Blog post 450: A Milestone Interview

Starting in mid-June, 2014, I committed to writing these posts weekly, which we have done for the past 6 years. Since 2009, this is the 450th blog post we have written.

We hope these blog posts are helpful to you, as we strive to provide you with guidance, timely information and clarity, as you deal with a constantly changing financial world.

What have you learned from the last few months, from the pandemic and the financial markets?

The most important lesson confirmed what we already knew, that financial markets cannot be timed and predicted. One of our firm’s guiding principles and beliefs is that you can’t successfully time the markets….that you can’t successfully try to time when to get out of the stock market and then accurately figure out when to get back in. It is too hard to be right both times, getting out and getting back in.

No one could have predicted the strong stock market recovery since March 23, 2020. The stock and bond markets move on news that is unexpected. In other words, new information that is not already known. The Federal Reserve’s strong and sweeping actions could not have been predicted or timed in advance. They have done much more, and acted much faster, than they did during the Financial Crisis of 2008-09. That has had a major positive impact on the bond market, and thus, the stock market.

When unexpected progress is announced on vaccines or treatments, it is likely the markets may increase. However, there remains great uncertainty about future cases, the ability to control Covid, how the economy will react and future governmental and Federal Reserve responses.

Nearly all of our clients have adhered to their long-term plans. They have remained in the stock market. We plan and determine each client’s asset allocation to be appropriate for their risk tolerance, time frame and their need and ability to take risk…. your need for stock market exposure. We want each client to have an appropriate stock market exposure so you can emotionally handle the downturns.

What are some of your earliest investing memories and lessons?

I didn’t make any real investments until I was in my late 20s or early 30s. My first financially related memory was working at my local public library during high school, when an older gentleman advised me to read the Wall Street Journal every day. I have been a Wall Street Journal subscriber and reader since my first year of college, for almost 40 years now.

The summer after my first year in college I worked as a busboy at a resort in Wisconsin, putting myself through college. Chrysler was near bankruptcy at the time. I wanted to buy $500 or $1,000 of Chrysler stock and called my mom to discuss it. She had no investing experience, as my parents were divorced and we lived paycheck to paycheck. She said I needed to save the money to pay my college tuition and not to risk it on Chrysler stock. I would have made a lot of money if I had bought that stock, but she was clearly right. I had no business even thinking about buying Chrysler stock, as that was critical money that I needed for the coming year of college.

The lesson is that money needs to be considered in various buckets, based on your time frame. I needed the money for tuition and housing for the next year. Money invested in the stock market requires a long time frame, at least 3-5 years or much longer.

You need to think about your investments based on your time horizon. If you are saving for a retirement that may last decades, what happens today is not as critical. We are planning and focusing on providing you with enough capital for an income stream that will last you for decades.

What are some of the important decisions that you have made and why?

The decision to adopt the investment philosophies that we did in 2003, and still believe in and adhere to today. These guiding principles enable us to have a set of beliefs that give us confidence and a foundation for investment policy and the decisions that we make. We believe this gives our clients confidence and comfort, despite financial uncertainty.

My decision to ask Keith to be my partner in 2008 was critical. I will forever be thankful for his trust in me and leaving our prior firm, a week after his 4th child was born. While we have very different styles and personalities, we analyze things well together and complement each other. We feel that one plus one equals three, which is the basis for a strong business relationship.

The decision to be fee-only financial planners and not to accept any commissions is vital. We act as fiduciaries and put our clients’ interest first, always. If our clients do well, so do we. If they lose money, our income declines as well.

We have made several major investment policy decisions that we feel are proper in the long run. We believe in global asset allocation and broad diversification. While certain asset classes have performed below US Large stock indices for a number of years, we know these periods of underperformance often turn around. Over the long-term, meaning decades, a globally diversified portfolio has outperformed a US-only portfolio. We expect that to be true going forward.

We got out of commodities after 2010. We did this because we did not think commodities provided an effective hedge against inflation, which was the original purpose of buying commodity funds. This had been a good decision, as commodities have done very poorly since then.

We have avoided alternative investments and hedge funds. We believe in using very low costs investments, which we can understand and provide daily liquidity. Most alternative and hedge funds don’t meet these criteria. We invest only in high quality fixed income investments. We review different investments regularly, and have modified portfolios and investments over time, but new investments must meet our foundational criteria.

How does writing this blog fit into the firm? Why do you do this every week?

As founder of WWM and author of nearly all of these 450 blog posts, writing these weekly blog posts represents our commitment and discipline to effectively and timely communicate with you, our clients.

We want you to know that we care. We want you to know that we are always thinking about our constantly changing world and how it impacts you. We want to be unique as a firm. By writing each week, we can inform you and provide our thoughts to you in real time.

Writing a blog post every week means we are constantly looking for relevant topics to write and communicate about. Finding topics in the past months has NOT been a challenge. We feel this process makes us better Advisors for you. We listen to your questions and issues, as those frequently become future blog posts topics.

I want to thank the other members of our firm, and Michelle Graham in particular, who works with me each week to produce the blog and deals with my many editing changes. We must research and meet various compliance regulations, which takes time. We spend hours per week on each blog. It is a firm-wide effort.

There are very few independent financial advisors that make 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.

What do you see for the future of the firm and its clients?

In the near-term, we will be working with clients on a virtual basis and we are well prepared for that.

WWM has grown at a steady, moderate rate over the past decade, and we hope that continues. We want to add clients, but only at a pace that will enable us to provide excellent service to all of our clients, new and continuing.

We are particularly pleased that we are working with multiple generations of client families. We have many clients where we work with grandparents, their children and even grandchildren. We work with parents and they are now introducing us to their children. We have helped many clients deal with life transitions, such as those who have had a spouse die or have gotten divorced. These can be difficult times for people and having a firm with this expertise that can assist you through those times can be critical to your well-being.

We are looking forward to engaging clients in a Wealth Analysis and planning processover the next year, and beyond. We are using a top of the line, comprehensive financial planning software that will enable us to interact and plan with you in a new way. Brad Newsome, an Associate Wealth Advisor who we hired last summer, is very experienced with this software program. He will be leading this implementation and the related client discussions. This process will address long-term financial planning and projections, goal setting, Social Security decisions and projections, college funding and many other areas. If you are interested in starting this process, please let us know.

We are committed in providing you with excellent financial advice, a dedication to client service and to be lifelong learners in many areas of financial and investment matters. We are committed to listening to your questions and concerns, and to invest in people and technology to provide the level of service, advice and long-term financial results that you deserve.

We plan to remain disciplined and stick with our commitment to communicate with our clients regularly via this blog, as well as through phone and Zoom calls. Hopefully in the not too distant future……meetings with you, wherever in the country you live.

Thank you for reading.

And thank you for being a loyal client!

Making financial decisions easier

Blog post #449

Your financial life can involve many decisions, choices and emotions. We can help to make it easier for you to deal with.

Staying in the market and sticking with your long-term asset allocation plan during a pandemic is not easy, but it can be done. We have helped you with this and will continue to do so.

Choosing among the many choices of a 401(k) plan and saving for college can be overwhelming. We can help, as we have for many others.

Dealing with finances and financial decisions after the loss of a spouse is not easy. We can help you or those you know, as we have helped many others.

Determining how much you need to save, and how you much money you will need in retirement is not simple, but we can assist you with this planning process.

We remind you to focus on the long-term. The stock market often looks forward into the distance, not at today or the next few weeks.

Markets move on unexpected news, good or bad. We remind you not to focus on day-to-day market moves, which should increase your ability to realize your long-term financial goals.

Dealing with a pandemic is not easy. Dealing with financial decisions during a pandemic can be even more challenging. We are ready and willing to help you, with whatever financial decisions or concerns you may have.

In recent weeks, all remotely and virtually, we have helped clients with many different issues. These have included decisions involving their asset allocations, investing issues, charitable planning, mortgage and moving decisions, selling a house, generational planning and gifting, job changes, as well as assisting clients going through life transitions.

Helping you and your family to make better quality financial decisions is one of our primary roles. We do this by listening and talking with you. You can benefit from our decades of financial experience and hundreds of client interactions.

We realize that uncertainty always exists, as financial markets, tax laws, the world and your life circumstances are always changing.

We strive to make complicated matters simpler for you.

We strive to give you guidance that is in your best interest.

We strive to provide you with clarity and guidance, for whatever issues you may be facing.

In this time of extra uncertainty, we are confident that we can provide you, and those you care about, with solid financial advice. Talk to us. We are here for you.

Our firm has relationships with approximately 125 clients in 18 states, including Michigan, Florida, and many others. We work virtually with clients across the country, so we are well prepared to assist you, other generations of your family, as well as your friends.

Purely Personal – Graduation Edition

Blog post #448

On Sunday, Rachel, my youngest child, will graduate from Kalamazoo College, a small liberal arts college.

Like so many other high school and college graduates around the world this year, she will not be able to have a formal ceremony. I am proud of her accomplishments as a student and as a passionate individual. I am grateful that I will be with her to celebrate, at a social distance on Sunday, as I have not seen her in person in many months.

As investors all know, investing can be difficult and challenging. You must be disciplined. There can be ups and downs.

Rachel has overcome challenges and shown determination throughout her life. She is very caring about others, passionate about her beliefs and is not afraid to stand up for what she believes in. This has been part of her for as long as I can remember.

Rachel advocated and worked for many causes throughout her college experience, from her first year on campus through her final weeks sheltering in place with her housemates. She has been a campus leader as well as a leader for two years in Kalamazoo College’s camping orientation program, LandSea.

Rachel canoeing as a LandSea leader in the Adirondack’s

She has wanted to do things her way. And she has. She told me in high school that she wanted to attend a small, most likely private, college. She didn’t want to attend the University of Michigan or Michigan State University, as most of her friends did. I told her that would be far too expensive for a general undergraduate education.

She showed me that I was wrong, as many small private colleges provide significant grants or scholarships that make the cost comparable to UM or MSU. Note to fellow parents or grandparents….it may be worth exploring small private colleges for your children if they are interested.

She has taught me other things during her four years at K College.

  • When I moved her into college, she quickly taught me that she was a “first year” student and not a “freshman,” as the gender-neutral term was very important to her. I tried my best to use the term she wanted and eventually, it came naturally to me. This taught me that we can change our habits if we concentrate on it. But change takes effort and persistence.
  • Rachel taught me that what she was learning at college, such as how to think and process ideas was most important, not the grades that she got. I don’t know what her GPA is, and I am OK with that. This may not apply to many students and parents. I trusted her. She has learned to be a better reader, writer and thinker. She has learned responsibility. She completed a massive senior thesis project that took 8 months and is 78 pages long, and with future efforts, hopefully will reduce sexual harassment at summer overnight camps in the future.
  • Rachel taught me that a semester abroad can be valuable (and lots of fun as well)
  • Thankfully, she pursued what she wanted and spent 4 months in Greece, followed by a month of traveling alone throughout Europe. This provided me with an opportunity to travel to Greece and Italy with my three children, which was a memorable family experience and one of the best trips I’ve had. Thanks Rachel!!
  • She has taught me to be a better listener, though I sometimes struggle with interrupting her, as we exchange passionate ideas and viewpoints. Rachel, please know that I try, and I do listen to you!

Rachel on her study-abroad term in Greece, overlooking Athens

People ask me what Rachel will be doing after she graduates. For several years, I have told others that “she will likely work in an organization of some type where she can change the world, as she wants to.” She is very passionate about what she believes in. She is not motivated by money. She is not materialistic. She is a leader and she is effective. She plans to spend the next year in Detroit with a non-profit organization dedicated to social change through service. I have no doubt that Rachel will succeed at causing positive change, in whatever areas of focus she decides to pursue.

In this time when health and social justice issues require change, I’m proud that my daughter will be graduating with leadership abilities, strong thinking skills and a passion to bring positive change to our world.

Just like investing, it will not be easy. But I am confident in the future.

Dealing Thoughtfully with Uncertainty

Blog post #447

For this week’s blog post, we encourage you to watch this short video.

David Booth, Founder and Executive Chairman of DFA (Dimensional Fund Advisors) shares his thoughts on the importance of having an investment plan that you can stick with, uncertainty and how to think about the future.

I didn’t know what the word “clairvoyant” means. It means to have the ability to predict the future.

As Booth states at the beginning of the video, we don’t have the ability to predict the future; humans are not clairvoyant.

We hope you find this few minute video worthwhile.

David Booth on Dealing Thoughtfully on Uncertainty

We help you plan. We help you with a strategy to reach your goals. We consider your goals and risk tolerance.  We help you make good decisions.

Just as we strive for your relationship with our firm to be beneficial for you, we hope this video is helpful.

Uncertainty can create opportunity. Please feel free to forward this blog post and video to others you know who could benefit from our firm’s approach to financial planning and investing.