research

Making Sense of the Data Flood

© Can Stock Photo / SergeyNivens

In the 21st century, information seems to be a thousand times more abundant than we could have dreamed of just a few decades ago. An insight into the olden days may be the best way to illustrate this.

When I first became qualified to work with investment securities, I would maintain a list of topics to research. It might be a specific company or an investment product, or some aspect of the economy. Day by day, new items would go on the list.

Every other week, I spent a morning in the library. Stock reports from S&P Marketscope and ValueLine were available there, in large binders. The financial newspapers and other reference works were available, too. I would chew through the items on my list all morning, then make telephone calls that afternoon and evening to report my findings.

No internet, no email, no cell phones.

Now, of course, we interact with economists and research analysts and portfolio managers in real time via webinars, Twitter, and conference calls. Research on thousands of companies is at our fingertips. Data and analysis subscriptions supplement the expert resources made available by LPL Financial and our other institutional partners.

Instead of writing research topics down in a notebook to be studied in the library days later, we often can respond to client inquiries almost instantly, and always quickly.

The key element in our approach is not the flood of information available. By itself, that flood would drown anybody. Instead, it is in the experience and knowledge we bring, in order to understand the narratives and themes lurking in the data. Context and perspective is vital.

When you have read thousands of pages of research, annual reports, and SEC filings, you develop an understanding of what is pertinent, and what may be disregarded. Greg Leibman, in his ninth year here, does a lot of the heavy lifting.

We are fortunate to be alive in this day and age, able to take advantage of the opportunities to operate more effectively on your behalf. Clients, if you would like to talk about this or anything else, please email us or call.

All That And More!

© Can Stock Photo / Irochka

The narrow part of our duties here at 228 Main is striving to grow your buckets. (By this we mean trying to help you build your financial wealth.) But a much broader range of topics comes into play.

The next layer out from investment research and portfolio management, equally important, is effective investing behavior. Some of you seem to have been born with great instincts; others have proved to be trainable. We invest energy and time into describing what effective investing requires, as accurately as we are able, to help you be sure we are all on the same page.

Then there is the matter of how to connect your money to your life. What do you need in terms of portfolio cash flow or withdrawals to meet your goals in the real world? Which forms of investing for retirement are likely to get you to your goals? How much of an emergency fund is optimal for you? We work with you on nearly any money question.

If you take a step back from that, you find a whole philosophy of money and life. We attempt to provide perspectives on things that will help you and us find confidence, comfort and happiness with the choices we make. Achievement, reaching goals, spending wisely (as vital as investing well), perspective on events of the day, economic history, biographies of giants who have come before us… all find their way into our communications.

We get paid for managing wealth. All this other stuff is intended to help you have the resources you need to live as you would like to live. (We have longed believed that the better off you are, the better off we are likely to be.) Whatever counsel you need from us is free; anyone may read our essays, watch the videos, and follow us in social media.

Speaking of that, if you have reason to wish others could see our perspective on money and investing and life, you may point them to our digital communications. Better yet, we will add anyone you want to the list for our weekly short email—friends, children, whomever. Of course, we are too busy trying to grow your buckets to bother them, so being on the email list is a low-risk proposition. Just let us know.

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

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.

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.

The Things We Do Together

things we do

We figured out a long time ago that three things we do matter the most.

Clients, talking with you is at the top. We connect to understand your situation and collaborate with you on your plans and planning. You are the most important part of our business. Otherwise we have no one for whom to research investments or manage portfolios through LPL Financial.

Research and portfolio management are the other two core activities. Our principles drive both of these: avoid stampedes in the market, seek the best bargains, ‘own the orchard for the fruit crop.’ And both are informed by our connection and collaboration with you.

Although each member of the team serves you in multiple ways, we think of our support infrastructure as the trade desk, the research desk, and the logistics desk. (By logistics, we mean taking care of the details of doing business with you.) These functions connect our main activities.

A funny thing happened when we concentrated on the three activities that are most valuable to you. Less pleasant things that dominate the schedules of most financial types simply disappeared: selling, searching for prospects, marketing to strangers. Ever since, we’ve been able to spend a much higher fraction of our time talking with you and striving to grow your buckets.

If your buckets grow, you like it and our revenues grow. Why waste time and energy on strangers when we can invest it in our friends? It sure raises the enjoyment factor for us.

Clients, we do not know if this is of any interest to you. Writing it helped clarify our thoughts about what we are doing and why. If you would like to discuss this or any other pertinent topic, 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.