Gratitude during the holiday season

Blog post #424

The Holidays can be different for each one of us. We might spend the holidays with our immediate family members, extended family or just with our spouses if your children are grown and have schedules of their own or live out of town.

You might bake cookies, decorate a tree, have dinner as a family, go to a religious service, buy gifts for loved ones, or help those in need.

Maybe you celebrate Hanukkah or Christmas and the traditions that accompany these holidays. You may not celebrate the holidays at all.

We often focus on buying presents, hosting our families for the holidays, or trying to please our family and friends. We often find ourselves stressed out during the holidays instead of just enjoying the time with our loved ones.

So, whether you take part in any of the above activities or not, let’s take time to be grateful, appreciative and acknowledge all the opportunities we have in our lives.

Let’s take the time to reflect on the moments both special and ordinary and be in the present with others.

Every Monday, we hold a weekly firm meeting. Over the past few months, we have started our firm meetings by having each WWM team member state something they are thankful for. I know not all members are comfortable sharing with everyone. It’s become a nice personal way to start our firm meetings and get to hear what each WWM team member is thankful for that week.

It has helped our firm grow. We may learn something new about a team member and appreciate the value each WWM team member contributes to the firm.

Just as we take the time to say what we are thankful for each week, we hope you set aside time for reflection and discover what you have gratitude for, at this time of year.

From all of us at WWM:

We appreciate EVERY client and the relationships we get to build with each one of you.

We hope you have a good holiday season and we wish you all the best for a healthy and happy 2020!

This week’s blog written by: Michelle Graham

Note: There will not be a blog post Friday, 12/27/2019.

Looking back and forward, Part 2

Blog post #423

As this decade draws to a close in a few weeks, we are providing a series of blog posts of our thoughts and reflections, lessons and guidance.

Last week we discussed how interest rates changed dramatically over the past decade, and in the opposite direction of what most people would have expected to occur in 2010, for the next 10 years.

This week, we will provide some of the traits, philosophies and attitudes that can help you to be more successful, as an investor and for your financial future.

Having a written investment plan. We feel that developing a written document with our clients, that discusses their long term asset allocation plan, as well as the potential of how such an allocation could perform during a significant market decline, is vital to your future success, as it helps you adhere to the plan during down markets.

To be a successful investor, you need to be patient. You need to have the psychological ability, with our assistance if needed, to ride out market declines, to be able to reap the rewards of positive bounce backs. Staying in the market during and after the significant declines of late 2018, and at other times in the past decade, are great examples of this. By staying in the markets in late 2018, this enabled the stock portion of your portfolio to grow during the positive markets of 2019.

Be willing to listen to others and get advice. Due to changes in financial markets, the economy, tax laws and the speed of change in general, we feel that using a financial advisor can help you reach your financial goals. Using an advisor that adheres to a fiduciary standard, as our firm does, so that the advisor’s interest is aligned with your financial interests is important. One aspect of an advisor that adheres to a fiduciary standard is we try to keep your costs minimal, by using very low cost institutional mutual funds. We cannot control many things, but costs are something we and you can control.

Having a consistent investment philosophy that you believe in and can adhere to over the long term, is vital. This philosophy should provide you with a solid chance for financial success. Rather than continuously changing approaches and underlying investment managers, sticking with a consistent, long term philosophy should provide you with confidence and peace of mind. An important aspect of our philosophy is the belief that, for most investors over the long-term, utilizing asset class mutual funds should outperform those who buy and sell individual stocks, as well as active money managers who try to guess which stocks and sectors will do the best in the future.

We believe that for the long term, being broadly and globally diversified is the proper strategy for your stock portfolio. We also believe that having a portfolio tilted towards small and value stocks, as well as including International stocks, should provide you better expected returns and a smoother ride over the long-term.


  • We may have the right long-term strategy, but this does not mean this will result in an optimal outcome every year or even for a number of years. You can have a good strategy, and still incur an outcome that is not as good as another strategy over certain time periods. But that does not mean you should change your strategy in a significant manner, unless you have evidence which supports your change, or that your current strategy is no longer valid.
  • To use a sports analogy, if you are going into the Super Bowl and could pick any quarterback, choosing Tom Brady may be the correct strategy. He may not win that one game, but your plan was valid. Over the longer term, he has proven to be a winner. Likewise, in investing, one could develop a sound strategy and recommend investing in a diversified set of asset classes (mutual funds).  If one of those asset class mutual funds underperforms other asset categories for a period of time, this does not mean the strategy was bad.  Patience is likely to prove that in the long term, continuing to hold a currently underperforming asset class to be rewarding in the future.  We just don’t know exactly when.

We think having a positive attitude helps you to be a more successful investor. You should believe in capitalism and that over the long-term, companies will succeed and grow their earnings.

Having realistic expectations of the financial markets is vital. You should know that stocks go down at least 20% in one of every 5 years, on average, since World War II. We want you to be prepared emotionally and financially for such downturns. At the same time, know that stocks go up far more years than they go down. When you are in retirement mode, you should plan to withdrawal 4-5% of your portfolio, which gives you a better chance of not running out of money during your lifetime and be able to maintain your standard of living.

We know that the financial markets and the world are continually changing, and we will change and adopt new strategies, investments and concepts, if they are valid, sound and we expect them to be beneficial to our clients. We are independent. We do not get compensated by mutual funds or other investment providers. We gather information from many sources, but we make our own decisions and recommendations.

We have used the same general investment philosophy since our inception in 2003. We still strongly believe in these major concepts and beliefs. Within that framework, however, we have not been static. We have made changes and modifications over time and will continue to do so, as we feel they should be made, as long as we expect them to be in our client’s best interest.

We cannot predict the future. We do not know what the next decade will bring. We do know that we have a set of philosophies and beliefs, as well as a team of professionals and industry relationships, that you can be confident in.

Talk to us.

Looking back and forward, Part 1

Blog post #422

It seems amazing, but in a little over 3 weeks, this decade ends and a new decade begins.

This is a good time to review, reflect and learn from what has occurred in the past, as well as share some insights about the future.

This is the first of a series of blog posts we plan to write reflecting on various aspects of the past decade and the future.

Ten years ago, the US and the rest of the world were just beginning to come out of “The Great Recession,” which was caused by the US housing bubble and led to the global financial crisis of 2008-09.

One of the major lingering impacts of the Great Recession has been that interest rates and inflation have been at historically low levels over the past decade.

You may think interest rates are low today, but let’s really put this into perspective.

Currently, the 10 year US Treasury Note is now yielding around 1.8%, and has fluctuated between 1.56% – under 2% during the last 3 months.

What do you think the yield was of the 10 year US Treasury Note ten years ago, during January 2010?

Think about this for a minute. The U.S. economy is doing pretty well today. While other parts of the world may not be doing as well, the world economy is certainly not going through anything like the global financial crisis that occurred in 2008-09.

So what do you think the 10 year US Treasury Note was yielding in January, 2010?

Incredibly, the yield 10 years ago much higher than it is today, almost twice as high. The 10 year yield was 3.665% in early January 2010, versus around 1.8% this week. ***

Similarly, mortgage rates were also higher in 2010 than they are now. Mortgage rates were above 5.25% in early 2010, and are now around 3.70%, for a 30 year fixed mortgage. *

While US and global economies have improved significantly over the past 10 years, inflation has been very low and interest rates have dropped. In many other counties, interest rates are actually negative.

What do we think are the causes and thoughts about the future?

Inflation and interest rates are closely correlated. If inflation was higher, or started to increase above 2%, then interest rates would be higher, or at least central banks around the world would raise interest rates to prevent inflation from increasing significantly.

This has not been an issue, as inflation has been so subdued over the past 10 years. One clear cause of this has been the impact of technological changes like fracking on the global oil and energy supply. In previous decades, such as 1973-74, the rise in oil prices caused high inflation and high interest rates. As we have written previously, the technological improvements in oil and natural gas production has put what appears to be a cap on oil price increases. Oil prices have traded in a range since 2015, which has been a key factor in low inflation.

We often say….you should focus on things that matter and things you can control, per the great sketch by Carl Richards. In this case, we cannot control the future of interest rates or inflation. For planning purposes, we assume that interest rates will remain around current levels going forward. Though we would not have assumed these current low interest rates ten years ago for now, there is nothing on the horizon to indicate much higher interest rates will be returning any time soon.


Our blog post dated March 17, 2010, Fed Actions: What Does it all Mean, still very much applies today. “As advisors managing fixed income portfolios, we do not make predictions about the direction of interest rates…to attempt to do that is nearly impossible, particularly over a long period of time. We would prefer to build a diversified portfolio of very high quality fixed income securities, of varying maturities, so that we will get the interest rate return of the market, and not risk losing money by betting on the direction interest rate moves.”

We know that is it very difficult to predict or guess the future direction of interest rates.

We are not going to play a loser’s game, or one that would be unnecessarily risky, by trying to place bets on the direction of interest rates with your fixed income allocation.

At the same time, we realize that the fixed income portion of your portfolio is not earning much, compared to certain time periods in the past. The rate of return on fixed income is low, in actual terms, as well as what is called the “real return,” which is the yield less the inflation rate. For example, if your fixed income is yielding 3.5% and inflation is 1.8%**, then the real return is 1.70%.

Unfortunately, due to this economic reality, to grow your assets net of inflation, you must take risk in stocks, as high quality fixed income securities are only earning 1-2% greater than the inflation rate. And this does not include income taxes on the earnings.

Though interest rates are low, we want to caution you to not increase your stock allocation unless you truly have the need, ability, willingness and time horizon to take on the extra risk that comes with owning more stocks. This is where talking with us, and planning, comes into play. In our role as your guide and advisor, we want to help you determine what is the appropriate balance of fixed income and stocks for your individual or family’s specific circumstances and goals.

There is still a vital role that your fixed income allocation plays, which is to provide downside protection when inevitable stock market declines occur. Owning fixed income mitigated losses in periods like the 4th quarter of 2018. While you may not earn much on your fixed income investments, the role of fixed income is still critical, to smooth out the ups and downs of stock markets.

We recommend that you factor in lower rates of return on fixed income, when you consider your financial future.

This means you may need to save more, as your fixed income earnings may be less.

It means you should generally not pay off a low interest rate mortgage early, as that is a significant “asset.” If your mortgage is higher than 4.5%, you should consider refinancing.

There are many implications to lower interest rates. Some are good and some are bad. We can help you to deal with this.

Please talk with us. We want to help you plan for your future.


*, December 4, 2019

**, December 4, 2019

***, December 5, 2019