A Milestone and reflections

Blog post #400

Numbers can represent milestones. Significant events. Progress. Moving forward. Growth, age and experience.

This is the 400th blog post we have written as a firm. 

What began as irregular blog posts in 2009 became a weekly commitment 5 years ago, in June, 2014. Since then, writing weekly has been a firm-wide effort, which involves coming up with an idea, writing, research and editing, compliance reviews and the final processing so the blog post is emailed to you for Friday am reading and adding to our firm’s website.

For me, as the founder of WWM, and primary author of nearly all of these blog posts, it represents a true source of pride and commitment to our clients. It represents the dedication and discipline to write, research and communicate to you, our clients and friends across the country, about relevant topics on a timely, regular basis.

There are very few independent financial advisors that have made this type of commitment to their clients to produce their own, original content on a weekly basis. We hope you find this valuable and helps you to be a better and more successful investor.

As this can be thought of as a milestone blog post, I wanted to share some bigger picture thoughts. Lessons. Key advice. Reflections since founding this firm in 2003.

We truly value the client relationships that we have developed. We take very seriously the trust that each client and their family places in us. We are confident that putting our clients interest first and using a transparent business model are vital to our past and future. That we own the same types of investments as our clients should give you even greater confidence that we strive to always act and be on the same side of the table as you, our clients.

During informal conversations, I have sometimes reflected that clients come to us for investment advice, but we can (and do) provide you with so much more. We help to determine a safe and reasonable annual withdrawal rate during the retirement phase of your life. We assist with college funding, retirement planning and analysis, aging, life transitions, estate planning and charitable giving. It brings us great satisfaction when clients request our input and advice on important decisions and transitions in their lives.

One of the core elements of our success was the adoption of an investment philosophy that we have been able to stick with, through all kinds of market ups and downs, as well as dramatic changes in the economy and companies, over the past 16 years. We are able to communicate our investment philosophy to clients, so they can understand it, adhere to it and appreciate that it is rationale and not guess work. More importantly, we continue to be confident that our core investment principles are valid and should remain so for the future.  Please read our blog, “A Philosophy You Can Stick With”, for further reading on why having an investment philosophy that we believe in allows us to be more disciplined and help our clients adhere to their financial plan.

Structuring a broadly diversified, global portfolio means that during some time periods we will outperform certain widely cited indexes, and at other times we will underperform these indexes. We structure and tilt our portfolios for the long term, towards asset classes that we believe will provide you with the best chance of long-term investment success, such as small and value, with significant International exposure. Sometimes value will underperform growth, or large companies will do better than small companies. We realize and accept this and explain this to you when we begin our relationship. We discuss and write about this often. We feel that providing you with guidance and discipline should help you to reach your financial goals.

One of our core principles since day one has been globally diversified stock portfolios, constructed with low-cost asset class mutual funds. There have been times, such as in recent years, that investing primarily in the US has been more successful than having a significant International allocation. As we base much of our investment advice and guidance on academic data, and not predictions, we remain confident that over the long term, our belief and adherence to being globally diversified will be beneficial.

While we listen to and read extensively from others we respect and trust, we make our own firm policy decisions after careful evaluation and analysis.

One of the few major portfolio changes we have made relates to commodity holdings. Many years ago, prior to 2008-09, academic data showed that adding commodities to a diversified portfolio would provide even more diversification benefits, as a hedge against inflation. The thought was that a commodity investment, with a significant component of oil related holdings, would provide good returns, particularly when inflation rose. As a firm, we later made the decision to drop most of these commodity allocations from client portfolios, as we perceived that the inflation hedge may not exist as often in the future because of the huge structural changes in the oil industry, mostly due to the growth of the US fracking industry. This has turned out to be a good strategic decision.

As interest rates dropped in the past decade, we made the decision to invest in high quality corporate bonds for certain clients who hold large fixed income investments. Some in our industry feel that high quality corporate bonds are not worth the additional default risk. We make the decision when we purchase new fixed income investments for clients, if the high-quality corporate bond interest rate premium is worthwhile over CDs and government securities, that this is a beneficial risk-reward trade-off. We remain confident that this has been very beneficial for our clients.

Another area that we differ from many advisory firms, both small and large, is our avoidance of many types of alternatives investments (such as alternative lending, reinsurance and hedge fund like investments). We believe that the investments we own and recommend to you should be as liquid as possible, have low fees, and are understandable and transparent. We have evaluated many such alternatives, and we remain very comfortable that our policy in this area has been to your best interest.

We wish that we had a clear crystal ball for the future. Unfortunately, we do not.

What we do offer to you is our goal of providing excellent financial advice, dedication to client service, the continued value of being lifelong learners in many areas of financial and investment matters, the intent to listen to your questions and concerns, and the commitment to invest in people and technology to provide the level of service and advice that you deserve.

We plan to remain disciplined and stick with our commitment to communicate with our clients regularly, via this blog, phone calls and meetings with you.

Thank you for reading.

And thank you for being a loyal client!

Good Decisions…..A better financial life?

Blog post #399

To be a good investor, you need to be able to make many good decisions over your lifetime.

Good decisions should be made rationally, not based on emotions. There will be circumstances and situations when time is of the essence and you would be best to act quickly.

Working with an advisor as a guide can help you make even better quality decisions.

You may not own any Bitcoin, but you can learn some great lessons from what has occurred to the price of Bitcoin over the past few years…..and what decisions those who have owned Bitcoin could or should have made.

Bitcoin is a type of currency, but it is not an investment that has a discernible value or worth. Other investments, like a company stock, bond, mutual fund, real estate, collectibles or commodities have prices and values that fluctuate, but there are generally underlying ways to value them over time.

Importantly, our firm does not consider Bitcoin to be an investable asset and we don’t recommend it to our clients. We consider it to highly speculative and very risky. For further background on Bitcoin, see our blog post “Bitcoin Mania: What’s it all about”from December 14, 2017.

The following are selected prices ranges of Bitcoin over the past years:

As you can see from these figures, the price of Bitcoin has fluctuated widely, both increasing and decreasing. It has been very volatile.

As discussed above, unlike other types of investments, we are not aware of a method to determine Bitcoin’s relative value.

Thus, if someone has decided to buy Bitcoin, we would recommend that they take advantage of price increases to sell some portion of their holdings. You must monitor the price constantly, be decisive and act when the time is right. For example, if you had Bitcoin in December, 2017, you should have sold some then, when the price soared to $16-17,000. The price has more than doubled during the past few months, and risen significantly in the past weeks. Now would be another appropriate time to take some profits. Waiting a few weeks to see what happens would not be rational.

When we invest for our clients, generally in asset class stock mutual funds and conservative fixed income securities, we don’t need to react with quite the same level of speed, as Bitcoin prices have been so much more volatile than stocks.

However, we do monitor and react with decisiveness and speed when appropriate. We are regularly monitoring client accounts for rebalancing and tax loss harvesting during periods of market declines and rebalancing as markets increase. Unlike some investors or advisors that only rebalance or tax loss harvest once per year, we act quickly when market and situations warrant it, as prices can change rapidly. For example, in late 2018 and early 2019, when stock markets decreased then increased, respectively, we placed trades to rebalance or recognize tax losses for clients as appropriate, based on market and timing opportunities. We did not wait, as the opportunity to act and obtain these benefits were gone within days or weeks.

Someone who holds Bitcoin may feel that because the price briefly went above $15,000 in December, 2017, it will reach that level again. There is no way to know when or if that will happen. You should be disciplined. You should not get emotionally attached to this or any other investment. You are best to follow the concept of buying low and selling high. If you bought some Bitcoin for way less than the current price, which is now around $9,000, then you should sell some of your holdings and be happy with your gains. Do not be too greedy.

We are rational buyers and sellers of investments on behalf of our clients. We have a plan in place for each client, called an Investment Policy Statement (IPS), which guides this process. We alleviate the buying and selling decision process for clients, which can provide them with greater peace of mind, as they know we are monitoring when to make these decisions and act. By acting rationally and having an established process, we are not making emotional decisions.

If you own Bitcoin and know you probably should be selling some of it now, but you can’t do it, you are likely letting your emotions control your actions. That is not the ideal way to handle financial decisions.

Diversify. Don’t have too many of your eggs in one basket. This seems so simple and logical, but many people evolve into this situation by owning company stock, receiving stock as an inheritance or getting lucky with Bitcoin they may have bought years ago. It is generally not a good idea to have more than 5-10% of your investable assets in any single investment (not including diversified investments, like a mutual fund). You cannot be afraid to take some profits. Even if you sell a percentage of what you own now, and retain a certain amount, you have to learn not to regret taking your profits….as there can be just as much chance the price could go down, or up, in the future.

When we design portfolios for clients, we evaluate how much risk they need to take, in order to reach their financial goals. We construct portfolios that are broadly diversified across many industries, asset classes and throughout the world. We want to avoid the risk of one bad thing that could happen to any company from having a material impact on your financial future. This is rational, logical and just makes sense.

If you have a significant portion of your portfolio in a few stocks or something like Bitcoin or gold, then you are taking on more risk than is necessary. Even if you own lots of a stock that has done really well in the past, like Apple or Amazon, there is no guarantee how that stock will perform over the next 5, 10 or 15 years.

We believe in broad diversification, knowing that it may not be as exciting. But this approach will likely enable you to reach your financial goals and also do it in a manner that will allow you to be less concerned about your finances than if you only held a few stocks in your portfolio.

We can help you be more decisive, rational and less emotional about your investments. Just talk with us.

In Your Best Interest

Blog post #398

When you buy something, you want to know what you are buying. Or you should know what you are getting.

When you want to buy some packaged ice cream, you make a series of decisions.

  • You may decide you want to go for taste, not low calories.
  • So you purchase some Haagen-Dazs, Ben & Jerry’s, or your favorite local brand of ice cream. You may have had them in the past and know they will satisfy your craving for ice cream.
  • You can decide how much you want to eat. The package provides you with the calorie and fat content, so even though you didn’t buy the “low-fat” product, you can easily see the information and choose how much you want to eat in each serving.
  • The key is that the packaging provides you with information that is transparent. You can read the label and make an educated decision.

What does this have to do with investing and your financial future? A lot.

In most important decisions or situations you face in your life, you hope that the people or advisors you work with will always have your best interest in mind.

When you go to a surgeon, you hope the surgeon will do his or her best. You hope the surgeon’s only objective that day is for a successful surgery. You hope the surgeon is using the newest and best tools, techniques and medications. You hope the surgeon is not choosing to use 2nd class technology or equipment because she is being compensated or getting other benefits from a medical supplier.

When you retain a financial advisor, you should want them to provide you with advice, guidance and recommendations that are solely in your best interest.

However, the financial industry is not set up this way.

Our firm, as Registered Investment Advisors (RIAs), are legally bound to make decisions that are in our clients’ best interest. Isn’t that what you would want and expect?Don’t you want an advisor that is going to be transparent about their fees and costs, and clearly explain the internal fees of the investments that they recommend? We would want this….and we are transparent about all these matters.

However, brokers at the major brokerage firms and banks don’t operate under these same very high standards. Now, they operate under a suitability standard, which means that an investment or product can be recommended to you, even if there are better or less expensive choices, as long as they are “suitable” for you.

Under current standards, a broker could be making decisions on your behalf, but influenced by compensation structures that impact their decision process. They are supposed to disclose these conflicts and costs, but in reality, these disclosures are provided to their clients after the investments have been purchased.  Further, this  information is buried in long and complicated documents like prospectuses, which few people ever read, or can understand.

Is this really what you want?

Do you want an advisory firm that will always strive to recommend what they feel is in your best interest? Or, do you want a broker which makes decisions on your behalf that may not be “best” for you, but would be “good” for you…..but better for them, than another investment choices?

We bring this to your attention because the SEC last week approved new regulations for the investment industry that will be effective by June 30, 2020, but the new rules will continue to allow for two somewhat different standards.

The new rules will feature “Regulation Best Interest,” which will raise the bar for the brokerage industry, but it will still be lower and less transparent than the standard for a firm such as WWM.

WWM will continue to have a higher standard of fiduciary conduct to act in your best interest, now, and after these new rules become effective next year.

WWM is very transparent about how we are compensated. Our only compensation is from fees paid by our clients, based on the assets we manage for you. If your assets increase, we both benefit. If your assets decrease, our revenue goes down. We are on the same side of the table as our clients. We are not paid by any mutual fund, investment provider or custodian.

However, now and under the new rules, brokers can be compensated for total products sold and rewarded for asset accumulation. Current conflicts, such as contests for the sale of a specific product will be allowed to continue for another year. Brokers will be permitted to continue offering proprietary products and use compensation to incentivize sales.

If you have accounts only with WWM, you do not need to be concerned about such practices.

If you have assets at major brokerage firms, banks, insurance companies or other financial institutions that are not RIAs, you should be aware of these matters. You should ask questions, or we can help you to review your accounts and help you to understand what you are really being charged.

We are not saying brokers are bad, but the manner of compensation and conflicts of interest which can and do exist may not be in your best interest.

You should be fully informed with transparent information.

When you buy food, you can read the label. You can then make an informed decision.

As it is hard to read a prospectus, maybe you are better off with a financial advisor like WWM, that is clearly working only in your best interest.

Talk to us.


“What’s in the final SEC advice rules?” Investment News, by Mark Schoeff Jr. and Jeff Benjamin, Pages 10-11, 6/10/2019

Market update – June 2019

Blog post #397

We always advise you to focus on the long-term and today is no different.

Years from now, the market moves of the past 6 weeks or few months will not be remembered and will likely be irrelevant to your long-term financial future.

However, at times it is important to review what has been occurring in the financial markets, so you can have a better understanding and perspective of the financial world.

We feel the main factors that have influenced stock market and economic movements in recent months are:

  • trade war and tariffs
  • interest rates
  • oil prices
  • still solid economic figures, such as generally strong earnings and employment numbers.

Trade and tariff issues: Over the past 6 weeks, since May 5th when President Trump announced new trade tariffs on China and more recently potential new tariffs on Mexico, global stock markets have declined. We cannot forecast how these trade matters will play out, as to who will win and who the losers will be.

We generally are in favor of free trade, if the playing field is considered fair to all parties. As many observers of International trade matters feel that China does not treat US companies fairly, the longer term goals and objectives of the Trump administration may be worth pursuing, even if they cause some near-term problems.

As in most situations, businesses and markets adjust to new realities. Already, we are reading that major companies that produce goods in China are implementing and making plans to change where they manufacture these products, away from China to avoid these tariffs. This will likely cause/force China to be more willing to reach an agreement at some point with the US administration.

While these recent developments have caused declines in broad US and International stock markets in recent weeks, on a year to date basis most major asset classes remain positive for the year, with wide variances between asset classes.

Interest rates: Interest rates within the US and globally remain historically very low and have dropped significantly in recent months. The 10 year US Treasury Note is considered a benchmark for many loans, including mortgages. The 10 year rate peaked at 3.2% in early November, 2018, when fears of rising interest rates caused stock markets to decline.

Since then, the 10 year Note has decreased dramatically to around 2.1%. Some feel the cause of this decline is due to concerns of slowing future economic activity. Others attribute the drop to foreign factors, as interest rates in most of the world remain far below these levels.

Earlier this week, Fed Chair Jay Powell stated that the Federal Reserve “did not know how or when the trade issues will be resolved….(but) as always, we will act as appropriate to sustain the expansion (of the US economy).” This was interpreted as another step towards the Fed decreasing/cutting short-term interest rates, and certainly not increasing them, as the Fed was projecting in the fall of 2018 for most of 2019.

Whatever the cause, many economists and forecasters are now predicting the Fed to decrease short-term interest rates later in 2019, which is a complete reversal from what most were predicting a year ago, or even 4-6 months ago.

This change in the Fed’s position in Tuesday’s speech led to one of the largest daily gains of 2019 for the US stock market. On Monday afternoon, stock market analysts were gloomy and pessimistic. And then on Tuesday, markets had their best day since January 4th. This is just another example why we advocate not trying to time the stock market.

Oil prices: Interestingly, oil prices peaked in early October, 2018, about a month earlier than the interest rate peak. Oil prices, as defined by WTI price per barrel, peaked at $76.41 on October 3, 2018 and have dropped to nearly $51 per barrel, a decline of over 30%.

The huge oil price drop can be attributed to many factors, including a perceived decline in demand due to a potentially slowing global economy, as well as increased supply in oil due primarily to US production increases.

Demand will always fluctuate based on changing needs and economic swings. The more important long-term trend that has had a major impact on oil prices is the huge increase in US oil production over the past years. We think this is a significant positive, which will have an ongoing positive influence for corporations and consumers alike, as it will provide for a cap/limit on oil prices. If overseas oil producers reduce production to limit supply, that would temporarily drive oil prices higher. And those higher prices will induce even greater US production, which would then drive oil prices back down.


  • The trade tariff issue will cause short term volatility and the outcome cannot be predicted in advance. There are likely to be settlements at some point, but there will also be new threats, new tariffs and unexpected surprises along the way, both positive and negative.
    • These issues should not cause you to change your investment policy or strategy.
  • The decline in interest rates and oils prices are good for the economy and may in fact prevent a recession or economic slow down, if one was even going to occur.
  • Cheaper oil prices and lower interest rates are good for consumers and companies, as it makes buying and producing products cheaper. It makes house purchasing cheaper, transportation less costly…..all positive factors.

We hope this information is helpful to you.

Again, it is in your best interest that your investment policy for the long term should not be influenced by short term trends and issues.

But understanding why markets have reacted over the last few days or months may be important for you to be aware of. If this can provide you with that knowledge and comfort, than our guidance and insights are valuable.