Magic Phrases

canstockphoto6643802.jpg

A fresh-faced youngster in a cheap suit, I began in business working for a life insurance company. Its agent training program included the sales tactics common to that era, full of scripts and one-liners.

The conventional wisdom was that you had to take seven “no’s” from a prospect to get to the “yes.” Have you ever dealt with a sales person like that?

I learned how to irritate people to no end. Business was difficult.

It took me a while to realize that simply talking to people was a better way. The product was decent and had its uses: connecting in a genuine way made it possible to see if there was a fit or not. Trust went up, pressure went down. And there was no need to memorize sales tracks and magic phrases.

These early memories came back to me recently at a conference. One session featured a consultant who had some good ideas and interesting perspectives, though a lot of their program was never going to apply to us, since it was aimed at finding new clients. We strive to grow your buckets; new clients find us.

But their formula for greeting a referral for the first time took me back to those early sales days: “I’m calling as a courtesy…” In truth, the caller’s goal is to get in business with this prospective client. You know, close the deal, make the sale. Courtesy doesn’t enter into it.

This is how it sounded to me: “I’d like to start our relationship by pretending to do you a favor so you owe me one back.” This logic may work like magic on some people, but we are not here to manipulate anyone. The real magic is created together, through trust.

Clients, if you believe you would be helping a friend by introducing us, we will fit them in if they call. Or you can bring them along if we are having breakfast or lunch together. But we are not going to call them, nor pretend to do them a courtesy by doing so.

The better off you all are, the better off we will be, sooner or later. What goes around, comes around. When that is your agenda and your belief, pretense is unnecessary. Life is good—thank you for being part of ours. Email us or call if you would like to talk.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Connecting, Communicating, Caring

© Can Stock Photo / focalpoint

The third birthday of our 21st century communications program at 228Main.com is upon us. It is a natural time to look back, and think ahead.

When we started, there were things we wished each of you knew. Questions we answered over and over. Stories we told all the time. We wanted our values and principles to be available for inspection, anytime, at your convenience. And we wanted to tell you our thinking about strategy and tactics on a more timely basis.

But we also wanted to hear more from you. Interaction is a key feature of electronic communications and the new media. You reply to our email newsletters with questions or comments or service inquiries. You like or share or comment on the things we post on Facebook, LinkedIn, and Twitter.

The whole object was to talk to you in new ways. Others focus on how to attract new business, new customers—not us. We simply thought it was great to have our thoughts go to all clients at once, to your phones or computers, at the speed of light, for you to read at your leisure.

We are always looking for ways to improve, but it has been a success so far. We feel better-connected than ever. We were fortunate about one aspect: LPL Financial, with whom we are affiliated, is a sophisticated and strong supporter of the new media. (Not all investment firms are.) LPL provided a lot of information that helped us get started.

Now it seems as if we are creating the future together, out on the leading edge, building a reputation in the industry. But it is still all about talking to you.

We are committed to expanding our communications in ways that will make us more accessible to you. If you have anything you would like to share that might improve what we are doing, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Laying the Foundation

© Can Stock Photo / ermess

Burt White, one of the great thinkers of our age, presented at the recent LPL Financial annual conference. His observation? “Adaptability is the new superpower. The faster change happens, the quicker our experience expires.”

It is daunting to think about everything changing all the time. But as we pondered Burt White’s thoughts, we realized that while many things do change, some things do not. We see this in our framework of values, principles, strategy, and tactics.

Start with unchanging values, which give rise to the principles by which we live and work. Then you have a strong foundation from which you can adapt strategy and tactics to changing times, new opportunities, and developing threats. The unchanging things provide congruence and stability even (especially!) in the midst of change.

If what we do needs to change, where do we begin? Our principles, rising from our values, guide us at all times, in every condition. Strategy needs to adapt; tactics change even more frequently. But they are shaped and guided by the bedrock on which they are built.

And Burt White might have it: it may be that stable values and principles are more important than ever before. In the 19th century, a saddle-maker or blacksmith might have practiced the same trade the same way for an entire career. If there is no change, the process of adapting is unnecessary.

But if strategy expires more frequently today, then the values and principles that drive strategy are more important. Therefore, authenticity—being genuine regarding those values and principles, as consistently and openly as possible—might also be more important than ever before.

People may need a clear understanding of who we are, what makes us tick, in order to have faith that we will be able to adapt and thrive in a changing world.

Could straightforwardness—“what you see is what you get”—be the most valuable business skill of the 21st century?

We believe life is too short to spend any time trying to kid you. Our energy is finite, and we focus it on striving to be of value to you, not trying to maintain some pretense or other. We aren’t perfect, we make mistakes, we can offer no guarantees. But we are excited about the way the future is unfolding.

Clients, if you would like to talk about this or anything else, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

The URL – IRL Connection

© Can Stock Photo / Bialasiewicz

… or, where the virtual world and the real world meet. We often talk about these two places as if we must choose one or the other. The reality is that the two work together in many ways.

Fans in stadiums root for their favorite team IRL (“in real life”), but they may also have a source for instant replays or play-by-play through a browser on their smartphones.

IRL, a grandparent plays with a grandbaby. But that grandparent may also enjoy seeing that baby between visits on social media or a photo-sharing site or some other URL—the address that connects them to a website.

And we see you at 228 Main in beautiful downtown Louisville, B’s Diner, or Round The Bend live and in person. But we’re also reaching you here at 228Main.com, plus social media sites like Facebook, Twitter, and LinkedIn.

In other words, we lead integrated lives that combine the real world and a variety of virtual venues. It is not an either/or deal: we benefit when our lives have a home in both places!

It is worthwhile thinking about the advantages we derive from life in the 21st century. When we started communicating in new media, one client told us they would talk to us every day if they could, being interested in planning and investing. They knew that couldn’t happen. But they were delighted to find what we most wanted to say each day was online, plus in these three-minute essays twice each week.

A key advantage of these virtual venues: they do not require each of us to be available at exactly the same time. Nobody plays “phone tag” on Twitter. We frequently post updates early in the morning, but you can read them at your leisure or even on another day. And each of you may choose how much or how little you want.

That client and I still meet; we still have lunch together. And our real-world conversations start warmer and go deeper and farther than before—because of all we share in the virtual world.

Clients, if you would like to talk about this in any world, email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Clients, What Are You Seeing?

© Can Stock Photo / carenas1

Clients, you represent a vast treasure of human capital, educated in every field of study, experienced in working at everything from farming to pharmaceuticals. We are seeking your help and perspective.

The world is awash in facts and data… about short-term factors. But we invest time in trying to understand longer-term trends because they may have a major impact on the world and our work with you. Slower-moving trends and concepts can be more difficult to spot, so here’s how you can help us help you with two goals.

Finding bargains. Hidden trends may produce mispriced investments. An example: our belief that the next energy revolution, solar plus batteries, will change the world. We may see many years of increased demand for the materials that go into solar cells and batteries and electrical equipment. Also, pipelines and conventional electricity generation might have less activity than anticipated. No guarantees on any of this, of course. But here we are, seeking to understand more about the future—as always:

• What is the coming thing in your area? What is just over the horizon but cannot yet be seen?
• What in today’s world is going away, but few have noticed yet?

Avoiding hype. Obvious trends with investment market implications may get overplayed, again producing mispriced investments. The tech boom of 1999–2000 is a good example. Some said the internet would change everything. It did. But internet-related stocks fell dramatically even as the story came true. So talk to us about what you see in your areas of interest:

• What is everybody talking about today that may be overhyped? What do you see that others don’t?

Clients, please comment, email, or call to talk about these topics or anything else. We look forward to learning to see what you see.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

Stock investing involves risk including loss of principal.

Optional Thinking

© Can Stock Photo / lisafx

Readers know we believe there are those financial arrangements that maintain stability and those that may garner long-term investment returns. But anything that promises both stability and high returns is not likely to work out that way.

The uncomfortable truth is, we must live with volatility in order to have a chance at market returns. Short-term market action cannot be reliably forecast, nor profitably traded, in our opinion.

Yet market values can be volatile. Imagine an account of $500,000: a 20% drop would shrink it to $400,000, while a 20% gain would grow it to $600,000. How do people stand it?

First, long-term clients tend to take the long view. If that $500,000 account started as a $200,000 account years ago, the owners remember where they’ve been. That original investment is their anchor: any value above $200,000 represents a gain from that beginning value. (We are talking about the effects of time and compounding, not claiming any unusual investment results.)

Second, the long view helps clients understand that volatility is not risk. Put another way, as we’ve written before, a short-term drop does not necessarily represent a loss. How should we view that $500,000 value dropping to $400,000, in the long view? Relative to the original $200,000, it’s still a gain. Worrying about drops as if they are losses is optional for people who are investing for many years or decades down the road.

Third, even while staying the course over the long haul is important, strategies need to address short-term needs. For those who are living on their capital, knowing where the cash is going to come from is vitally important. With secure cash flow, it is easier to live with the ups and downs in account values. We call this pursuit of opportunity “owning the orchard for the fruit crop.”

This perspective requires a certain confidence that we will stumble through any problems and likely come out of whatever troubles have arisen. Optimism is sound policy, for if we are going back to the Stone Age, it won’t matter what is in your portfolio anyway.

Clients, if you would like to talk about these ideas or any other, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

 

Building a Retirement Fund: Two Simple Things

© Can Stock Photo / tashka

As a rookie in business, I impressed myself with how much knowledge the work required. It was complicated! It did not take long to figure out that many people believe the same thing about their work.

The point was driven home when I made the mistake of suggesting that working in the ice cream factory must be pretty simple—to a fellow who worked on the production line. “Are you kidding me? You got all your different flavors, plus the ones with nuts or candy mixed in… it’s complicated!”

Like any field of endeavor, retirement planning has those who seek to impress with how complicated it is. But if you get just two simple things right, you can put yourself on the road to progress.

Your Savings Rate. The money you put away is the raw material of your future retirement. The first thing is to set aside money every payday. 401(k) plans make it easy, but you can do it with or without one. It seems like many people starting out cannot save 10% or 15% of their earnings—one needs to buy groceries and electricity, too.

But wherever you start, even at 1% or 4%, you can increase that 1% per year until you get to 15%. Or put half of any raise into the plan—if you get a 4% raise, add 2% to your contribution rate.

Your Long Term Strategy. Put your long term money into long term investments. Various investments offer short term stability or long term returns—but not all of both. If your retirement is decades away, investments that promise a stable value tomorrow or next year do nothing for you in your real life. You might aim for higher returns instead.

(Some people are unable to live with the ups and downs of long term investing. We aren’t suggesting that living with volatility is right for everyone. But if you require stability, you will probably need to save more in order to reach your goals.)

Clients, if you figured these things out long ago, you might pass this along to younger folks. To talk about these ideas or anything else, email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

 

Peak Experience

© Can Stock Photo / Nejron

You know we are endlessly fascinated by the search for investment bargains, the interplay of human behavior and the markets, and economic cycles. We enjoy talking with you, and collaborating on your plans and planning. But the pinnacle of our work is in a whole different category.

Once, a life-long friend of a close client had not been able to solve the question, “Can I afford to retire?” Mrs. S had raised two children on her own after being widowed at a young age, and was working at a job that had become onerous as she approached retirement age. For two years she had pursued the answer, but could not find it.

She needed to gain the confidence that she could retire. The resources were there, through her lifetime of diligent saving. We were able to explain the meaning of her wealth, how it could help her work toward where she wanted to go, in terms she could understand.

A year and a half after that, she called to ask another question. Would it be possible for her to own a home, or was that a pipe dream? She had spent thirty years in a modest rental duplex. Some time later she began her home search.

These questions, and others like them, are the reason we are in business. Our real work is not about making money. It is about helping clients make decisions that could change their lives.

Mrs. S was never our largest client. She never paid us the highest fees. But the personal satisfaction we felt from our work was vast.

Many will never need that much help. They come to a comfortable understanding of the meaning of their wealth without our context and perspective. We are still very happy to play a role investing their resources, and answering those financial planning questions that do arise.

Clients, if you would like to talk about these things or anything else, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

 

Connect the Dots

© Can Stock Photo / bradcalkins

Do you remember the “connect the dots” pictures for children? By drawing lines from one dot to the next, the players discover that a coherent picture emerges from a seemingly disorganized collection of dots on the page.

Likewise, our work involves creating a picture that makes sense out of all the things going on in the world. In our version, though, there’s no handy numbering guide to draw our attention to the relevant dots.

Instead there seems to be an infinite number of dots in the world. So our first task is to do some sorting. For example, a vast mass of information is available about the day-to-day movement of the stock market. We can sort out any dots that fit into the category “the market goes up and down”—and then discard them. They are not pertinent for long-term investors.

Time horizon plays a large role in sorting as well. There is a wealth of opinions about nearly any investment alternative. A short-term technical analyst may have an opinion that is useful to a day trader but worthless to investors who are thinking in terms of years or decades.

But our work involves more than sorting out what to ignore. We frequently need to dig deeper—to read SEC filings, to research what happened in prior cycles years ago, and to look up many years of operating results. In other words, we still have to be able to find some of the specific dots we know are needed to complete the picture.

For example, we believe that inflation in the next few years will exceed consensus expectations. There is little information from the past decade supporting this view, in our opinion, but as we dig deeper, the patterns going back many decades suggest we may have it right. (No guarantees.)

Another way of saying all of this is that perspective, context, and background matter as we try to connect the dots. We are fortunate to have time to think deeply—and clients who value our methods and our work are a big plus. Together, we’ll create the picture.

Clients, if you would like to talk about this or anything else on your agenda, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Who Controls Your Destiny?

© Can Stock Photo / photocreo

“You can’t go back and change the beginning, but you can start where you are and change the ending.”
-C.S. Lewis

When we came across this quotation from novelist and academic C.S. Lewis, it made us realize one other trait tends to set you, our clients, apart from others. We have long believed you form a niche market of the mind, sharing certain beliefs about investing and life. Our understanding of your uniqueness is deepening as we go along.

Successful planning—our work–requires all of us to believe that we have some control over our outcomes—that we can start where we are and change the ending. But not everyone believes that.

Do people have control over how things turn out, or do external factors, things beyond our control, govern? Psychologists refer to this dimension of personality as the locus of control. We humans vary in this respect.

Much is beyond our control. Accidents happen, markets move randomly in the short run, others sometimes make decisions we do not like. Yet we try to make the most of what we have to work with. We expect that we can make the future better with the actions we take today.

At one extreme, some believe nothing they do can make a difference. If planning is fruitless, we cannot be of service. At the other extreme, some believe that everything can be controlled. This is a problem too—we do not control the stock market!

We are grateful for your balanced outlook: willing to take action to make a better future, knowing that stuff happens, always looking to make the best of it.

Clients, if you would like to talk about this or anything else on your agenda, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.