Month: October 2018

Being an independent firm, we manage portfolios, service our clients, and write content.  That’s it.  Because we offer fees tied to client outcomes, we have a direct incentive to ensure your portfolio is optimized and our process is streamlined. If you work with a large, profit-center advisor, you know a few headwinds are working against you: sales goals, conference calls, middle managers, and corporate bureaucrats, just to name a few.  Being committed to fewer families allows us the ability to understand everyone’s unique communication style, anxiety level, and quirks (these are my favorite).

The only reason I mention this is to say that we are built for times like these, so use us.  If you’re a “hands off” investor; Fine.  If you’re someone who looks at their statement every couple of months; Great.  If you’re someone that is intimately involved and wants more education on why Amazon’s year-over-year revenue growth of 30% led to the largest two-day DECLINE in the stock in 4 years, even better.  We’re here for you.  And we’re not going anywhere.

Below are a couple of my favorite articles from the last couple weeks.  Enjoy.

– Adam

Diversification Means Saying Sorry – “Unnecessary risks can be avoided. Unnecessary risks include a host of decisions including, but not limited to; single securities, sector bets, reaching for yield, and failure to invest in almost half of the world’s stock market. Unnecessary risks can lead to periods of excess performance, but they are not a reliable strategy for the long term.”

Broker vs. Advisor – “The financial advisor is a stakeholder in the client’s outcome, a professional with something to lose should the plan fall apart or fail to be adhered to. Financial advisors are for people with complex situations who want a relationship with someone that knows them, understands them and will fight like hell to see their goals and objectives met in the future. Order takers don’t fight, they abide.”

Festina lente is a classic motto adopted by Greek emperor Augustus as well as the Medici family from the Renaissance.  Directly translating to “make haste, slowly”, this simple proverb immediately strikes us as a riddle.  After all, how can we rush, slowly?  While it’s a literal oxymoron, the phrase has come to be understood as a call to seek thorough urgency.  Financial planning and investment management is all about keeping emotions in check and having an anchor in the storm.  No one expects financial professionals to predict the future, but everyone expects to hear something to calm the anxiety.  Sorry, there’s no magic pill here either.  What I do know is that avoiding the anxiety is impossible.  Unless you’re a robot, being emotionally attached to your investments happens to everyone.  As we move on through our lives and our wealth continues to grow, that emotional connection only becomes more volatile.  So what can we do?  We can arm ourselves with education and realize the decision has already been made.  When it was rooted in slow, methodical logic.  Before the storm.

• The average annual range of the S&P 500 each year is 14% (meaning from the high of the year to the low of the year).  This year so far, it’s been 16% from the high in September to the low made in February.
• Daily drops of 2% or more happen about 5 times each year.
• On average, every 5 years, markets decline more than 30% in a year.
• Markets rise 7 out of every 10 years on average.
• In the last 88 years, the average total return of the S&P 500 during rising interest rates is 10.5%.  The average total return when rates are falling? 8.4%.

Now is not the time for Warren Buffett quotes, or even the cold stats above.   It’s the time to see whether or not you believe them.  Most people consider themselves long-term investors.  Don’t try and tinker with the process.  We’ve already made haste, now is the time to sit back.  Festina lente.

– Adam