mark leibman

Life and Savannah, Georgia

© Can Stock Photo / SeanPavonePhoto

Traveling recently, I had the chance to spend 24 hours in Savannah rather than drive right by. This is a new thing again for me; my life has been too full for side trips most of the last few years.

At best, 24 hours does not even scratch the surface of a city like Savannah. The largest historic district in the country included markets, churches, temples, homes, and mansions. Now it is also home to museums, shops and restaurants.

The unique and beautiful squares or parks, more than twenty, were originally laid out from 1733 to 1801. Many have fountains or statues or otherwise commemorate notables from history. Ancient and stately oaks grace the squares, and indeed the entire city.

The river features shops, entertainment, and dining housed in the centuries-old brick buildings originally used to service a working waterfront.

In preparing for this day, it took some time to understand what all there was to see and do. And then, how to make the most of it? Trolley tours, boat tours, guided walking tours, solo hiking, or some combination?

(I won’t bore you with my decisions; they suited me. Yours would be, or will be, different.)

The task of figuring out how to spend 24 hours in Savannah, Georgia is akin to how we live our lives. When we choose to focus our time and energy, we forsake everything else for a time. And we can never get around to all that the world offers. And the span of our lives in the world is every bit as limited as 24 hours in Savannah.

I did learn that with planning you can see a great deal in Savannah in 24 hours; I am still in the process of learning that with planning you can do a great deal in life.

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

Tend and Befriend

© Can Stock Photo / KalengUang

One concept we hear about in the investment and financial planning world is a real downer. This is the idea that evolutionary bias may force us into unwise decisions. Supposedly, our caveman brains are stimulated by ‘fight or flight’ tendencies in the face of uncertainty or danger.

We have always believed we can learn, we are trainable, we can use reason and logic to our advantage. In other words, there is more in our heads than caveman brains. But it still irritates us when we see the implication that we humans are doomed to stupidity by evolution.

We recently read about another supposed product of evolution, a far more optimistic and different instinct.

‘Tend and befriend’ is a concept first outlined by psychologist Shelley Taylor. It refers to the instinct to reach out to those around us, to strengthen our ties to others and to care for them when threats arise. This seems to us to be the opposite of fight or flight, and is a much more helpful concept.

We do not suffer threats from saber tooth tigers anymore, but volatility in the markets, scary headlines, and viral rumors may produce the appearance of threats and danger.

Back in the early part of my career, I envisioned having clients who, if I took care of them, they would take care of me. This evolved into the belief that the better off you are, the better off we will likely be. Now we read about ‘tend and befriend.’ This strikes me as a wonderful way to think about how we strive to work with you.

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

S.M.A.R.T. Goals?

© Can Stock Photo / PixelsAway

We’ve all hard about SMART goals, haven’t we? The acronym stands for “Specific, Measurable, Achievable, Relevant, Time-bound.”

Perhaps SMART goals should be balanced with GUT goals: General, Unbounded, Timeless.

SMART goals are all about what we do. GUT goals are all about who we are.

Great thinker James Clear talks says the key to lasting improvement is to change who we believe we are. This is key because we humans are always in the process of becoming who we believe we are. This is a general concept. For example, we might come to believe we are a person who prioritizes exercise.

Compare that to a SMART goal like ‘walk two miles every day.’ Life has a way of getting in the way of our plans; the specific plan to walk might fall to inclement weather, or an upset schedule. But if we believe we are a person who prioritizes exercise, we will usually figure out a way to get exercise despite the disruptions that inevitably pop up.

The SMART goal of walking two miles every day is specific, so involves failure when it is not met. But the GUT goal of becoming a person who prioritizes exercise, being general, does not chalk up a failure when the inevitable lapse occurs.

On another parameter, SMART goals can only be applied to things that are measurable. Many of the most important things cannot be measured. Try to quantify empathy, love, a sunset, or the work of an inspired person. A GUT goal might be about things that cannot be measured. One example, to be present in the presence of others: more empathetic, more attentive, more closely connected to the moment. If we come to believe we are that person, our actions will reflect it.

There are corollaries to personal financial planning. If we believe we are people who put something away every payday, who think twice before committing to large expenditures, who live below our means, who balance long term goals against impulsive spending, then our daily actions may support our key objectives.

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

A Structural Reminder

pyramid

The ability to adapt to changing conditions is what sets those who thrive apart from those who merely survive.

Our portfolio theory evolves over time as economic and market conditions unfold. The problem with the textbook approach in a changing world is that a textbook, once printed, never changes. Looking at the world as it is and doing our own thinking, we see things in a new way.

Some time ago, we concluded that counterproductive monetary policies have distorted pricing for bonds and other income-producing investments. By crushing interest rates and yields to very low levels, the old investment textbook had been made obsolete.

Therefore the classic advice about the proper balance between stocks and bonds brings new and perhaps unrecognized risks, with corresponding pockets of opportunity elsewhere. Yet the classic advice met a need which still exists: how to accommodate varying needs for liquidity and tolerance of volatility.

Our adaptation to this new world is the portfolio structure you see above. Our classic research-driven portfolio methods live in the Long Term Core. We believe our fundamental principles are timeless, and make sense in all conditions.

But people need the use of their money to live their lives and do what they need to do. So a cash layer may be needed, tailored to individual circumstances.

The layer between is ballast. This refers to holdings that might be expected to fall and rise more slowly than the overall stock market. Ballast serves two purposes. It dampens volatility of the overall portfolio, thereby making it easier to live with. Ballast may serve as a source of funds for buying when the market seems to be low.

The client with higher cash needs or who desires lower volatility may use the same long term core as the one who wants maximum potential returns. One may want a ‘cash-ballast-long term core’ allocation of 10%-25%-65% and the next one 4%-0%-96%. It’s a free country, you can have it your way.

It may be time to review the structure of your portfolio. Clients, if you would like to talk about this or anything else, please email us or call us.


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.

Confusion, Wealth, and Options

© Can Stock Photo / bruesw

A confession: I am confused about a fairly important life question. Some of you have been, or will be, facing similar conundrums.

You may be surprised, depending on how well you know me. Clarity is something I strive for.

When I am home in Louisville Nebraska, there are no traffic lights between my modest abode and my shop at 228 Main Street, a ten minute walk if I choose. Life is simple, inexpensive, and easily within the means of future benefits from Social Security and a small pension.

I also have a home in Florida which is not particularly modest. We chose it a few years ago, when I was part of a ‘we.’ It met the needs of my high school sweetheart as she worked to extend her life in the face of serious health challenges. The original rationale for the decision no longer holds, as Cathy passed away last summer.

You may recall our original decision a decade ago to adopt a snowbird lifestyle, in the hopes of making my plan to work to age 92 a sustainable one. I had no appetite then for decades more of Nebraska winters.

Now I am confused.

• I still have little appetite for Nebraska winters.
• The Florida home is more than I need.
• It takes money to maintain a second home.
• Where I will want to spend how much time in the future is something I cannot answer now.

What is needed to cure my confusion is time. The old rule of thumb about dealing with wrenching personal change is “don’t make any big decisions for at least a year.” Now I understand this rule, after giving myself whiplash trying to make plans prematurely.

The answers will become clear with time.

What gives us the time we need is money. I have some; you have some. Money for its own sake has little value, but the time and flexibility it provides is priceless.

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

 

Financial Inflammation

© Can Stock Photo / staras

Inflammation is one of the ways the human body deals with harmful stimuli. It keeps us healthy. Chronic inflammation is something else: it is thought by some to be at the root of many health challenges. It seems to be a factor in heart disease, cancer, Alzheimer’s, and other serious problems. Complex processes are difficult to manage, but some things have been shown to reduce chronic inflammation.

We use the concept of chronic inflammation to think about other areas of life, as well. Sometimes we meet people who have conflicting goals, plans that are unlikely to happen, unsatisfying spending habits, or ineffective use of wealth.
All of these are a form of financial inflammation.

The first step in dealing with inflammation is understanding its role in keeping us from healthy bodies or working financial plans. Then we can work on the things that are aggravating it and the things that may help control it.

1. Clarifying goals provides a focus that may guide our decision-making and reduce uncertainty.

2. Figuring out a path to get to your goals provides a roadmap to move you toward that desired future.

3. Fixing the things that interfere with progress, and finding ways to improve your progress, are ways to systematically reduce the financial inflammation in your life.

Vitality is a good thing in your financial plans and planning, as well as in life.

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


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

This Land is Your Land

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I have an interest in some land adjacent to the Platte River, near my home. A fairly extensive parcel, it includes small lakes, good places to have a picnic or campfire or pitch a tent, and lovely hiking paths.

Have you ever been mesmerized by the sight of moving water? Ripples on a pond, waves on a lake, or a river flowing seem to connect with us on a deep level. This land offers ample opportunity for inspired introspection.

Walking it in different seasons provides a different experience every time. The leaves of the cottonwoods provide early color in the spring, spring and summer breezes murmur through them, and autumn winds make them rattle as they turn yellow and dry out, before they fall. When bare of leaves, the cottonwoods stand vividly against purple winter dawns and red sunsets.

The time I spend on this land promotes my well-being in every dimension: physically, emotionally, spiritually.

The other day I wondered how much it would cost to buy the parcel today. I was grateful that there is no need to do that; it would be quite expensive.

The interesting thing is, I never bought it, not any fraction of it. My interest in it arises from a state park annual pass. The pass covers the Louisville State Recreation Area, 65 other recreation areas, eight state parks and nine historical parks. Each of us has the same right to it, whether we leave a large mansion or a small apartment to access its wonders. Clients, the twenty states you live in each have something similar.

As we enjoy the present and plan for the future, we benefit ourselves by finding and taking advantage of the opportunities to enrich our lives that are free or nearly so. The ability to be cheaply amused, a valuable trait, is a great one to cultivate.

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

All or Nothing

© Can Stock Photo / agencyby

We keep hearing reasons why financial advisors should have 100% of every client’s invested assets, instead of some fraction. This theory is popular with… financial advisors.

You might guess we have a contrarian opinion on this subject, like most subjects. Our theory is that we end up with all the business we deserve. Since you who own the money are the judge of that, we are relieved of the burden of worrying about it. We don’t want any money in our shop that doesn’t want to be here, after all.

There are sound reasons to consolidate assets in one place – including lower costs through volume discounts. But some may prefer not to do that, for whatever reason.

Our investment approach is different than most. Rather than use the standard pie chart approach of owning a little bit of everything, or outsourcing investment management to some third party somewhere, we do hands-on research and our own thinking, using individual securities as appropriate. So our work is a useful diversification, something different, from run-of-the-mill conventional portfolio management using investment products instead of stocks and bonds.

When somebody wants to allocate a fraction of their wealth to our care, it is fine by us. We already know how much business we will ultimately end up with: all that we deserve.

It turns out that remembering whose money it is not only respects the people who engage with us, but also reduces our stress.

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


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

The Gong Show, Seminar Edition

© Can Stock Photo / dutourdumonde

I spend most of my days working with you or for you on your investments and planning. A few days each year are spent at seminars and conferences, working to get better at working with you or for you.

It is great to find a new perspective or idea or tool that helps us with our work, especially delivered by an inspired and inspiring speaker. But sometimes things we see and hear are just not a good fit for our values and philosophies. The last seminar I attended had much that was helpful.

But the part that was not helpful was interesting. Reflecting on it, it had to do with a mismatch in philosophy.

One of the speakers was a consultant for a coaching outfit, one that works with financial advisors to help them grow their businesses. After the preliminaries, he began his presentation by asking attendees to visualize how much money they wanted to make, three years down the road, encouraging our ambitions. And then, write that number down in the notebook provided. Next, how many millions in client assets did we want, three years hence? Write that down.

Thinking about the future and setting goals is a familiar and valuable exercise. But it was what came next that made me think of The Gong Show.

(One of the first reality TV talent shows, The Gong Show featured amateur acts appearing before a panel of celebrity judges. A judge could end an audition by striking a loud gong.)

The next topic after the money exercise was about the importance of being client-focused. Before many words were said about how vital it is to be centered on clients, I heard the gong in my head and thought, “Too late. You already established that you are focused on money, not clients.”

We concluded long ago that the better off you are, the better off we are likely to be, down the road. So when I walk in the door of 228 Main each morning I think, “What can we do to grow the buckets?” Of course, that’s not the only thing. We also work on helping you use your resources in your real life, to spend well. It is all part of being better off. Our business objective is to improve your outcomes.

The better off you are, the better off we are likely to be. My income is a byproduct of how well or poorly we help you become better off. That fits the definition of client focus a lot more closely than having your results be a leftover effect of how much money I want to make.

There were other things in that seminar presentation that struck me as off, but if I had a gong I would not have heard them.

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

Making Money the Old-Fashioned Way

© Can Stock Photo / stokkete

Years ago, the Wall Street firm of E.F. Hutton advertised “We make money the old-fashioned way. We earn it.” This tag line evoked a world of indepth research into securities and markets, and investment analysis by experienced professionals.

E.F. Hutton disappeared into a series of mergers, and making money the old-fashioned way is increasingly scarce. One popular theory now is that security selection does not matter, only the allocation of money across the different sectors of the market.

Combined with the idea that past patterns of volatility and past returns by sector should dictate what one should own for the future, many modern ‘investment advisors’ pay no attention to individual company stocks or bonds.

It seems to us that owning stock in a failing chain of department stores is a lot different than owning the world’s largest online retailer. A few automakers survived, hundreds did not. Buying a corporate bond for 50 cents on the dollar is a totally different proposition than selling it for 50 cents on the dollar. Owning some of everything is different than being selective.

Our experience says security selection DOES matter.

One of our strategies is to try to find ownership in great companies at decent prices, to buy and hold. Looking for cyclical companies at low points in the cycle is another strategy. And simply seeking bargains anywhere in the investment universe is a third.

This is not easy. Conditions are always uncertain. There are no guarantees. It takes a lot of effort and energy. There is no assurance that the old-fashioned way will make money, as E.F. Hutton claimed.

But we are trying.

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