It’s that time of year……again

Blog post #406

Over the next few weeks, students will be going back to school. 

Two of my nieces will be leaving for college soon, starting in 10 days. Other children of the members of our firm will be returning to college, high school, elementary and middle schools shortly.

It used to be that nearly all schools, colleges or K-12, started after Labor Day.

Times have changed. Schools start earlier now.

And that is one of the key lessons for saving for college….start saving early.

We all know college is quite expensive and over past decades, costs have generally risen much more than inflation. College debt is now a major national issue for many young people.

If you have children or grandchildren, we recommend that you begin starting to save for college as soon as you are able to. Depending on what fits your financial ability, we recommend a regular savings plan.

Generally, the most optimal way to save for college education is using a 529 savings plan. These plans, offered by nearly all states, allow the money that is invested in the plan to grow tax-free, as long as the money is used for college-related expenses when withdrawn.

By using a 529 plan, you will avoid having to pay taxes on any dividends, interest or capital gains. Thus, it is advantageous to move funds intended for college savings into one of these plans, rather than incur taxes in a taxable account.

These plans allow for the money to be used at nearly any college or university, and permit families to use funds for other siblings, so there is built-in flexibility.

The 529 plans offered by each state will be different than those offered by other states.Some states provide a tax deduction for deposits made by residents of their states, but these are usually minor and probably should not be a major factor when selecting which state 529 plan to use.

Each state 529 plan uses different investments or mutual funds. Each plan will have different asset allocations and varying costs. 529 plans usually offer various investment options, such as 100% stock, 100% fixed income and age-specific choices. Within these choices, there may be vast differences between how the money is invested, such as how much large v. small stocks or how much International exposure the plan provides. The key is that you should review and understand how the money is invested, or have us review this for you.

Many people choose the age appropriate option, as a default option. It is simplest. As a child gets older, every few years the age based plans decrease the stock allocation and the fixed income allocation increases. Age based plans offer diversification, automatic re-balancing and the investment becomes more conservative as college gets closer.

This concept makes sense. We have found that many age based plans may be appropriately allocated between stocks and fixed income for younger children. However, many age based plans may get much too conservative for many of our clients’ children well before they near college age. It is important to gradually reduce the stock allocation as a child gets closer to college age, say by age 15-16, which is 3-4 years before you would initially need the money, but some plans may have stock allocations of well below 50% even before high school. As college lasts 4 years, and many students take longer, and some people save more money for graduate school, your actual time horizon for using/needing the money may be longer than the perspective of many age based college 529 plan asset allocations.

Thus, it is important that you review the asset allocation of the 529 plan at various ages to determine if the asset allocation makes sense as part of your family’s overall financial portfolio. We can provide valuable advice by reviewing this for you.

By starting at a young age, you should benefit from compounding. The opposite applies if you start to save if your child is older. The later you begin to save, you will likely need to save much more each month or each year. We can help you determine how much you should begin to save based on the age of your children or grandchildren, the projected cost of the colleges that you think may fit for your child and family, and prepare projections to assist you in developing a college savings plan for your family.

If grandparents have the financial resources and it fits into their financial plan, providing money for college savings for their grandchildren can be a wonderful legacy and certainly helps their children and grandchildren. Grandparents can fund 529 plans as well as parents. If you think this may be applicable to you, please contact us.

College is expensive. Saving in the most tax efficient manner, choosing the most optimal 529 plan and monitoring how you should invest the funds are all services which we can provide to you, our clients and your families.

We can provide you with clarity in helping to save for college.

We can help you overcome confusing choices and overwhelming options.

Talk to us. 

And we would be pleased to talk to your friends and relatives about this or other topics.

“All in” on must see Jeopardy phenom

Blog post #389

A professional sports gambler set a Jeopardy single game winning record of $110,914 on Tuesday’s episode. 

But that one day win is only part of the story. 

James Holzhauer has won an astounding $298,687 in 5 wins. His aggressive betting, different game strategy and vast knowledge has resulted in must see viewing. He is averaging almost $47,000 in his other 4 wins, which is far higher than typical winners. For perspective, Ken Jennings averaged $34,000 per night during his record 74 game win streak in 2004.

Holzhauer has turned the game upside down with his strategy. Most contestants start at the top of the board, starting with the small dollar clues in each category. Holzhauer picks the most valuable clues across the entire board first, which can earn him the most money the fastest. This enables him to bet super aggressively if he gets one of the 3 Daily Doubles, which he can bet up to his full winnings at that point in the game. He has repeatedly gone all in with huge bets, even at critical points in the game.

His change in strategy, how he plays the board, is interesting. I wonder why no other contestants, particularly those who have been very successful on the show in the past, have not tried his strategy? 

Similarly, for many of our prospects, and now clients, we present a different approach to investing than most had used in the past. However, once you understand it, you see the logic in our investment strategy. It will be interesting to see if future Jeopardy contestants adopt Holzhauer’s strategy in the future.

On Jeopardy, speed and information are key. Holzhauer is very fast with the buzzer, which then gives him an advantage, so he can try to answer the question correctly. And he is certainly well informed, as he correctly answered 129 of 133 attempts, through the 4th game. 

In investing, we do not feel that speed or certain information matters. Company specific information is supposed to be public and disseminated to all at the same time. Unless you have inside information, which is illegal, speed should not be an advantage. Earning announcements are generally either before or after the markets open or close. Major financial institutions can react quicker than individuals can, but they all get public information simultaneously. We rely on academic data and historical information for our investment philosophy, so speed is not critical. At times, we feel patience can actually be an advantage over speed. 

Holzhauer can have a significant advantage by being faster with the buzzer. However, he cannot control what categories he will face each show and the knowledge or expertise his fellow contestants have. He may be very skilled, but he may face a competitor that is even faster at the buzzer or smarter than he is on certain topics. He can only control his ability. 

In our investment strategy for stocks of using asset class mutual funds which are globally diversified, we take the view that active money managers cannot provide added value to you by being smarter than the market, over long periods of time. Active managers do research and charge higher costs to their investors, but extensive data shows that these active managers generally underperform their respective benchmarks.

Holzhauer has made very aggressive bets. So far they have paid off spectacularly. But his overconfidence may cost him a win at some point.

During his record breaking one night win, he bet all his money, about $34,000, early in the second “Double Jeopardy” round. He was far ahead of the two other contestants, but if he had answered the question incorrectly, he would have blown his insurmountable lead.  When he made this $34,000 wager, he must have felt that if he answered wrong, he was very confident he would recapture the lead because he was faster at the buzzer and then could answer subsequent questions correctly. He did get the question correct and went on to win.  His great confidence has resulted in huge success, so far. To keep winning, he will have to balance his aggressiveness without being too overconfident.

For many investors, investing in individual stocks has great appeal. You think you know what company, store or product will be successful, so you invest in it. Many years ago, before I began this firm, I thought I could identify mutual funds based on their past track records or reading about the money managers. All too often, this overconfidence in our abilities to pick financial winners does not prove out to be as successful as we would hope. Unexpected things happen to companies or sectors that we think are good ones. The world changes. Amazon comes along and online shopping has hurt the stocks of many retailers, for example. 

Holzhauer has made huge bets, relative to what others contestants have done in the past. I went back and watched online the previous highest single game winner, from 2010. That contestant bet $7,000 when he had $25,800 and $5,000 when he had $33,600. In comparison, Holzhauer bet his entire $14,600 early in the game, $25,000 later in the game and then wagered $38,314 on the Final Jeopardy question (though he could have bet more), as his goal was to win $110,914, as the total represented his daughter’s birthday, 11/09/14. 

Holzhauer is a professional gambler and he may already be wealthy. He obviously is a risk taker. He told ESPN “…my work is similar to an investment bank, except that I’m the analyst, trader, fund manager and day trader all into one.”**

In our investment firm, as we work with clients, we want to take appropriate risks, but not more risk than is necessary. We plan and discuss with you how much risk you need to take, and are comfortable with, to reach your various financial goals.

James Holzhauer is a highly intelligent person and professional gambler. I hope he continues to win, as he is great to watch.

This contestant is playing a game. He may be ok with “risking it all” on one question or taking outsized gambles on his ability to answer a single question, which may lead to huge success or failure. 

We feel strongly that broad diversification is prudent and advisable for your financial future. We are not “going all in” on one stock or any particular financial sector. 

As we manage your investments and provide you with financial advice, we want you to be comfortable and be able to sleep well at night.


**”Sports Gambler James Holzhauer Shatters ‘Jeopardy!’ Winnings Record”,, 04/10/2019 by Ron Dicker

“Professional sports bettor sets ‘Jeopardy!’ record”, 04/10/2019 by David Purdum

The secret weapon of the sports gambler who just broke the single-game ‘Jeopardy!’ record?  Children’s books.“,, 04/10/2019

How to be more secure and help your favorite charity

We want to donate to your favorite charity.

We want you to be more secure, financially.

And, we want you to be more secure on the Internet and how you use your passwords.

So just as the beginning and end of daylight savings time has become known as the time to change the batteries in your smoke alarms, we want you to start a new tradition. Daylight savings time ends this weekend, so set your clocks back an hour before you go to bed Saturday night. And change your smoke alarm batteries!

We strongly recommend that you use a password manager program, which should work in a coordinated manner on all of your devices, such as your cell phone, iPad or other computers.

I have used 1Password for many years and I highly recommend it. My son encouraged to begin using 1Password years ago and I cannot imagine living without it. It saves me time. I don’t have to re-type my passwords when I log into various websites. The program auto fills them for me. I have lots of very different, complex passwords and I don’t have to remember any of them. I don’t have my passwords written on a piece of paper in my desk or “hidden” in a notebook.

You should use 1Password or another program, such as LastPass and Dashlane. While the best programs are not free, the cost is relatively nominal (most are between $20-40). We think it makes sense for these applications to charge a fee, and even to have an annual charge, as they are keeping your data secure and they should be constantly improving their services, as well as keeping up with technology changes. For further information on various password manager programs, please see this article:  The best password managers of 2018. 

You should know that everyone in our firm now uses 1Password within our business, to store various passwords we need to maintain. That’s how important computer and password security is to us.

If you are not yet regularly using such a password manager program, we want you to start. If you are a client of WWM, and start using a password manager program by November 15th, we will donate $25 to your favorite charity.

That’s all you need to do is start using a password program and email Michelle Graham of our firm, Let Michelle know that you have started to use a password management program and tell us the name and address of your charity. We will then make a $25 donation in your honor.

We will all benefit. You will be more secure, you will make your life easier and we will be helping a number of charities, we hope!

And if you are already using such a password program, we want to encourage you to start a new tradition. Twice a year, when daylight savings time begins and ends, we encourage you to change 10-15 of the passwords you use the most or are financially important. And if you have any frequently repeating passwords, those should be changed. You should not repeat passwords.

If you are a client of WWM, and you change 10-15 of your passwords by November 15th, we will donate $25 to your favorite charity (if you already are using a password manager program).

After you make your 10-15 password changes, email Michelle Graham, Let Michelle know that you have done this, and the name and address of your selected charity. We will then make a $25 donation in your honor.

We care about you.

We care about the charities that are important to you.

And we care about your security on the Internet.

The next step is up to you.

We hope to hear from many of you in the next few weeks.

Will you act?

Reflections on the Week

Risk and return.


Climbing Mt. Everest.

How to be better investment advisors.

These were some of the topics of the 2018 BAM National Conference which I attended, along with Michelle Graham of our firm, over the past few days.

We heard from Alison Levine, who in 2002 was the captain of the first American Women’s Mt. Everest Expedition.  Her presentation was filled with many leadership and life lessons, which can also be applied to investing.

In building her team, Levine said the members’ techniques and ability were important, but willpower was the most important factor. To be a successful long-term investor, you will need to have willpower to endure down markets (such as we are experiencing right now), willpower to ignore the constant noise and financial predictions and willpower to stick with your financial plan (investments), even when they temporarily underperform some other stocks or asset classes.

Levine stressed the importance of confidence. She had to know that each of her individual climbers were confident of their ability to have a truly confident team. As your advisors, we are confident about our consistent investment philosophy. As a client, we want you to be confident in our investment strategy and philosophy, so you can adhere to it for years and decades.

To make this attempt to climb Everest, the American Women’s Mt. Everest Expedition required extensive planning, training and financial support. This was not a one person effort. The Women’s trip was sponsored by the Ford Expedition and not the Chevrolet Avalanche (get it?) …as both wanted to sponsor the venture.

We learned that before an Everest climber can attempt to reach the ultimate peak, they spend two months having to go up and down the mountain. (See the picture) They go from the base camp up to base camp 1, then back down to the base camp. Then up to base camp 2 and back down to the base camp. Then up and down to base camps 3 and then 4….before they are finally able to climb all the way and try to get to the peak. They are forced to endure this up and down process so their bodies can get safely acclimated to the thin mountainous air.

The climbers had to go backwards many times, so they could eventually go forward. Even when going backwards, they were making progress towards their goal. As in investing, sometimes the markets force you to go backwards (when the markets decline), before you can go forward (when the markets go higher, and then eventually reach new highs).

Various speakers discussed how risk and return are related, which of course we know.

Levine’s 2002 attempt did not make it all the way to the final summit. She was 28,704 feet above sea level, but due to storms that quickly developed, they were unable to trek the final 331 feet up to the peak. Did they fail? No! They had to make smart decisions. It was better not to take extra risk, in order to return …and live. That is the ultimate risk and return!

She returned to Mt. Everest in 2010 and finally made it all the way to the summit. She said she could not have done it without an extensive support team and the crucial experience she gained from her 2002 venture. We are part of your support and advice team. We have extensive experience, rely on market and academic data, and behind us, we have extensive resources that we can rely on, as needed.

We agree that risk and return are related. We discuss this with you, as we develop and evaluate your portfolio over time. One speaker expressed that due to US S&P 500 valuations as of September, 2018, the future expected returns for this asset class are quite low going forward, well below the historic average of 8-10% per year. He may be right, but there is no way to know. None of us has a clear crystal ball about the future. However, we disagree with his recommendation to invest in alternative investments which we find hard to understand, use leverage and make bets by shorting certain stocks (betting they are over priced and will go down). Some speakers advocated adding alternative investments to try to reduce the overall risk of a portfolio or to increase the expected returns. As of now, we are not in agreement that the risk of these alternative investments are worth the potential return. We are open to new concepts and ideas, but we must be confident in them before we invest our money and recommend them to you.

We also heard from another speaker, who spoke from the view of an investor.** He shared how years ago, it was difficult for him to deal with uncertainty, noise and the constant barrage of media predictions and warnings. This was before he began using his current advisory firm (not WWM) and investment philosophy, which is likely similar to ours.

He talked about how important it is for us as advisors to be good listeners. He stressed values that are similar to ours, such as “doing the right thing” and “doing it the right way.”  He discussed the importance of treating each client as an individual and understanding your personal emotions and feelings about money, as well as sharing our personal money stories. I plan to write about these topics in future blog posts and we will discuss them in client meetings.

He said that by working with his advisor, he became more comfortable with the uncertainty of the financial world. He began to tune out the noises. He worked with his advisor to make better financial choices. He realized that he can only control what he can control. He now knows that as a long-term investor, the investments and decisions he makes today will compound over time for great future benefits. He doesn’t know exactly how this will work out, but is confident that over the long term, he feels this is the correct philosophy to have.

We strive to provide the type of guidance and advice that the speaker described, so that our clients can also feel this way.

The speaker feels transformed by the relationship he has with his financial advisor. He refers to himself as a transformed investor. As a result of his new mindset, he is much more willing to refer his friends to his advisory firm, so his friends can be helped by his advisor and feel the way he does.

If you are a client, we hope that you feel this way about our firm, so when the situation arises, you can help your friends and relatives by referring them to us.

If you are not a current client, but want to have this type of investor experience and relationship, let’s talk.


**The speaker is not a client of our firm or BAM Advisor Services (our back office firm), so this is not intended as any form of client testimonial.


The Power of Investing In……

I am writing this on my way back from a meaningful and extremely worthwhile BAM Alliance learning group session.

It was thought provoking. It was memorable.

It has the potential to be transformative.

I made new connections and relationships. I strengthened and renewed others.

It is the power of investing in moments.

U.S.S Yorktown, Charleston, South Carolina

My three days in Charleston were successful because of the talented staff at BAM, our back office firm, who invested significant time and energy to create moments and experiences.  Additionally, I was intentional to take the time to plan for the session in advance.

One of the valuable additions to this meeting were two, 30 minute book review sessions. One of the books was The Power of Moments, by Chip and Dan Heath, which I highly recommend.

As financial advisors, we focus on investing, viewed financially. This book advocates investing time to plan and create more memorable and elevated experiences in all aspects of your life. 

The authors of this very readable book feel that “life and work are full of moments that are ripe for investment.” They cover many aspects of life and settings, such as schools and education, families, businesses and organizations.

The Heath brothers feel “we must learn to think in moments, to spot the occasions that are worthy of investment….The “occasionally remarkable” moments shouldn’t be left to chance! They should be planned for, invested in. They are peaks that should be built. And if we fail to do that, look at what we’re left with: mostly forgettable.” (Emphasis added)

Invest time in advance to plan peak moments and be intentional and creative about it. Make an effort to elevate the experience. For certain life moments and experiences like a trip, invest time to end the experiences with peak moments.

The authors write “when people assess an experience, they tend to forget or ignore its length-a phenomenon called “duration neglect.” Instead, they seem to rate the experience based on two key moments: (1) the best or worst moment, known as the “peak”; and (2) the ending.” This is called the “peak-end rule.” It is not the length of the vacation or experience which counts, it is about the peak moment during the experience and what happens at the end of the experience that creates the memory impact.

This is particularly true with vacations, as we remember the peak moments of a trip and the ending. I can attest to this from my vacation to Florida in March. It was good, but not the best. My memory of this Florida vacation was negatively impacted because during the last two days it rained and my wife was sick. We had a bad ending, in the authors’ terms.

These were things beyond our control. However, I assume that if the rain and Felicia getting sick had occurred at the beginning of the trip, rather than at the end of our vacation, I’m pretty sure the authors would be correct and I would have a more favorable memory of this trip.

I accomplished a number of objectives during these few days at the BAM Masters Forum event because I was intentional. I wrote out goals before arriving, people I wanted to connect with and talk to about certain matters. Other discussions occurred spontaneously and without any prior planning.

For this 12th annual gathering of fellow advisors from across the country and a number of BAM staff members and executives, BAM requested that we bring “wedding attire” for one dinner, so I brought a sport coat and nice slacks, rather than the normal resort attire. They asked us to participate in a southern bow tie competition, so I borrowed a bow tie and wore one for the first time. It made the evening quite fun and special. It elevated the evening. We took group pictures and admired the diverse collection of bow ties. The early planning resulted in a more memorable evening for all.

My learning group session ended with another memorable dinner on Tuesday night. My flight home was Wednesday at 2 pm.

Wednesday morning, I could have slept in, packed and gone to the airport. I did things differently, with great results.

Wednesday at 9 am I toured the World War II aircraft carrier U.S.S. Yorktown, originally commissioned in 1942 that was docked near my hotel. This was incredible experience. As I walked up and down the ship’s steep stairs, it’s 6 levels and the enormous flight deck filled with planes of different decades, I was filled with gratitude and appreciation for those who served on these ships, flew the planes that took off and landed, those who lost their lives on missions and the hard work and ability of those who designed and built these behemoths.

After visiting the ship, instead of eating hotel food for lunch, I took an Uber into downtown Charleston for some great southern fried chicken at Leon’s Fine Poultry and Oyster Shop (well worth it!!). Even though I was rushed to arrive at the airport, the last minute stress will not be my memory a year from now. My positive memory of the end of this trip will be of the incredible aircraft carrier and the delicious fried chicken. 

I read most of The Power of Moments. There are many more valuable insights to be gained from this book than just the few I highlighted. I plan to apply some of these concepts within our firm and in my life. This will take effort, as the authors note, but it would be well worth the investment and time to implement some of these concepts and ideas.

Who should read this book: Almost everyone. Those who want to have a more impactful and enriching life, or help others to have one. Certainly parents, business and non-profit leaders, teachers, coaches and medical professionals.

Bitcoin Mania: What’s it all about

Bitcoin has gotten lots of attention over the past year, as its price has skyrocketed. This post is intended as an introduction to Bitcoin and cryptocurrencies. This is not intended to be a recommendation or advice regarding purchasing Bitcoin or other cryptocurrencies, as they are highly speculative and extremely volatile.

Bitcoin was introduced in 2009 and intended to be a new form of currency, in the way dollars or gold can be used as a form of payment or exchange. Bitcoin is a worldwide currency and digital payment system. Its value changes 24/7, not like stocks, which generally trade only during specific stock market hours during the day, in each country or region. Bitcoin and other cryptocurrencies are not physical. You can not hold or touch a Bitcoin.

Four years ago, Bitcoin traded around $125. Last December and early January, 2017, the price was in the $900-$1,500 range. By August, the price first crossed $3,500. Since mid-November, Bitcoin skyrocketed from the $6-7,000 to a range of $16-17,000 in the past week.

Bitcoin is traded all over the world and is not currently regulated by governmental agencies in the US and most other countries. It has been widely used for black market transactions, money laundering, or other illegal activities. This does not imply it is only for illicit purposes. However, if it becomes more regulated, demand for Bitcoin may decline, which would cause the value to decline. Per the WSJ, as of the end of November, Japan, South Korea and Vietnam accounted for over 80% of the 2017 global trading activity. In the past few weeks, the US share of trading activity has increased.**

I have followed this more closely since the summer, when a relative told me he had purchased some Bitcoin and another cryptocurrency starting in 2015. He has done this independently of me and is not a client of WWM.

What originated as a new method of currency has evolved into a hot investment. However, most currencies are not this volatile or speculative. Note that Bitcoin is only one of many cryptocurrencies.

We cannot emphasize enough how different Bitcoin is from stocks, bonds, gold or other investments. There is nothing backing it at all. There is no basis for any valuation methodology, like an individual stock can be evaluated relative to its future earnings expectations or underlying assets. Bitcoin is not an asset in that respect and has no earnings or dividend paying ability. There is supposedly a limited supply of Bitcoin, although more can be “mined” in the future. It has increased in value due to a huge spike in demand and media attention.

What no one knows is whether this will continue to appreciate or whether this is a huge bubble waiting to burst. We would offer the following advice to anyone who has held this and has significant “paper” profits: Sell some percentage of your Bitcoin holdings (like 15-20%) and take your profits in real cash. Sell off at least your original investment. By doing this, you will have realized some actual profit and still hold the remainder, if the price goes up in the near or long-term. As we do with stock investments we recommend, we would advise anyone with these types of holdings to gradually take profits if the value increases.

As of now, we cannot assist anyone in purchasing Bitcoin or other cryptocurrencies, as none of the major financial institutions, which function as custodians, have developed a method for holding it, let alone trading it.

From what I have read and heard, buying, selling and holding it can be somewhat complicated and costly on a percentage basis (significant bid/ask spreads), at least compared to buying and selling stocks, bonds or mutual funds. There have been reports that exchanges have not been able to process trade orders on a timely basis in recent days and weeks, as volume has surged.

Bitcoin is what is referred to as a “bearer security,” meaning you have the key/individual data for what you own….and if you lose that key, then you lose your investment, as no one else has that data. It is comparable to owning stock and the only proof of ownership is the actual stock certificate. If you lose your bitcoin blockchain data (your key), you would not be able to sell your bitcoin. For a humorous look at this situation, and a primer on Bitcoin, see “The Bitcoin Engagement” episode of The Big Bang Theory on CBS, which first aired on November 30, 2017.

There are different exchanges or places to purchase and sell Bitcoin, and as of now, the prices can vary significantly between exchanges, as CNBC has recently shown. This would be like Amazon’s stock selling for three different prices at the exact same time (say $1,000, $1,050 and $1,100)…which does not occur for a stock in today’s financial markets.

Some of these issues will likely get addressed in the future. Although this is not a brand new investment/currency, with its recent publicity, the controls and exchanges should improve. But that may take months or years. Bitcoin is considered an asset for tax purposes, so any sales are reportable as capital assets for US tax purposes. Thus, you are responsible for keeping track and reporting your financial data, such as purchase and sale dates and amounts.

Summary thoughts for now: I would not call this an investment, as we generally think of that term for our clients. Due to the incredible increase in price and very volatile trading, it is a highly speculative and risky bet.

As I have told my relative and others who have asked, I have never seen any form of investment increase in value like what has occurred in the past year, during my lifetime. And I doubt I will again. If I had purchased some years ago or even prior to October, I would certainly be taking some profits, with absolutely no regrets, even if it continues to increase. Nothing goes up forever. So the real question is, how high is up? No one knows. When it goes down from a peak, how fast will it go down and will it recover? Will you have sold or taken some chips off the table? Don’t be too greedy.

If someone wanted to speculate (note, I intentionally didn’t say invest) in Bitcoin, you should be prepared to lose a very large percentage of it. Bitcoin and other cryptocurrencies may be in their infancy, but as there is no real economic valuation to evaluate Bitcoin, other than demand, this is total speculation.

If you are interested, I highly recommend that you carefully read the following materials, especially the first two:

Bitcoin: Investment or Bubble? Larry Swedroe, Director of Research, Buckingham Strategic Wealth and the BAM Alliance (Our back office firm). This article was a reference source for some of this blog post.

SEC Public Statement: Statement on Cryptocurrencies and Initial Coin Offerings, SECChairman Jay Clayton, December 11, 2017

“Bitcoin Soars as Futures Start,” Wall Street Journal, print edition, page B1, December 12, 2017.

“Bitcoin Trading Overwhelms Exchanges,” Wall Street Journal, print edition, page B4, December 12, 2017

**”Bitcoin Lures Asia Investors,” Wall Street Journal, print edition, page B1, December 13, 2017

Do you notice the change?

This week’s takeaway: This week, I’m adding “This week’s takeaway” at the end of each week’s blog post. It may be a summary of the post or just a concept I want to highlight. Look for it and email me to let me know if you find this helpful. 

This week’s blog post:

Change can happen gradually. You may not even notice very small changes. But over time, small changes accumulate to have a significant impact.

You may or may not really notice as prices go up gradually over time. The cost of your favorite cereal, yogurt, bananas, as well as utilities, health care and other services may go up over months and years.

This price inflation is when the cost of goods and services increase over time. In general, the cost of most items increase. In the short-term, price increases usually do not change your purchasing habits or your standard of living.


However, over the long-term, say decades, year to year price increases (inflation) have a major impact.  If you do not have substantial retirement income or savings, and your income and assets do not rise as costs rise, how will you live the life you want to live?

To give you a better idea of the true, long-term impact of inflation, let’s look at the cost of cereal over many decades. An 18 ounce box of Kellogg’s Corn Flakes increased from 27 cents in 1960 to $4.19 in 2017.**

Here is a summary of the cost of an 18 oz box of Kellogg’s Corn Flakes over the past 50+ years:**


It’s pretty startling. As this chart shows, the dramatic increase in Corn Flakes prices over the decades is really quite significant. You know the cost of groceries have gone up over time, but seeing it like this probably provides you with a different perspective. It sure surprised me.

How does long term price inflation impact your investments?  
It’s pretty startling. As this chart shows, the dramatic increase in Corn Flakes prices over the decades is really quite significant. You know the cost of groceries have gone up over time, but seeing it like this probably provides you with a different perspective. It sure surprised me.

To maintain your standard of living and keep up with inflation, we generally recommend that most clients have an allocation to a diversified portfolio of stocks.  Over time, stocks and their rising dividends exceed the rate of inflation. Fixed income investments do not keep up with the inflationary effect of rising prices, especially on an after-tax basis. The purpose of the fixed income allocation of your portfolio is to provide you with current income and stability, as this part of your investments will not incur the fluctuation of stocks.

Thus, owning stocks, even with their short term temporary ups and downs, gives you the best chance of out-pacing inflation over the long term. The percentage of stocks in your portfolio would be based on your personal situation, your timeframe and what you want to accomplish in your lifetime.

If you are now 60, your life expectancy is hopefully many decades (20-30+ years), so your investment portfolio needs to be able to provide for growth to keep up with, and exceed, the gradual rise in prices over time. This after-tax, real long-term growth has to come from stocks, for which we recommend a globally diversified stock portfolio.

You want safety and financial security. That comes from fixed income. But you need to have growth to outpace inflation and build your wealth (especially for younger clients), which you get from holding stocks for the long-term.

For many people, there is a tightrope balance of what percentage of stocks and fixed income that need to be held at various stages over your lifetime. We help you determine an appropriate allocation of stocks because it is necessary for your long term financial future. And then we help you maintain this stock allocation, especially when stocks go down. As your financial advisor, these are vital aspects of the value we provide to you.

This week’s takeawayOwning a globally diversified portfolio of stocks will outpace inflation over the long-term, if you don’t sell when stocks go down. If you remember that broad based stock declines have always been temporary, you will be a more successful long-term investor.

**Source:, 8/20/2017, for data through 2000.  Data for 2017 based on local store, 08/20/2017.

Have you checked these recently?

The following are some ideas and reminders of things you should consider, which may prompt some good next steps.

Beneficiaries for your retirement accounts and life insurance policies: Are the actual designations on the forms what you intend? Have you reviewed them recently?

  • It is a good idea to review your beneficiary designation forms every few years, to ensure they reflect your current intent.
  • If you want to provide for charitable bequests upon your death and you have retirement accounts, these gifts should be reflected on retirement account designations, not as part of your will/estate planning documents.

Have you enabled the emergency function on iPhones and other devices?

  • For iPhone users, if you enable the emergency function within the Health app (which comes with the iPhone) and you are in an accident or incapacitated, a first responder can access critical information from your phone, even if your phone has security codes or Touch ID.
  • After going into the Health app, continue to “Medical ID.” Input your name, emergency contacts, and basic health information.
  • The Medical ID feature can be accessed without unlocking any other information on your phone. (Thanks to my kids for this recommendation, which I just did).

Do you know whether your financial advisor is a fiduciary?

  • We highly recommend that your financial advisor be a fiduciary, which means that all of their advice and recommendations must be in your best interest (even if it is not in theirs or their company’s best interest).
  • We are fiduciaries. Most brokers or financial consultants with major brokerage firms and banks are not fiduciaries. The interest of their company can come before your interests. For more information, see this blog post.


  • Are you using complex and different passwords?
  • Have you recently changed the passwords for some of the websites you use most and for banks and credit cards?
  • We highly recommend using an application like 1Password or a comparable password manager, which stores passwords and can automatically enter your passwords and user names for you. For more information, see this blog post, How to Securely and Efficiently Manage Your Passwords.

What is one thing which you are procrastinating on, that if you dealt with it, would enable you to move forward?

  • Think about this. We hope this helps you resolve something or move an issue forward. Procrastination can mean it’s important, but you just need to focus on it and determine the next step.

Have you checked your FICO score or your Social Security information?

  • FICO scores are important for interest rates on loans and applying for credit. You can get this for free from many credit cards. Email me for more information.
  • If you are not yet receiving Social Security, you should go to at least every few years, review your earnings history for accuracy and see a projection of your future benefits. Their website is quite secure and they have now added a second level of verifying your identification.


We hope these are helpful and practical for you and your family.

Better than

Over the long term…..

Being optimistic is better than being pessimistic.

Being patient is better than reacting quickly.

Staying in the market is better than getting in and out of the market because you are worried.

Small company stocks do better than large company stocks.

Value company stocks do better than growth company stocks.

Globally diversified portfolios of index-like funds do better than concentrated holdings of US individual stocks.

Using complex computer passwords is better than using a few simple passwords.

Avoiding annuities and hedge funds is better than using them.

Lower mutual fund fees are better than higher fees.

Using a password manager program is better than keeping your passwords on a piece of paper.

Having a financial advisor who monitors the tax management of your portfolio throughout the year is better than an advisor that only does it at year end.

Making a financial decision after consulting with your financial advisor is better than making a decision without talking to your advisor.

These should help you to be better.

12 Travel and Credit Card Tips for Greater Value and Enjoyment (Part 2)

A few weeks ago, we provided Part 1 of this two part series.  These are additional suggestions on how you can optimize travel and other rewards, as you spend money.

We hope these can help you to create some wonderful travel and other experiences with your family and friends.

Consider these various tips and ideas.  If they make sense with your lifestyle, travel or spending habits, implement them.

7. Be strategic about using credit cards that pay significant quarterly bonus percentages.

  •  Pay attention to quarterly bonuses and remember to register each quarter to activate them.
      • Credit cards such as Discover and Chase Freedom offer quarterly bonus categories, which are worth paying attention to. They vary and you must register online each quarter. These are often 5% rewards on spending in certain categories you likely spend anyway, such as gas, restaurants, home improvement stores, movies, Amazon or department stores.
      • Keys: you need to register quarterly and keep track of what the card is offering in each incentive category each quarter. The extra effort should be worthwhile.
  • Costco branded credit cards have always had good cash back reward percentages. Costco is switching from American Express to Citi / Visa effective June 20th. The new Costco Citi Visa will offer 4% rewards on gas purchases and 3% rewards on restaurants and travel purchases, such as airfare, hotels and car rentals. If you shop at Costco, these are great reward incentives.
  • You should strategically decide how you want to spend and decide if you want to earn cash back for certain purchases, and reward points for future use for other items. For example, you may want to use a Costco card for gas purchases to get 4% cash back, but use a hotel branded credit card for many other purchases, to accumulate points for use on a specific trip or destination.
8. Join hotel reward programs and get their branded credit card.  Just do it. I did this a few years ago, for the chains I frequent the most and it has been very worthwhile. The benefits can be significant.
  • My wife and I planned a trip for next fall and the hotel will be free for 5 nights, as we are redeeming points which I accumulated with hotel stays and purchases on their credit card. Between the 4 nights I’m using points and the 5th night they give for free when redeeming points, I expect that the return should be very significant, far above the typical 1% on many cash back reward programs.
  • For many hotel and airline cards, you can accumulate points and perks much faster through your spending then through actual stays or travel, especially if you reach elite status levels. (See more on this in #3 in Part 1 of this post).

9. For longer stays, consider paying for a premium credit card which provides the 4th night for free on a 4 night stay. As discussed in the prior post, Citi Prestige and Amex Platinum credit cards provide this perk, which can easily pay for the card many times over, depending on your travels. If you are planning a stay for 4 or more nights at least once in a year, particularly to an expensive location, getting one of these cards should be seriously considered. I have not obtained one of these cards yet, but it is next on my list.

  • These cards would be optimal if you plan to travel to a major city for 4 or more nights or to a resort in high season. Think New York City, San Francisco or places like Grand Cayman or southern Florida resorts in the winter.
10. Pay attention to bonus point offers for obtaining new credit cards.  Monitoring bonus offers, which you can do by following websites such as, can pay off.
  • Just applying and getting certain credit cards can get you free travel, at no cost.
  • I recently got a Starwood hotel credit card for free, with enough bonus reward points that will provide at least $1,000 in room value, depending on when and where I stay.
  • Be selective about how many new cards you apply for within a 3-6 month time frame and what bank the credit cards are from. You should not apply for too many at once and not have too many from the same bank or financial institution.

11. Consider your everyday spending and how to charge it.

  • First, take advantage of high reward categories and cards that offer quarterly bonuses (see item 7 above).
  • Then, determine which cards would be best for airfare, hotels, restaurants and car rentals. Each credit card can be different, offering 1X, 2X or 3X points, depending on the credit card and their definition.
  • Next determine how to optimize your spending on all the other things you charge, which generally don’t fit into the “bonus” categories, so you can try to earn above the standard 1% on that spending.
  • I recommend learning about Chase’s Ultimate Rewards program, which is available via their Chase Sapphire Preferred and certain Chase business credit cards.
    • With Chase Ultimate Rewards, you can earn an extra 20-25% benefit by linking Chase Freedom and Freedom Unlimited credit cards to Ultimate Rewards credit cards and then book travel or transfer points through Ultimate Rewards.
      • Before I was fully aware of this extra benefit, I previously cashed in Chase Ultimate Rewards points for 1:1 cash back. With the Ultimate Rewards travel benefit, I could have gotten a 25% increased benefit. Don’t cash in Ultimate Rewards for cash, use them for various travel benefits with many different travel partners.
    • With certain Chase business credit cards, there are even more categories which provide 5% bonuses, beyond those typically mentioned in #7 above.

12. Watch redemption values, especially with airlines

  • When redeeming points, it pays to carefully monitor the values, especially for airline travel. I could not believe the fluctuations in points needed when planning a trip, as the points would change by 10-20,000 points from one day to the next, both up and down. It can be risky, but it can make sense to watch the movements over a week or so before you redeem airline points, especially if your travel is months away and the plane is not full. I saved over 10,000 points on a redemption on Delta by monitoring this closely.

Additional reminder: Get TSA PreCheck or Global Entry. See item 1 in my first post. With the recent warnings about really long airport security lines, everyone should get TSA PreCheck. If you are flying, as the ads used to say, don’t leave home without it!

I truly hope these ideas get you thinking about how you spend and travel, as well as how you can maximize the benefits which are available, if you know and use the right strategies. Just as investing can be complicated, we try to simplify that for you.

If you have other tips and thoughts or opinions about this blog post, I would love to hear them. Please let me know what you think, at

Disclosure: I use some of the above credit cards and am a member of some of the hotel loyalty programs mentioned. I have not been compensated for any of these comments. They are based on my own experiences, opinions and research, with special mention to, which I highly recommend. There are many credit cards, hotel chains and airline reward programs, all with varying benefits.  The purpose of this post is to make you aware of the potential uses, not to recommend any specific product or company.