Month: August 2020

COMPLETELY UNFINISHED

photo shows a desert highway with

Maybe the idea of “the finish line” is overrated. You know about my long-time goal of working until I’m age 92, so this sentiment shouldn’t be a shocker.

But we’re thinking about other ways this idea applies. A lot of investment wisdom suggests finding strategies that work with your current life stage. What milestones are coming up? What are you working toward right now? What can you prepare for? Even in this approach, though, life shouldn’t be treated like a checklist.

It’s definitely a journey—and you can’t plan for all the stops along the way. Our approach has to reflect that reality.

Psychologist Carol Dweck studies motivation and mindset. Her take? If things feel fixed or set in stone, look out: that attitude may be a signal that you’ve shut down in the face of change.

We’re not saying that flip-flopping or changing for its own sake is the way to be, but we can’t grow unless we’re willing to change.

“Opening yourself up to growth makes you more yourself, not less,” Dweck explains in her book Mindset. Dweck encourages us to continue to “learn and help learn,” and that’s an idea we can get behind.

You can be a whole person every day you live, but that doesn’t mean your living is ever finished. That’s how we feel about our work, too: a strong financial advisor isn’t a teacher or guide necessarily. An advisor can be a partner on that path. We can map an approach that is complete, robust, and comprehensive—but you better believe that the plan should be able to grow right along with you.

Clients, write or call when you’d like to talk about this, or anything else.

WORK YOUR WORTH

photo shows a pair of hands holding a book and a pen and a picnic table

Financial wellbeing is rarely just about the numbers. But there are some areas where investors regularly miss opportunities.

Best of all? Some of them are free.

We’re talking about that collection of qualities that determine our human capital: the attributes, experiences, and habits that contribute to our ability to do our work and do it well.

Each of us has room for growth, and many of these qualities can be worked like a muscle. Generosity? Practice gratitude, and it will flow. Creativity? Get your internal censor a nice comfy chair in the corner of your brain so that you have the space to make something—then go for it.

Notice how we’re not talking about fighting your brain or your sense of self. We’ve known plenty of friends who flushed their energy trying to evict their weaknesses while their strengths—their true talent and potential—withered.

Even better, we don’t have to make these investments in huge, life-altering waves. Many of these qualities compound. Enthusiasm, punctuality, diligence: practice a few small actions and watch the habits improve each other!

Where can you invest in yourself? Your “earning power” is linked to a lot of domains. It’s not just your education or certifications. What areas of knowledge give you a unique perspective? What experiences have shaped you? These are parts of your financial journey that you can actively work on.

You’ll notice this investment is more about reflection than ‘rithmetic—but it’s work that can pay off in many ways. Your investments in yourself cannot be taken away, they adjust for inflation, and they help you lead a more interesting life to boot.

Clients, we’re glad to be part of the journey with you. Write or call when you’re ready to talk about this or anything else.

YOU DON’T GET WHAT YOU GIVE

photo shows two rocks balanced on a flat rock on top of a triangular rock with water in the background

We’re not pessimists, by any stretch, so we’ll apologize now for the “gotcha” headline. But do you always get what you give? No, you don’t.

When you invest a dollar, it rarely works out such that you make only a dollar or lose only a dollar. Returns aren’t symmetrical: it’s not one dollar in, one dollar out. It could be one dollar in… and many dollars out. Or pennies. No guarantees.

Our core investing philosophy guides us toward those investments that are likely to stay robust and provide healthy returns for the long haul. However, there is room in some accounts to consider more speculative investments from time to time.

Take Silicon Valley, for example, which is full of disruptive visionaries trying to turn the auto industry upside down. Maybe they are geniuses, and maybe not so much: they could go broke in the blink of an eye. But if an upstart company can capture 3% of the new vehicle market over the next few years, the payoff may be considerable. That could be an opportunity.

As another example, some time ago we invested in a flyer—a fairly risky company at the time—because we figured we might make five times our money if it worked out, and we would only lose one time our money if it didn’t. There were no guarantees either way, but the potential reward dwarfed the potential cost.

There are examples that ought to be cautionary tales, times when the potential reward is so tiny compared to the potential cost. Consider the choice of racing across the train tracks as the arms start coming down. Potential reward? You could save five minutes. Potential cost? The whole rest of your life.

Not worth it.

We can’t know the future, and we are always dealing with uncertainty. But we can think about the possibilities and work to understand the potential outcomes. This applies to investing and life: it’s why we took that flyer, and it’s why we do the practically free things that might help us live longer, healthier, happier lives.

Do you always get what you give? No, but it’s easier to find our opportunities when we understand the consequences.

Clients, when you’d like to talk about this or anything else, please write or call.

It’s a Whole New Ball Game

picture shows sunrise behind dewy grass

Millions of us are living through new experiences. The global pandemic has affected many aspects of daily life. Sportscasters and others have used the expression “It’s a whole new ball game” to describe suddenly changed circumstances.

It seems apt now. The rate of change—and the stakes—in this pandemic can feel overwhelming and disorienting. And yet we wonder…

We humans start out knowing nothing about anything, right? Babyhood was a whole new ball game, along with getting teeth, walking, going to kindergarten, making friends (and enemies), and all the other developments in our lives.

So how is it that we have each managed to adapt and deal with this lifetime of ever-changing circumstances, coped with each and every “whole new ball game”? What lessons are there as we each deal with our current set of changes?

Some of the answers might be found in our own pasts, the things that have taught us perspective. Maybe the answers are in our goals and priorities: they could guide the way through. No matter what we each face now, the overall challenge of change remains.

We might revise the old saying and conclude, “It’s always a whole new ball game.”

Clients, if you’d like to discuss this or anything else, write or call.

No Fair-weather Fans

photo shows a young man with a baseball bat and

With the tenuous return of baseball this year, we’re thinking about what fandom means for the investing world.

One thing that strikes us is the redundancy of a phrase like “long-term investing.” Investing is already aimed at the long haul, right? You’ve heard it from us before: “Own the orchard for the fruit crop.” We have been explicit that our investment strategies are based on long time horizons.

But we dove a little deeper and came out with an even richer appreciation for this approach.

Turns out the most common notion of “investing”—using what we have to generate income or profit—is a fairly modern one. The phrase popped up in the 17th century and gained traction by the 19th, per the Oxford English Dictionary.

But a few hundred years before that? It was more literal. “Investing” was closer to its Latin root vestire: to dress or clothe, often in symbolic garments.

Even today, when the crowds aren’t allowed in their favorite stadiums, the word “investing” still has us imagining a sea of sports fans, adorned in those special garments of their favorite team. A sea of investors.

They dress in their team’s colors, and win or lose, by golly they’ll put them on next weekend too.

They’re fans for the long haul; they’re invested.

Like a fervent fan, the phrase “long-term investing” is cheering pretty loudly for a proposition we’re already on board with. It doesn’t mean we can’t be disappointed in our investments, nor does it mean the lineup will never change.

But when we buy in, when we wear the clothes of, this is no fair-weather enterprise; we’re here for the long term. Clients, if you’d like to discuss this or anything else, please write or call.


Content in this material is for general information only and 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.

Slow and Steady

photo shows blue, partly cloudy sky and brown stalks of rice plants

I’ve got something to say—about rice.

I know. I’m not a foodie. This is not a food blog. But hear me out. Recently, a retired client and amateur nutritionist opened my eyes about rice.

I’ve always had issues with white rice: I generally want to eat the whole pot. It’s handy, it cooks up so quickly, but to get full from it, I keep eating and eating.

“That’s not what you need,” the client told me. “They take the good stuff out so it will cook faster.”

Brown rice isn’t “minute rice.” It’s 45-minute rice, but the slow route preserves the stuff we really need. We don’t throw out the good stuff for immediate gratification. And if you want to think about the big picture, remember that this grain has been a food staple across the world for thousands of years. No wonder. It packs a punch, if only we handle it responsibly.

We are not nutritionists (although when you and I visit, you may still hear me talking about brown rice!). But this lesson is still paying off in other ways. Did anything sound familiar as I relayed all this?

In their rush to get in on the action, some new investors head for day trading. It scratches an itch, but it’s focused on the smallest time frame. Investing for the long haul? That’s where the good stuff is, we believe. (No guarantees.)

There are benefits in the waiting. Preservation, patience—sometimes we need a dash of each.

Clients, email or call to talk about this or anything else.


Content in this material is for general information only and 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.

 

When the Problem Is the Problem

photo shows a blue, partly cloudy sky through a square courtyard of buildings

We like to think we are glass half-full kind of people. We are all for due diligence and preparation, but we also remain optimistic that over time, the best possible things can happen. So how do we keep that spirit? The trick is knowing what you’re up against.

We have to be realistic about the problems we face. Sometimes when a problem seems insurmountable, it’s because it is. Volatility in the markets? You might as well fight gravity. It’s part of the deal.

It can’t be a problem because it can’t be solved.

Making sure you have the resources you need to meet your goals? That might be something that we can address—specifically, with some planning, strategy, and arithmetic. And honestly, some hope. If you don’t think your goals are possible, you’re probably right. There’s a world of difference between “Could I…?” and “How could I…?” We just have to stay open to possibility.

The alternative, we think, is pretty unbearable. We’ve watched too many friends waste away fighting things that were out of their control. What if their energy had been given instead to activities they could control? It’s the difference between years of soul-sucking labor and years of life-giving pursuit.

We want you to benefit from the best of our perspective. You might remember we’ve talked about this sort of thing before, as when we cautioned “Don’t Let Your Anchor Drown You.” We’re not promising a rosy path of puppies and rainbows, but we are interested in any outlook that serves us for the long haul.

The obstacles, the possibilities—we’re ready to face all of the above. Thanks for joining us.

Clients, if you’d like to talk more about what this means for you, call or write.