mark leibman

The Information Age is Over

canstockphoto5932409.jpg

An Italian philosopher has identified the great paradox of knowledge. The tidal waves of data and information coming at us every second are more likely to drown us than empower us. Gloria Origgi believes we are moving towards the Reputation Age, in which information has value only when it has been filtered by a trusted source.

To illustrate, we recently sought to find the reason behind a rise in the stock price of a company in which we are invested. Turning to Google, filtering to see only news from the last 24 hours, we found a blizzard of information – but nothing related to our quest. None of the search results was from a news source we recognized. Here are the entries we found, with our interpretations and judgement:

1. A tiny investment manager sold some of its shares, an insignificant 0.02% of an average day’s trading volume. Worthless.

2. A press release about one day’s trading action from last July. Worthless.

3. The third entry was of an increasingly common type. Apparently written by a robot, it recites the percentage change in the stock for the prior day, month, and year to date. It also included average analyst ranking and statistics about the stock price and volume of trading. Worthless.

4. All of the remaining entries on the first page of the Google news search were similar in form to the third, with variations in the statistics cited. Two had proprietary technical scales or indicators, one included Bollinger bands, none had actual news about the company. Worthless.

Fortunately, we invest in proprietary subscription-based investment services which include breaking news about the companies in which we invest. A quarterly earnings report is due out within a few days, so we concluded that changing sentiment about that report was probably behind the stock move.

This anecdote demonstrates Dr. Origgi’s concept. The quantity of raw data available is staggering. But only when we to turned to our trusted sources did we find what we wanted in an efficient fashion. How did we know to look there? Reputation.

The Reputation Age. It’s here. We strive to earn a place in it when you are looking for guidance about your plans and planning and wealth issues.

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 performance referenced is historical and is no guarantee of future results.

Stock investing involves risk including loss of principal.

Building an Enterprise to Serve You

© Can Stock Photo / artjazz

Over lunch with dear clients recently, I mentioned that our work together has now spanned twenty years, through the beginning of retirement and building a dream home.

One said, “I will never forget what you told us in that first meeting.” I was curious: what had been so memorable?

“You told us you wanted to work to age 92.”

I still have the goal, as you know. (Although, I had not remembered that it was twenty years old.) Of course, working to age 92 depends on living to age 92, maintaining vitality and mental acuity.

But we do not choose our lifespans, and good health is a gift that may be lost.
Early in my career I established a succession agreement. This assured your affairs would be handled by competent, high-integrity colleagues in the event I could no longer work for you. You could elect to go elsewhere at your convenience, on your time frame, but you would not be forced to scramble for help.

Although I would not walk across the street to talk to a prospect, being fully occupied with the goal of growing your buckets, the business has grown beyond anything I could have imagined when I established that agreement. Our outbound communication is aimed at you, not prospects. And yet we grow and grow, and new clients find us.

You point neighbors to our blogs and videos at 228Main.com. Your relatives find their way in. Even “likes” and “shares” in social media spread the word about our services.

This unexpected success prompts us to think about building an enterprise strong enough and deep enough to survive me. We’ve had success in finding wonderful people to work with us. Our philosophy and strategies resonate with them, and they bring their personal contributions to the shared mission.

You see four people working at 228 Main, but three others are working part-time, behind the scenes, and there may come a day when any of them devote even more of their energy to working for you.

I’ll never farm out talking to you to someone else. Yet we will develop associates who help new clients get connected to our system and philosophy, and take care of them.

Our object is to develop the organizational depth to survive the loss of any one of us. Then you will have a more resilient, sustainable partner in this enterprise.

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.

Hit ’em Where They Ain’t

© Can Stock Photo / dehooks

Investors can learn a lot from Willie Keeler, one of the smallest major league baseball players in history. Wee Willie stood 5’4” and weighed 140 pounds.

Playing from 1892 to 1910, Willie was a prolific hitter, with a batting average of .345 over that long career. He explained his success with words that have become part of baseball lore:

“Keep your eye on the ball, and hit ‘em where they ain’t.”

We believe it makes sense to strive to understand investment opportunities, researching companies, trends, and economic developments to try to gain an edge. This is what it means to “keep your eye on the ball.”

As contrarians, we seek to avoid stampedes. If the crowd is there, we probably want to be somewhere else. As Warren Buffett once said, “be greedy when others are fearful, and fearful when others are greedy.” Isn’t this the investment version of “hit ‘em where they ain’t?”

It would be interesting to know whether Wee Willie Keeler did any investing. Did his investing philosophy match his baseball hitting philosophy?

We cannot know the answer to that. But we do know, our investing philosophy matches up very well. “Keep your eye on the ball, and hit ‘em where they ain’t.”
Clients, if you would like to talk about his 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.

Pin It Down

© Can Stock Photo / albln

Social Security is a key piece of the retirement puzzle for most people. The benefits can be worth a substantial amount of money, Each one of us must make decisions about our participation.

We advocate getting facts specific to your situation before making up your mind about what to do. There is a lot of information floating around, not all of it accurate. If you do a Google search on the term “social security” you find more than six billion references.

But there is only one Social Security Administration, and its official websites may be a good place to begin. The reality may be more complicated than indicated by articles in the media.

Recently a client wondered about whether to defer retirement benefits to age 70. Supposedly the benefit of waiting past Full Retirement Age would be an 8% increase per year, calculated to the month. But when they looked at their online benefit statement at SSA.GOV, the benefit of waiting to age 70 benefit was 17% greater than indicated by the 8% formula.

How could this be?

Social Security retirement benefits are based on your best 35 years of earnings, indexed for inflation. Working beyond Full Retirement Age would replace a low wage year from earlier in life with higher current earnings, for this client. So there were two factors working in favor of deferral, not just one.

Pin down the specific facts for your situation before making up your mind. Clients, if you would like help with this or to talk about 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.

This is an individual example and is not representative of any specific investment. Your results may vary.

Minesweeper, Free Cell and the Nature of Life

© Can Stock Photo / paulgrecaud

I recently upgraded my primary computer, a Microsoft Surface tablet. After using only a touchpad and touch screen for a few years, I decided to try using a mouse again. One quick way to acclimate is by playing games in my downtime.

The solitaire card game FreeCell has a fundamental difference from the puzzle game Minesweeper. Any game of FreeCell may be won, with enough thought or trial and error. You may go back to it as many times as you want to solve it. It is possible to win every game, sooner or later.

Minesweeper, on the other hand, forces you to make decisions from a position of uncertainty. You can know many things about the terrain, but not everything. You can learn more by leveraging what you know. But in the final analysis, you must act even though you cannot know everything you want to know. Sometimes you set off a mine, and that game is lost.

If investing were like FreeCell, all we would have to do is study and think enough, and every holding would be a winner. But investing is like Minesweeper—we cannot know everything we would prefer to know, and sometimes things blow up.

Some approaches to investing try to make it look like FreeCell: charts and graphs and computer models, all very scientific. But you know and we know it is like Minesweeper, prone to periodic blowups. There is no point in trying to disguise the nature of the game. The markets go up and down. Some years are down years. Volatility is an inherent part of long-term investing.

In other words, investing is a lot like life itself. We do the best we can with what we have, and deal with the surprises as they come up.

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 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.

Enterprise In The 21st Century

© Can Stock Photo / Eraxion

A business can serve one of two basic functions: solve problems for customers, or exploit their vulnerabilities.

Haven’t we all had experience with both kinds of enterprises? Some bad apples will do anything to take advantage of you. One of our wise clients told us she runs when she hears a fear-based sales pitch, the hallmark of exploiters.

On the brighter side, we also find enterprises that deliver more value to us than they cost, and make it a pleasure to do business. Some act as if they know what you and we know: what goes around, comes around.

We believe the way the 21st century is unfolding will help the good ones and hurt the bad ones. There are three reasons we think this:

• We can get up to speed on any subject more quickly than ever before, with all the knowledge in the world at our fingertips. No longer does anyone have a monopoly on information: prices, specifications and other factors can be checked out.

• Reputations, good and bad, can spread like wildfire through social media and other new forms of communication. It is harder for poor business practices to survive, and easier to find the solid professionals.

• Successful businesses can provide information and perspective to clients and prospective customers at very little cost. This makes it easier for you to figure out whether they focus more on your welfare or their profit, before you get in business with them.

We are always working to get better, continually learning, striving to stay at the leading edge. We make mistakes, as all humans do—but we’re excited about the opportunities unfolding in the decades ahead.

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

Expensive Lessons Threaten Teacher Retirements

© Can Stock Photo / nameinfame

An amazing tale of mistakes and worse in the Omaha Public School (OPS) pension fund has been uncovered by the Omaha World-Herald. According to the paper, the fund went from being one of the best-performing funds in the nation to one of the worst.

The most surprising thing? The same issues you and we face in managing our own investments caused a lot of the grief.

• The fund sold stocks heavily at the bottom of the financial crisis, in 2008 and 2009, dramatically reducing its holdings at the wrong time.

• Decision makers sought ways to achieve above average returns without market volatility—almost always a tale too good to be true.

• The risks of alternative investments were poorly understood, not surprisingly. Mumbai real estate, international shipping, Kazakhstan oil companies and distressed housing in Florida? (At least they didn’t buy swampland, as far as we know.)

• When stocks rebounded, the fund missed out—while suffering with poor results from its new strategies.

We endlessly encourage staying the course, hanging in there, living with volatility, avoiding the stampedes, seeking the bargains… in fact, aiming to do the exact opposite of what the OPS fund managers did. It is not easy to do the right thing, but you, the best clients in the world, have shown perseverance and patience when needed.

It is unfortunate that the people responsible for management of the fund lacked the basic good sense that you possess. 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 performance referenced is historical and is no guarantee of future results.

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

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

 

Financial Wellness

canstockphoto15850454

We put a lot of time and energy into researching investments and managing portfolios. But there is more to financial wellness than being effective investors.

It is handy to understand where you are financially. Putting together a summary of what you have, and what you owe, is a great first step. What you own (your assets) less what you owe (your liabilities) is your net worth. This is a key indicator.

Not everyone is going to be great at creating and following a detailed budget. But it behooves each of us to think about where and how we spend money. At 228 Main, we don’t really have a lot of time to hector you or lecture you about spending money—you are the boss of balancing life in the present moment and preparing for the future.

When you know where you are, and understand the spending that needs to happen in your household, you can go to work on two ways to grow your net worth:

1. Reduce liabilities by paying debts off. One proven method is to pay some extra on the smallest one. When that is paid off, the amount of its payment plus the extra can be put on the next one until it is paid off, and so forth.

2. Increase assets by increasing your regular contributions to retirement or savings plans, or starting new accounts.

Once your plans are on track, there are some other niceties you might attend to, such as an emergency fund, managing your credit score, and beginning to think about your long-range goals.

What good is your money if it doesn’t connect at some point with your real life? That’s why we work to understand where you are, where you are trying to go, and the strategy and tactics you might use to get there.

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.

Stocks Have No Memory

canstockphoto9965668.jpg

Clients sometimes bring up their own history with a particular investment in
trying to assess it. We sometimes hear things like this:

• “It’s done nothing but go down since we bought it.”
• “This is the most boring stock ever! It just lays there.”
• “At what point do you give up on waiting for it to turn around?”

As investors, our challenge is to form an opinion about the future value of prospective investments. Broad economic trends, industry developments, and company evolution may go into the mix. Reading annual and quarterly reports, checking our research sources, and looking at pertinent news are part of our routine. We frequently have to do some arithmetic, too.

Notice something missing from our recipe? Investment price performance does not go into the stew. Track record is not a factor for us personally. If you believe in buying low, you sometimes buy things with terrible recent performance. Conversely, some of the best track records in history belong to bubbles at their peak.

We aren’t saying our approach is the right approach. There is a whole school of thought that says you should only invest in things that are already going up—trend followers. But our approach is our approach, and we are unlikely to change.

Market values depend on the consensus opinion of the rest of the world. As contrarians, we look for potential gaps between the consensus and how we believe the future may unfold. No guarantees, of course—but we aren’t going to base investment decisions on a consensus that may be flawed.

Your stocks do not know how much you paid for them, or when you purchased them. We look at companies, not stocks—and make decisions in line with what we see. Opinions change, the consensus shifts, and we wait. Sometimes we look out of step for a time, perhaps years. That’s part of being contrarian.

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.

 

Stock investing involves risk including loss of principal.

Listen Consciously, Express Beautifully

© Can Stock Photo / kasto

Here in the 21st century, we all may be in the business of communication via social media, blogging, and other electronic formats. When we embarked on our 21st century communications, a friend pointed us to a helpful, useful TED talk by communications expert Julian Treasure. His life vision is the title of this essay.

His TED talk is ‘How to talk so that people want to listen.’ In an era of ubiquitous communication, isn’t this a key skill? What he had to say applies to Facebook posts and tweets as well as spoken communications—so we thought it might be useful to you, as well.

Treasure outlines four cornerstones of powerful speech. There is an acronym for these things that spells HAIL, a word that means ‘to greet enthusiastically,’ which is how we would like our ideas received.

• H – Honesty, being straight and clear.
• A – Authenticity, standing in your own truth.
• I – Integrity, doing what you say and being true to your word.
• L – Love, not romantic love, but wishing others well.

There is a flip side to these cornerstones—the habits that one should avoid, if effective communication is the goal. Treasure talks about ‘the seven deadly sins of speaking.’

They are: gossip, judging, negativity, complaining, excuses, exaggeration, and dogmatism. We all know what these things are, right? You can look up Julian Treasure if you want more detail.

We have all seen cases where words or images or actions are recorded and spread around the world—go viral, as they say—with large consequences, good or bad. So paying attention to what we say and how we say it may be more important than ever before.

Clients, if you would like to talk about any aspect of our communications, 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.