was 16, while working at a public library. I have always been very focused and motivated.

A common theme among these chefs is the desire to learn and create, but to do it differently than others were doing. They do not accept the status quo or conventional wisdom. When I decided I wanted to transition from a traditional CPA to become a financial advisor in 1999, I then spent four years learning, talking and voraciously reading investment books, to find the best investment philosophy for myself and my clients. Only then did I form the financial firm we have today. I did find a philosophy, which we still adhere to today. We challenge conventional wisdom and don’t follow Wall Street thinking, which we feel is a significant benefit for our clients.

Many of the episodes show the time and effort that these chefs spend in obtaining the outstanding ingredients which go into their meals. They walk the food markets and talk to vendors. They travel to farms, learn about new growing techniques and discuss the finest details. They smell and taste parmigianio (parmesan) cheese and fresh baked bread. It may make you immediately want to go to a high-quality food or produce market.cheese

We strive to take the same type of care and dedication in making investment and financial recommendations for our clients. We want to understand your personal needs and goals. We are continually learning, questioning, reading and adapting to an ever changing world.

The chefs’ goal is to select the highest quality ingredients, which may be the most expensive, because these outstanding products will lead to the best dining experience. These are extremely expensive restaurants and the food cost is less of a factor in the overall experience. These chefs know that top quality ingredients are vital, regardless of their cost.

In stock investing, pursing the opposite is true. Research shows that lower investment costs are highly correlated to better long-term financial success. We understand this. Most of traditional “Wall Street” does not. We implement our stock investment strategy by combining high quality stock mutual funds, with strong performance records, which also have very low costs.

One key difference between our firm and these restaurants is accessibility. They only have one restaurant location and very limited space, so distance can be an issue. These restaurants are hundreds of dollars per person, so very few people can afford to experience them. We are based in suburban Detroit, but advise clients who live all over the country. Where you are located is not an issue. We work with multiple generations of many families, with varying amounts of wealth. If you think and save long-term and believe that our advice will be valuable to your financial future, we can have a working relationship.

We hope that you try watching Chef’s Table.

While you may never eat at one of these restaurants, seeing their passion and how they strive for excellence is truly inspiring.


The Important Six Sentence Investment Message

1.  Important investment principles begin with saving, coordinated with good planning, so that you do not run out of money, you can meecarl richards things matter mostt your financial goals and you sleep well at night.

2.  Remaining invested in stocks and not timing the market is important to your financial success, as gains can come in sudden, short spurts and often when you least expect them to occur.

3.  Patience, discipline and diversification are important characteristics of successful investing.

4.  It is important to “expect the unexpected” and not to react to sudden market swings, which unexpected events can cause.

5.  Academic data continues to show the importance of using low cost investments, such as we recommend, as they outperform high cost investments over the long-term.

6.  It is important that you recognize why we do not recommend “reaching for higher yield” by purchasing high-yield (junk) bonds/bond funds, as well as preferred stocks, as they may seem enticing for income but may not be as beneficial in the long-run.