Employ your Fear in your Family’s Financial Planning

I recently attended, for the third year in a row, the one day “Leadercast” event (5-8-15). It’s an inspirational and practical guide to being a better leader, better businessperson and better person overall. An amazing slate of speakers are assembled. The actual live event is in Atlanta and it is “simulcast” around the world. I attended at North Coast church in Vista. There are 100-200 just at this local location. You can see a 2-minute video summary at this link. If you are a client, I will host you at next year’s Leadercast event. (5-6-2016) Each Leadercast event has an overriding theme. This year’s theme was “the brave ones” – addressing fear and how to deal with it as a leader. Rudy Giuliani said that you should , “Put fear in the right place. Use it as a motivation to work harder.” Commander (Navy Seal) Rorke Denver said about fear, “Face it. You have to grab it by the neck and confront it. You say to it, ‘I’m not going to be afraid of you.'” My own daughter inspired me because she confronted fear in college. She was deathly afraid of Speech class. She “grabbed it by the neck” (Cdr. Denver) and took Speech her first semester. She “put fear in the right place” (Giuliani) and worked very hard on each speech. She was at or near #1 in the class and the speech professor hired her to work in the speech lab! I love that story and so proud that my own daughter handled fear so well. What more can I say than these two (three counting my daughter) leaders...

Pop Quiz

Every year Dimensional  – the institutional fund family we use because they produce the best funds to use in an evidence-based investing portfolio – produces a book called the Matrix book. The matrix book is very helpful to quickly demonstrate investment truths that will ultimately help you produce better investment results than most folks. Essentially it guides you toward prudent investing which wins out in the long run over taking more risky paths. By risk I mean under-diversification among and/or within asset classes. Here’s the pop quiz.  Can’t wait to get the answers? – buy me a bad cup of coffee and I’ve show you the answers using the Matrix book  Otherwise, I will post the answers next month. Which asset class that has been around since the 1920’s had its sixth best year in recorded history in 2014?  (Hint:  It has nothing to do with U.S. stocks) Which had a bigger market capitalization at the end of 2014—Apple or Russia/Italy/Greece combined? The U.S. finished #1 on the Randomness of Returns chart the past two years, yet another country has nearly doubled the growth of a dollar over the past 20 years vs. the U.S. market yet never finished #1 in a single year.  Which country is it? US Small Cap Stocks under-performed the S&P in 2014, but which one did better the past 5...

Exploding Retirement Income Myths

One of the most important educational services that my firm provides is to help the average person understand what really works and what doesn’t in investing.  The financial services world is full of folks selling their brand of snake oil. It’s hyped incredibly – so well that the salespersons selling it are completely convinced themselves. Retirement income is one of these areas. It is of great concern because obviously retired people want a steady steam of income they can rely upon.  Interest rates have been near historical lows for a long time. Because of the barrage of advertising and salespersons that call upon them, they are convinced they need the right product that comes with an income stream like a bond mutual fund, dividend paying stock mutual fund or an annuity. You see/hear advertisements all the time about people seeking safe streams of income for retirement. First things first – before you get to the solution, you need to know your destination, starting point and your motivations for arriving there.  Then you can develop an overall plan/strategy congruent with your values, which hopefully has been developed with at least one expert involved. We use three experts – our firm, an independent CFP (certified financial planner) and your own CPA. We make sure that they advice offered is top notch, so you can just focus on implementation of the advice. So while I address some of these myths below – it’s important to understand that my firm advocates the steps above first. The best way to generate income over time is through stock dividends, stock capital gains, bond dividends and bond capital gains....

Scale hurts active managers

Any “active manager” can outperform evidence-based investing as long as they are lucky enough to have larger amounts invested in securities or asset classes that are currently out-performing vs. under-performing. Easier said than done!  And you only know if you were successful when all the dust has settled. But it has been done. The article points out that as more people find out about this skilled (actually lucky) manager, that they all want to pile on. But the winning stops when it gets too big, or as the article is titled “scale works against active skill”.  (Or when the luck runs out, whichever occurs first.) Here’s the article….  Swedroe: Scale Works Against Active...