803.941.4440 | Chapin, SC

  • Economic Predictions

    In the wake of the unexpected Trump-era, it has been fascinating to watch the myriad of talking heads discuss the direction of our economy, stock market, and global relations. While we were not as convinced as some that Trump had no chance (after all, we had just experienced Brexit), the reality of how this might affect our clients portfolios and their long term goals remains to be seen.

    We have considered many alternatives:

    • Is Trump really going to bring jobs - and by extension production - back to the US?  How will this affect both our US and International stock holdings
    • What will interest rates do?  How does this affect our bond holdings?
    • What about the swirling question marks about China and Russia?  
    • How will a Trump presidency, in combination with Brexit, affect European stocks?


    One thing is certain:  the more time we spend researching and looking for opportunities, the more we focus on what we can control.  We can control our behavior - not succoming to our tendancies towards fear and greed in markets.  We can control our costs - expensive investment products are rarely worth the cost.  We can control expectations - portfolios will gain money and lose money.  We just do not want to be unprepared.  

    We will continue to look for opportunities and explore ideas to create a better experience for our clients.  We will work to avoid "confirmation bias" - the behavioral tendancy to look for data that confirms what we already believe rather than truly exploring alternatives.  We will develop investment portfolios based on science, and not on a prediction of the future.

    Regardless of what this new presidency will bring, we are prepared, which means you are prepared.

  • Retirement Plan Humor

    Its funny because its true...

    Retirement plans (401k plans in particular) are often simply terrible.  Riddled with high fees, expensive investment options and a broker who isn't even really working for the client.  The good news is, they don't have to be that way.  

    Enjoy John Oliver's experience with 401k plans - laugh and learn.

  • Beware of Tax Scams

    Every tax season, the scammers create new and inventive ways to steal taxpayer money.  Here is a reminder of some of the scams out there, including a new variation for 2016:

    • Scam artists call you claiming to "verify details" of your return.  The goal is to get you to give up personal information, such as credit cards, bank accounts or social security numbers
    • Scam artists impersonating IRS agents make threatening calls, such as "You must pay NOW or go to jail!"
    • Scams targeting payroll providers and Human Resources professionals.  
    • Email phishing and malware attacks designed to look like official IRS communication.  If you receive an email, it is NOT from the IRS - they never initiate taxpayer communication through email.  

    Do not fall for these schemes - and more importantly, make sure that those around you are aware.  The elderly tend to be targeted, but anyone call fall victim. For more information, look here:    IRS Tax Scams

  • Bad January = Bad Year?

    January was rough.  The ninth lowest S&P 500 return for the month since 1926.  So what does this mean?  

    1. Markets are working.  Volatility is indicitive of the ever-changing inputs in the stock markets: investor preferences, earnings expectations, risk aversion, etc.  If there was no change in prices, we would be much more concerned.
    2. What will happen the rest of the year?  We don't know.  The subsequent 11 month return (for the S&P 500) after a negative January is positive 59% of the time and negative 41% of the time.  January returns are predictive of nothing.
    3. The idea that volatility is higher than normal may not be correct. Since 1929, there have been 6 decades with greater volatility than this one and 2 decades with less (based on standard deviation).  This decade is only half over (2010-2015), so it remains to be seen where it will fit in. Again, volatility means markets are working.

    We will use this drop to our advantage and look for opportunities to rebalance.  Our long term advice is to hang in there and ride the wave.


  • 2016 Predictions

    January is the time for financial predictions - the economy, the stock markets, oil, China, etc.

    Here are some of our predictions for 2016:

    1. Some days, markets will go up, others they will go down.

    2. Most of the "experts" or "prognosticators" will be wrong.

    3. Even if some correctly predict what will happen in the economy, most will still be wrong about how markets react to that data.

    4. Predictions don't really matter for most folks.

    As a student of behavorial finance and economics, I have learned that how we react to market events is much more important than the events themselves.  So what do we do now that some markets have gone down?  It depends.  If you are investing for the long term, have enough cash to meet your needs and enough fixed income to replenish that cash when you need it...you do nothing.  Ride out the downturn, knowing the long term trend will be in the upward direction.  Rebalance your portfolio buy selling those sectors that have done well and buying those that have gone down.  If you have extra cash hanging around, a downturn is an opportunity to buy stocks at lower prices, again understanding that investing is long term.

    My final prediction is this: Those who do not panic and take the current volatility in stride, will outperform (in the long run) those who panic.  Stock markets provide long term returns to investors.  It is up to us to not screw it up. 

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