Financial Quick Hits…..Quick Advice

Blog post #454

  • Consider refinancing your mortgage: Interest rates are at historic lows. If you have a mortgage with an interest rate above 3.25%-3.5%, you should be looking into refinancing. We do not always recommend shortening your mortgage, say from a 30-year to a 15-year mortgage, but that may be needed to get the lowest rates that are out there. If you are considering a 15-year mortgage, we should likely talk first. Mortgage firms are very busy, so you may need to be patient.
  • Don’t be afraid to ask. Talk to someone: Talking to someone else can be helpful, in almost all situations. We can be a resource for a wide variety of topics. If you are struggling with an issue or just can’t resolve something, reach out to us or someone else you trust and start the conversation. We help people deal with all kinds of issues, from complex matters like estate planning decisions to balancing a check book for clients. Talk to someone. It may help. It will allow you to get a new perspective, brainstorm and maybe gain some confidence.
  • Have an emergency fund and liquidity sources: The pandemic has taught us many lessons, including the importance of having funds on hand for the unexpected. Some have lost their wages or other income sources. Many have assisted others with financial challenges. It is important that you always have funds readily available, whether in your checking account, a home equity loan that you can borrow against, or as part of your fixed income allocation with our firm, that can be readily liquidated if needed.
    • One of the measures that we use for your liquidity protection is that if you are in a withdrawal mode, we strive to maintain at least 6 months of your future withdrawals in cash. This was very beneficial when the credit markets struggled in March, as we were not forced to sell positions when others were selling bonds at panic prices.
    • It is also important to remember that you should build an emergency fund before you begin to invest in the stock market. This is an important lesson for those in their 20s and 30s. Stock market money is longer term, that should not be needed for at least 5 years.
      • Hint to parents and grandparents: This is a good topic to discuss with your kids/grandchildren.  We can help, if you like.
  • Be aware of credit card bonus categories: Due to the pandemic, some credit cards have added or changed reward categories, particularly among premium credit cards. These have been changing often, so check with your specific credit cards.
  • Do some financial and physical housekeeping: 
    • Subscription services of all kinds are now part of our lives, but you should review them occasionally.
      • Are you really using all the TV or music streaming services you pay for?
      • I have an Audible subscription that I rarely use….so I should cancel it and save the extra money every month.
    • Could you donate clothes or other household goods that you no longer use? This could benefit a charity and get rid of clutter. If you itemize, keep the receipt for tax purposes and document what you donated. Even charitable organizations like Goodwill have made donating items “contactless.”
    • Are you using a password program like 1Password or LastPass yet? This will save you time and energy, and make your life more efficient. Ask any of our firm members, who all use 1Password in their business and personal lives.
  • Don’t take unnecessary risks: We recommend building a globally diversified portfolio that contains thousands of stocks. If you were to own huge positions in some stocks, this can lead to unnecessary risks.
    • As you build your portfolio, if you consider it like a bridge, we think it is better to drive in the middle (a broadly diversified portfolio) than riding the edges of the bridge with no guardrails (owning a lot of a few stocks).*
    • The less diversified you are, the closer you may get to the edge of the bridge. Sometimes, this can mean higher returns, but it also may mean greater losses. Owning huge positions in individual stocks can lead to huge losses which are unnecessary and hard to recover from. For example, if you owned $300,000 of Boeing, GE, Delta or any number of bank or energy stocks earlier this year or a few years ago, those positions are now only worth a fraction of what they used to be.
    • With a globally diversified portfolio, you will have fewer reasons to worry about poor returns from a single stock or asset class. And that will keep you in the center of your financial road.
    • For most of us, whether crossing a bridge or investing, we want to follow a safer and prudent path. Your future is too important to risk.


What we do know is that the financial world keeps changing. This is what makes our role in your life valuable, as we will continue to provide you advice that is relevant and appropriate. We take this responsibility very seriously.

Talk to us. We want to help you, and your family, deal with change, today and tomorrow.


Source:  *27 Principles Every Investor Should Know, by Steven J. Atkinson (Illustrations by Dan Roam) July 2019


Being prepared

Blog post #432

We strive to design a financial plan for you.

We recommend and build a portfolio for you, that will help you reach your financial goals.

But sometimes the unexpected happens.

A crisis. A health emergency. A death in your family.

Are you and your loved ones prepared?

We are not talking about whether you have life insurance…we are focusing on the more mundane, but critically important ability to handle basic financial tasks, in our high-tech society.

Are you and your family adequately prepared?

If something were to happen to your parent or spouse, does someone know how to access bank accounts and pay bills?

Do you know how to log into all of their devices, such as their cell phone, tablet (iPad), and/or desktop or laptop computer?

As we talk to clients, there are a significant number of families where one person handles all the financial matters….and the other person or children would not know how to handle these important tasks, or does not know the logins and passwords needed to get access or pay bills.

We want to stress to you the importance of talking to your spouse or other family members (children or even grandchildren) about these things so they are informed and prepared, in advance.

We know that many of you are resistant to using password manager programs, even though we have strongly recommended these many times in the past. The issue we are addressing here goes far beyond using a program.

It’s about information…..whether you or others know how to do things, and do multiple people that are close to you have the knowledge, ability and data (logins and passwords) to handle important financial tasks, if you or another family member are not capable of doing these things?

Do a practice drill. Spend 15 minutes with your parents or loved ones. Talk about this. It will be beneficial.

Can your close family members access your computer or cell phone, your primary bank account, pay some bills and view your credit card accounts?

Do you each have credit cards in your own name? Every couple should have at least one major credit card that is not a joint credit card account.

Just the opposite, every couple should have at least one bank account that is joint, or have an individual bank account that can be accessed in an emergency with at least $10,000 in it.

We plan for you. We help to build your wealth.

But you must take responsibility to do these things, for you and your loved ones.

The 15-30 minutes that you spend now to do this could save you a lot of problems one day in the future.

Talk to us about your family. We want to help you, your children, (and even your grandchildren), with any financial matter that is important to you and your family.

If you know of family or friends who could benefit from this type of advice and guidance, please share this post with them, and let them know we are available to help them as well.

Getting Personal….Hope is not a plan

Blog post #427

I took some time this week and wrote a list of items that I called “2020s…Hopes and Thoughts.”

The idea to do this came from a set of lists I saw on Twitter around New Years, where many financial people that I follow posted lists of things they had accomplished or how their life had changed from 2010 to 2020.

I took that idea and wrote a list of things that I want to occur in the next decade, from now to 2030.

As I was sending this list to my executive coach for our monthly call, I realized that I had made a mistake.

The mistake was not in my list. The mistake was what I called my list.

The mistake was the title. I should not have called the list Hopes and Thoughts.” I should have called it “Plans and Thoughts.”

There is a big difference between “hopes” and “plans.” In reality, most of the things that I wrote are items that I can control, at least to some degree, so I can take future actions and plan to make it much more likely for each item to occur.

This is really a list of plans or goals, of what I want to do or accomplish, of what may happen if I do certain things and be pro-active.

This is not really a list of hopes. Hope does not imply planning or that I have any control about the outcome.

Hope means that you want and desire something to happen in the future. But hope, on its own, implies that you cannot influence the outcome.

I want to be financially secure. I want to travel extensively. Both of these are hopes, but I have a significant ability to ensure that both will be a reality. If I want to visit NewYork annually and go to London and Paris in the future, planning and thinking about this now, and again in the future, make it much more likely for these to occur.

While I cannot control how the stock market will do in the short term, which has a direct impact on my financial security, I am confident that in the long run, if I continue to save on a regular basis, that I will be financially secure.

One of the major changes for our firm this year, later this spring, will be the introduction of new comprehensive financial planning software, that will make planning, goal setting and then tracking each of our clients’ progress more of a reality. We want to do more to make your plans, as well as your hopes, something that together you will have a greater sense of control over.

One of the items on my list was to ensure that my wife and children are properly taken care of, if I die, as well as bequests to charities that are important to me. While I certainly hope I am living 10 years from now, I can make the financial security of my family a reality by regularly reviewing my estate plan and making sure that it reflects my wishes and the financial circumstances of my family members. I can also regularly review my asset allocation, my life insurance and the titling of my investment accounts, as tax laws change.

Plans can also change. Earlier this week, I made a list of some places that I want to visit over the next 10 years. And then at lunch with a client on Wednesday, he talked about the incredible experience he had visiting South Africa and the safaris he went on. I came back to the office and added this to my travel list.

My priorities just changed, days after writing my list. My priorities will continue to change in the future. That is a reality in life, as there are always new opportunities, experiences, uncertainty and adversity.

I am much more likely to accomplish these things and make these goals a reality, by having a list and by spending time thinking about the future.

I encourage each of you to take an hour and think about the past 10 years and the next 10 years. Take 30 minutes for each, together, or at different times.

Look back over the past decade. Where did you live 10 years ago? What has changed? What did you accomplish? What have your kids done? Graduations, weddings, births, deaths? Where have you gone? Write it down somewhere.

Then look forward 10 years. What does that look like? What changes do you want to make? How can you improve your health? (Making time for more regular exercise and sleep are definitely on my list!). What is important to you? Are you doing it? What do you want to do? What do you want to stop doing? Write these down somewhere.

While past investment performance is no guarantee about the future, I can almost guarantee that if you do this, and look back 10 years and look forward 10 years, you will find this to be time well spent.

And you will find that hope is not a plan. Having a plan, or plans, leads to actions, accomplishments….hopefully, positive outcomes.

Talk to us. We want to help you with any financial matter that is important to you.

If you know of family or friends who could benefit from this type of advice and guidance, please share this post with them, and let them know we are available to help them as well.

New Year….New Retirement planning and tax changes

Blog post #425

In late December, as part of major spending legislation, Congress passed what is called the SECURE Act, which makes numerous changes to retirement plans, particularly regarding distributions after an account owner dies.

There are many detailed items in this legislation. We will provide you with an overview of changes that will affect most people.

The SECURE Act did not change how much you can contribute to a 401(k), IRA or planning opportunities for those who own business or are self-employed. We encourage you to consult with us about your retirement planning, investment choices and related matters.

Changes to distributions….end of the Stretch IRA, mostly

If you inherited retirement assets from someone who died prior to 2020, the SECURE Act changes do not impact those inheritance distribution rules at all.

For someone who dies after 2019, fewer beneficiaries will be able to stretch the IRA/retirement assets over their life expectancy, as you could under the prior law.

Going forward, most beneficiaries, other than a surviving spouse, will have to take inherited retirement distributions by the end of the 10th year following the year of inheritance. If you inherit such assets, there are no required distributions for years 1-9, but you will need to distribute all the assets by the end of the 10th year.

There could be planning opportunities to evaluate, as the tax impact on when you take these taxable distributions could change depending on the year, your other income, and decisions like when you begin receiving Social Security. Thus, if this impacts you, this should be something to discuss and get advice from your financial and tax advisors.

If you are a surviving spouse, you will continue to be able to take retirement distributions over your life expectancy and you will not be subject to this new 10 year rule.

Have you named a Trust as a retirement beneficiary?

If you have not named people (such as a spouse, child or other relative), but have named a Trust as an IRA, 401(k) or other retirement plan beneficiary, or successor beneficiary, you should review this, as the SECURE Act may limit your distribution flexibility. It is possible a Trust may only provide for distribution in the last year, and not earlier, depending on your Trust document wording.

This could be a bad result, as it potentially limits the beneficiaries from being able to receive the inherited assets earlier, in years 1-9, even if they need the money.

If you have named a Trust as a retirement plan or IRA beneficiary or successor beneficiary, you should consult with your estate planning attorney.

Required Minimum Distribution Age change

Prior law was that you had to begin taking retirement plan distributions by April 1st after the year in which you turned 70 1/2. Yes, that’s simple and logical. Not really!

Under the new law, you must begin taking the required minimum distribution (RMD) by age 72. Simpler. But it’s actually by April 1st in the year after you turn age 72. And if you wait until the year after you turn age 72, then you have to take a 2nd RMD in that year, the year you turn 73. Again, more potential opportunities for planning, so talk to us about these issues.

And, if you turned 70 1/2 by December 31, 2019, you will follow the old rules, not the new age 72 rule. You would need to take an RMD for 2020 and years after.

Qualified Charitable Distributions (QCD) still allowed

For those who do not need all of their retirement money for their living expenses, up to $100,000 of your Required Minimum Distribution each year can be directed to a charity and it is not considered taxable income.

The SECURE Act keeps the age at which you are eligible to make QCDs at age 70 1/2, so if you fall within the 70 1/2 to age 72 group now, and have the financial ability and charitable intent, this could be planning opportunity for you.

Other Items

  • The new law removes the age limit for contributing to a traditional IRA. If you have earned income and are older than 70 1/2, you are now eligible for further IRA contributions.
  • If you incur birth or adoption expenses, you and your spouse, as applicable, will each be eligible for a $5,000 qualified distribution from a retirement plan or IRA. The distribution would be taxable, but not subject to the additional 10% early withdrawal penalty.
  • The SECURE Act changed the tax law related to the kiddie tax, lowering the tax rate back to the parent’s rate. The Act also reduced the threshold for medical expenses to be deductible, back to 7.5% of your Adjusted Gross Income for 2019 and 2020 only.

Concluding thoughts

As you can see, laws and rules are always changing, and these changes can impact your financial future. Change can lead to opportunities and pitfalls.

Please contact us if you have questions about any of these matters. That is what we are here for and the value we provide to you.

Also, please feel free to share this information with others who you think would benefit from reading this information, as well as our advice and guidance.

Long Term v. Short Term

Blog post #409

When we provide investment advice and write in these blog posts, we recommend to focus on the long term, especially with regard to investments in the stock market.

A client recently asked me how that “long-term” perspective applies to him, as he is “older” and feels that his time horizon is not as long as he once perceived it.

This is a valid question, so I thought it would make sense to address it.

Let’s start with a basic premise, that if you invest in the stock market, including a globally diversified portfolio as we recommend, you must be prepared for a significant loss of your money over a relatively short period, which could be anywhere from months to a year or two. Stock markets can and do drop quickly and significantly. In order to reap the benefits and gains of stocks, you must be willing to endure the down periods.

In real terms, you could see a decline (loss) of 10-20-30-40% or even more, of whatever money you invest in the stock market, at any point in time. This has happened before and it will happen again.

This is where your time perspective and the reality of the stock market come together. We encourage you to view stock market losses as temporary, and not permanent losses. If you don’t sell at the bottom or during down periods, you should be able to recover from the temporary losses in the stock market, depending on your situation and your timeframe.

As you can see from the following chart, each major loss of greater than 20% of the S&P 500 since 1926 was fully recouped within a few years. For each period, for down and up markets, the chart shows the number of months and the percentage loss and gain over the respective time period. For example, the tech meltdown that started in 2000 resulted in a downturn of 45% in the S&P 500 and occurred over 25 months. Over the next 61 months, the S&P 500 gained 108%.

Please note that this chart is presented for illustrative purposes, to help you understand that stock market losses are temporary and not permanent. We recommend portfolios that are much more diversified than just the S&P 500 (which includes US based large companies only and the companies in the Index have changed significantly over time) so the performance of a portfolio that we recommend may have done better or worse during these specific time periods, but the concept would still be valid. Losses are temporary, not permanent, if you can be disciplined and patient.

The client who posed this question asked me how we factor his “shorter” time perspective into his planning.

When we determine the allocation of a portfolio – how much is invested in stocks v. how much is invested in fixed income (bonds, CDs and cash, which are considered safer and not as volatile as stocks), we focus on your need, ability and willingness to take risk.

And this is where the time perspective begins to take part in the planning and advice that we provide. This is very personal and may be different for each person. For someone such as this person, he may feel he does not have the willingness to take on as much risk, due to his or her age. But we also have to factor in the need for growth in the portfolio, which can really only come from the stock allocation. We also consider his ability to handle the risk, which is likely a factor of age, as well as each persons’ emotional ability to handle volatility. Thus, we would hope that we can recommend a portfolio that has an allocation to stocks that will enable each client and their family to be able to meet their lifetime financial goals and desired cash flow, as well as be at a level of stocks that they can handle emotionally.

Since any money invested in the stock market is subject to loss, we account for someone’s shorter time perspective by adjusting (reducing) the percentage of the portfolio that is invested in stocks.

As we said above, a key part of our philosophy is that stock market losses are temporary, not permanent. But you have to remain invested in stocks, in order for them to recover….and you can’t know how long the recovery will take, especially in the midst of a market crash, such as occurred in 2008-09, or even last fall and through December, 2018.

For most people, this type of analysis and planning is in respect to their retirement portfolio. In this case, your life expectancy is what should drive your time perspective. Based on Social Security life expectancy data, for which 2016 is the most recent published, someone at the respective ages in 2016 should live, on average, to the following ages:**

Male Female
60 Year Old 82 85
70 Year Old 84 87
80 Year Old 88

Also, keep in mind, that this means that half of the population is expected to live longer than the above figures and half will live less. These are the mid-points. Further, it is clear that for people who are better educated, wealthier, and presumably have better access to good health care, they would be expected to live longer than the average. However, as we all know, the only statistic that counts are yours, and the ones you love, not the averages.

But for planning purposes, unless you have a specific medical condition that you have shared with us, we would rely on this type of data. Thus, for someone who is around 60, we would view them as having at least a 20-30 year time perspective. For someone who is 70, we would want to plan for a 15-25 year time perspective.

This is really important. You may be in your mid-60s and not feel that you can think long-term as it relates to stocks. But we encourage you to think long term, as we view it. We have many clients who are well into their 80s and 90s. I’m sure that each of you know people like that. We need to plan so that your money can last for a very long time while you live in retirement.

There are other situations, such as college savings plans or certain employer incentive programs, which have specific timeframes or ending periods, where the money will or should be distributed. In these cases, we would plan very differently than for someone’s retirement funds, as these situations may really have only a 5 or 15 year ending point. In these cases, we would recommend that the closer one gets to the end of the time period, or closer to the college years, the money in this type of account should get much more conservative, reducing the stock allocation to 10-20% or even less, in the final year or two.

As your advisor and guide, we can help you deal with these varying, emotional and financial issues.

  • All aspects of investing and financial planning should include discussing your emotional ability to handle risk.
  • It should include evaluating what is the appropriate time frame for your investments. You may have differing bucket of assets with varying time perspectives.
  • We encourage you to think long term, especially in light of longer life expectancies. You may live into your 80s or 90s and we need to plan for that.
  • Based on this, if you have a 20-30 year life expectancy, you should have a long term time perspective to be able to recover from temporary stock market losses.

We hope this information is valuable and helpful to you.

If it is, please share this email with your friends and family members. We would be pleased to add others so they can receive these blog posts weekly, with their permission.

We hope you have a safe and good holiday weekend.


**”Life Expectancy Table,”, webpage as of 08/29/2019


Different choices, same end goal

Blog post #394

What do you do to be healthy? 

Have you tried different diets?

Do you take vitamins or supplements?

Have you tried different workouts?

Do you use a coach, trainer, fitness tracker or attend a regular class? 

Have any of those led to greater success?

To stay healthy, there are so many different options and choices we can and need to make. There is not a “one size fits all” fitness category. As with investment choices, which can be overwhelming, not all fitness levels and activities are appropriate for each person. Every WWM firm member has their own way that we choose to exercise to maintain our idea of a healthy lifestyle, such as walking, intense exercise classes, running, lifting weights, yoga, play a sport and biking, to name a few.

Just like our health, there are many choices or decisions for your financial road map to retirement and beyond. You know or you may have an idea or a vision of when and what you want your retirement lifestyle to look like. To get there it takes planning and making many decisions. This is where a financial advisor, just like a fitness trainer or nutritionist, can be helpful. 

If you have a fitness or eating routine in place, sometimes you go off course. You stop exercising. You add a few pounds. Even though it is easy to “not get back on the bike,” we all know it is in our best interest to resume with our fitness routine or eating best practices, to stay healthy. It is the same with investing, as even if there is volatility in the stock market, it is best to just continue with your long-term investment plan. 

Similarly, like investing, real life sometimes gets in the way. Even though you have a plan, there can be small or large bumps in that plan. Unplanned job changes. Illness. Unexpected expenses. Stock market declines.

It’s our job as financial advisors to help you navigate through real world circumstances and to help you reach your individual and family retirement goals, which are different for every person. We want to listen, learn and help you develop an investment strategy to help you reach your goals. 

When you become a client, we put together an Investment Policy Statement (IPS) that allocates your current assets, while considering your expected future savings and retirement goals. It is our goal to meet with you on a regular basis to make sure your goals are in line with the Investment Policy Statement put in place when you first became a client. 

If your plans change, or other outside factors change, we review and possibly revise your plan by amending your Investment Policy Statement, to make sure your asset allocation is in line with your goals. These adjustments could be due to changes in your goals, where you want to live or when you want to retire. Changes could also be for financial reasons, if you need to take more risk or less risk, based on how the financial markets have performed over time and your projected life expectancy.

Your Investment Strategy should be as important as your health. We all want to be the best versions of ourselves. 

If you have concerns about your health, you may visit your preferred health care professional to get help. If you have financial concerns or need guidance regarding your investments and financial planning topics, why not reach out to your advisor.

If this makes sense to you, please contact us to schedule a conversation.  We want to learn more about you and your goals, and how we can help you reach them.

Market Update

We always encourage you to focus on the long term.

We plan and allocate your investments so that you will have adequate liquidity to meet your short-term financial needs.

We don’t know how the future will evolve, but we do our best to plan, knowing that the reality is unknown.

While stressing our long-term focus, sometimes analysis and thoughts about short-term market actions and news can be helpful to you.

In general, worldwide stock market indices have declined since September 30th. US and worldwide stock market indices increased in early November (see blog dated November 8, 2018), then declined most of November, with a strong recovery this week, since Thanksgiving.

The decline of worldwide stock market indices since September 30th can be attributed to investor psychology regarding the following:

  • Slowing global growth
  • Trade tariff impact
  • The huge decline of oil prices since early October
  • Concern about rising interest rates in the US (see the above cited blog post)
  • Valuation concerns about some sectors or individual stocks may have been overvalued

Most of our clients have significant fixed income allocations. For illustrative purposes, let’s say someone had a 50% stock and 50% fixed income allocation. Though the financial markets have declined for the year, a balanced portfolio would not be down double digits on a percentage basis for the year to date. While not what we expect long term returns to look like, it is not anywhere near the losses incurred in a major down market.

We remain confident in our major investment principles, which include:

  • Being globally invested for the long term
  • Using very low-cost asset class mutual funds and not individual stocks
  • Not trying to pick which stocks, sectors or regions will do best
  • Owning high quality fixed income and not junk bonds
  • Avoiding hedge funds and alternative investments, which lack transparency and can be very expensive
  • Over-weighting to value and small company asset classes

On Wednesday November 28, US Federal Reserve Chair Jerome Powell gave a key economic speech. He first discussed his outlook for the economy and interest rates. He then explained in-depth the Fed’s approach to monitoring and addressing financial stability. I found both aspects of his speech to be very insightful and they gave me confidence about the future.

While not everyone will be interested in the full speech, I highly recommend reading this speech, or at least the pages 1-2 about interest rates and pages 13-14 summarizing his thoughts about financial stability. The highlights of the first part of his speech are below. I will likely write about the latter part in a future blog post. The speech is very readable. It shows that the Fed is trying to effectively communicate, as well as look at the financial world and attempt to identify future problems before they become severe.

Powell explained that the Federal Reserve has two jobs, to promote maximum employment and price stability (keep inflation around 2%). He stated that “our economy is now close to both of these objectives.”

The real news which caused the stock market to increase significantly on Wednesday were his comments that the financial markets interpreted that interest rates will not need to be raised much further. He explained that while interest rates are still low historically, “they remain just below the broad range of estimates of the level that would be neutral for the economy-that is, neither (causing the) speeding up nor slowing growth.” (WWM inserted “causing the”)

Powell said he, along with his Federal Reserve colleagues, and many private sector economists, are forecasting “continued solid growth, low unemployment, and inflation near 2 percent. There is a great deal to like about this outlook. But we know that things often turn out to be quite different from even the most careful forecasts.” (Emphasis added)

Powell then went on to discuss the balancing act that the Federal Reserve has, that they are dealing with uncertainty and there is no pre-set path for future interest rate moves. Because no one can predict future events, which cumulatively will affect the Fed’s future interest rate decisions, Wall Street will play a guessing game and this leads to volatility in the financial markets. While all this occurs in the short-term, this is where we remain disciplined and focused on the long-term.

Our bottom line from this speech….

  • There will very likely be a short-term interest rate increase of .25% in December.
  • We stated in our November 8th blog post that there will likely be two or three .25% short term interest rate hikes in 2019. After this speech, it’s possible that there may less. The Fed will monitor and evaluate how the economy is performing and review its forecasts at each of their meetings.
  • Powell does “not see dangerous excesses in the stock market.” He made this comment in the latter part of his speech, when he was focusing on financial stability. He distinguished market volatility, which is normal and expected, from events that could threaten financial stability.

We hope this analysis is helpful to you.

If you have further questions, please contact us. That is what we are here for.

Discipline and Spain travelogue

My wife and I are in the midst of enjoying our first trip in Spain, as well as our first trip to Europe.  See pictures below.

On the plane here and between cities, I read a lengthy white paper** by a fund manager whose investing style is causing their firm’s “liquid alternative mutual funds” to be currently underperforming most US and International asset classes. Note….we have not recommended or are invested in these funds.

As part of his discussion (23 pages), a quote stood out to me.

“There are two pains in life: there’s the pain of discipline, and then there’s the pain of regret. You choose which one.”

The quote appears to originate from a power weight lifter, not an investment professional.

As a weight lifter, I assume the athlete is saying the regular pain of his or her disciplined exercise regimen must be endured in order to succeed. If the athlete is not disciplined or does not feel the pain, they will not be successful and thus face performance regret.

This is also true with investing.  To be successful, we must be disciplined.

In regards to our firm’s investment strategy, we intentionally design your portfolio to be quite different than the major US benchmark, the S & P 500, which is comprised of 500 US based companies, which change over time.

We design your portfolio to be different than this benchmark with the expectation that you will have greater expected future returns and also have a smoother, better long term investment experience.

However, in order to accomplish these goals, we as your advisor and you as our clients will have to endure periods of “pain” when our disciplined approach may not perform as well as other benchmarks.

We recommend a portfolio that tilts towards more small and value stocks than the S & P 500, as well as include global diversification to our clients’ portfolios.

We add these components based on strong academic evidence that these premiums exist, over the long term, to add small, value and International stocks to a US large stock portfolio. By doing so, you must be disciplined to reap the greater expected future returns.

While this may be true over the long term, just like the weight lifter, there are times when we feel the pain, as these strategies and components may not perform as well as a non-diversified or US large only portfolio. At times, your portfolio may grow, but not as much as the S&P 500. During other periods, your portfolio may decrease in value while the S & P 500 is increasing.

This is when the pain is felt. This is when we will talk to you about remaining disciplined for the long-term, as we feel strongly that the academic evidence still supports these concepts. We may each feel regret, for the opportunity cost of not following other strategies (going with the herd). However, we know that remaining disciplined may be painful in the short term, it has proven to be rewarding in the past and we expect this to continue in the future.

We cannot know in advance when these strategies or premiums will occur. Many times they are unexpected and quickly rewarding, such as with US small company value stocks in late 2016. Other times, investing globally has been very rewarding after trailing US stocks for many years.

So, remain disciplined. At times it may be challenging. 

In the long run, we expect it to be rewarding.

I’ve also included a few pictures from our trip to Spain.

The first is La Sagrada Familia, an unfinished Roman Catholic Cathedral in Barcelona, Spain, designed by famed architect Antonio Gaudi, who worked on this project from the late 1880s until his death in 1926. After decades of no work on this complex through the 1950s, it expected to be completed in approximately 10 years. It was well worth seeing and will be even more incredible when completed.


The second picture is my wife and I after an evening of pinxtos, which is small portions of food enjoyed at bars or small restaurants in the Basque, or northern part of Spain. We were in San Sebastián and had a guided tour of great pinxtos restaurants. We could not believe the crowds in the streets and bars on a Monday evening in this relatively small town!










**Liquid Alt Ragnarok? by Cliff Asness, 09/07/2018



Transitions, Discipline and Milestones

Ten years ago, during a beautiful fall week, we moved into our current office space. We enjoyed the picturesque view outside our windows of the leaves changing colors. Keith and I were excited about our future. The S & P 500 was around 1,250.

The US stock market had declined almost 20% during the prior 11 months, but we had no idea what would occur in the coming weeks, months and years.

Five years into our financial advisory firm, in our new offices, we soon faced the bankruptcy of Lehman Brothers, the AIG bailout and the financial crisis of 2008-09. At the bottom of the economic collapse, in March of 2009, the S & P 500 had declined to 682, down 57% from it’s October, 2007 peak.

Today, the S & P 500 is around 2,880. Worldwide stock markets have strongly recovered from the depths of the financial crisis.

As a firm, we have grown significantly over the past 10 years. As we mark the milestone of 15 years as a financial advisory firm, we are very fortunate and truly appreciate the loyalty of our valued clients. We appreciate the trust you have placed in us and are grateful for the referrals that many of you have made to friends and relatives.

As we look forward and back, some key lessons apply as much today as they did 10 years ago.

We had many conversations with our clients during the financial crisis.  We listened to their concerns and we encouraged them to remain disciplined, to stick with the investment plan we had developed with them. We continue to have these type of conversations, as economic and political challenges and uncertainty are always with us.

Many people thought the world was coming to an end 10 years ago, at least financially. It didn’t….and it has recovered. The recovery may have been slow, but as an investor, the past 10 years have been good ones. Our clients have been able to grow their assets and live off of their investments, depending on their stage of life.

This time was not different. The crisis of 2007-09 was not different from other market crashes which preceded it. The key is that financial markets recover. We didn’t know how or when, but we had faith that there would be an economic and stock market recovery. If you are going to invest in stocks, you need to believe that most companies will adapt and their earnings will grow over time.

As it is very difficult to consistently identify which companies, sectors and countries will succeed or fail in the future, we believe in diversifying broadly across many companies and geographic regions. This strategy gives you the best change of success and minimizes your risk by not placing concentrated bets.

Today, with many US market indices at or near all time highs, many are asking the opposite question. Have US markets reached new peaks? Will they go higher?

We believe in rational optimism and being rational to deal with uncertainty. These principles enable us to provide you with financial and investment advice that is timeless and will work, if you are disciplined and patient.

We remain rationally optimistic about the long term financial markets, both in the US and overseas. We know that we cannot time the markets and predict a peak. History and academic data teaches us that corporate earnings will continue to grow, which will lead to higher stock markets in the future, both in the US and Internationally.

We know that certain asset classes that we recommend will trail other asset classes at times, but over the longer term, this diversified strategy will provide you with a smoother and more successful investment experience.

If you focus on your long term financial goals, such as how much money you will need annually for retirement, you will have a much greater chance of success. We strongly encourage you not to be distracted by day to day headlines, politics and the barrage of predictions and economic forecasts.

Fall is a time of transition and change for many. School starts. Students move to college or begin middle or high school. These changes can be positive or negative. For those who are Jewish, next week begins the Jewish New Year, a time of reflection.

Over the past 15 years, Keith and I, along with our firm members, have dealt with all kinds of changes, both personally and professionally. Change, transition and unpredictability will always be with us. To deal with this, we remain very confident in our investment principles and guiding beliefs, which enable us to provide each of you with expert financial advice tailored to your specific situation. We want you to be disciplined and not make reactive decisions.

We hope this provides you with greater comfort and financial security, as we all deal with change and uncertainty.

Let’s Talk

Purpose and goals

We may underperform a major benchmark, the S&P 500*, this year, or in some other years.

We may outperform a major benchmark, the S&P 500, this year, or in some other years.

However, beating the S&P 500 every year is not our goal.

Our goal and purpose is to provide you advice and financial recommendations suited to your personal needs.

Our goal is to help ensure that you have adequate financial resources for you and your family’s lifetime.

For many clients, our purpose may be to help provide you with an annual income stream to live off of for the rest of your lives. This is a real and very important goal.

This goal, that you have adequate funds to live the life you desire, is accomplished over years and decades. It is not determined by whether we beat the S&P 500 this year or not.

If your primary financial goal is to conserve or maintain your investment portfolio for years and possibly decades, for yours and future generations, we can advise you so this goal can be accomplished.

The key is that focusing on beating a specific benchmark is not how you accomplish these goals.

You are most likely to succeed in accomplishing these goals by working with a financial advisory firm (like ours), doing comprehensive planning, being disciplined and utilizing a consistent and proven investment philosophy.

Succeeding financially and meeting your goals is complicated.  You have to know how to react to the markets ups and downs, the impact of constantly changing tax laws, handle uncertainty and the constant barrage of news, opinions and predictions.  We help you deal with all these complexities.

We intentionally structure your portfolio to be very different than the S&P 500, as academic evidence has shown that over long time periods, a globally diversified portfolio outperforms the S&P 500, with less volatility.

Investing and financial advice can have many goals and purposes.

We want to understand your goals. We want to help you succeed financially, so you can reach your goals. That is our purpose. 

Talk to us. We have a proven approach that works.