Please enjoy our latest Quarterly Letter. We hope you find it informative (and interesting), and that it provides you with insight into the way we view markets and construct portfolios. Feel free to pass it on to others who also might find it valuable.   Thank you for your continued confidence and trust!   A Correction I could begin this piece with defining what a “correction” is in a few different ways, either through an economic lens or by measuring the distance that the price of an index needs to fall from peak to trough. However, those have already been blasted to you by every financial news site over the last few weeks. Plus, they’ve only refreshed you with the definitions after the correction has already occurred, which gives you no benefit other than to distract you from your work, and increase your heart rate.   My goal is a bit different in that I aim to slow your heart rate, and tell you to get back to work. Most people already know what a correction feels like, but what does one actually look like? And can a visual perspective help calm our fears of a potential worst case scenario event seemingly right around the corner. In all likelihood, that event is in the next 3-12 months and market participants are merely being prudent, and collectively pumping their breaks ahead of this unknown future event, if it were even to occur at all. That’s the beauty of a free market. No single piece of news is going to sway everyone at once, or even in the same direction, but will be weighed by all participants (the “market”) over the course of a full business cycle. But I digress... Read More >

Every time I revisit Carl Richard’s back-of-a-napkin financial planning sketches they make me stop and think, is my spending in line with my values? I think so, however, I did just spend quite a bit of money on a new sound bar for my living room. Does that mean I value quality sound, down-time, or my couch? While the answer to my internal dialogue is likely all of the above, they’re definitely not my deepest values and serve as a friendly reminder to revisit my deepest values to make sure I’m allocating my resources to them consistently. In this week’s Distillery, Carl Richard’s helps model how to think deeper and uncover your deepest values, and begin/resume allocating your spending to them.   So, what’s important about money to you?   This is an uncomfortable question because we aren’t used to thinking about money in those terms. But it’s one of my favorite questions to ask. Even before talking about goals or building a personal balance sheet, you might find it helpful to ask yourself this question. While I’m not certain of the question’s origins, I first learned of it about a decade ago in a book by Bill Bachrach. It was about the importance of understanding your values when making important financial decisions. I’ve been using the question ever since. The purpose of this question isn’t to think in terms of goals. It’s meant to go deeper than that, or to get at the reason why we have certain goals. The first answers people come up with are usually easy — things like... Read More >

The first 90 days of 2018 are already behind us (wow!), so it’s accountability time. How are we doing on our New Year’s Resolutions? Have our recent goals and actions matched our values? Are we saving money with the right end in mind? This week’s Distillery helps bring us back to that space in which we’re reminded that investing is merely a means to fulfill your highest values. So think about it, why do you invest?   Enjoy!   Really think about it. My gut response used to be, “to replace my future income,” as I’ve discussed here. However, this response was incomplete. I say incomplete because it seemed too cold and mathematical. It was not based on my personal values. Investing without considering your values is like having the fastest boat in the middle of the Pacific Ocean with no set destination — no matter how fast you go, you will always feel lost. Chasing riches without knowing why you truly want them is a surefire path to lifelong misery... Read More >

With three weekends remaining until taxes are due, one of which being a holiday weekend, today’s Distillery groups multiple resources together for you while you consider how, when, where and why you’re going to do your taxes. For the few that have already filed, and trust me, you’re part of the minority according to this IRS chart, you may find these links helpful in thinking through next year’s tax planning topics...   Read More >

This week’s The Distillery answers the question you silently ask yourself every year, “How Long do I have to keep all these tax documents?” Unless you’re just into collecting dust, or power cleaning your filing cabinet (it took 3 people to carry my desk full of documents upstairs a few years ago), we hope this article provides the information you’ve been seeking to inspire a Spring documents cleanse! Enjoy! Tax season is the perfect time to start culling your paper piles and computer files and getting everything in order. You've already delved into your financial records, so you might as well take the time to organize them. There are plenty of good reasons to do this. One is that if you haven't yet completed your taxes, getting your paperwork in order will reduce tax-preparation stress. And if you have already filed your taxes, you'll want to know how long to keep tax records and other financial papers in case you're audited. There are other instances when being organized can pay off. If you're meeting with a financial adviser or an attorney, you don't want to spend hours wading through clutter to find the documents you need. If there's a fire, flood, or theft, you'll need access to essential documents quickly. And if you become ill, well-organized paperwork will make it easier for your loved ones to find your healthcare power of attorney, insurance policies, medical records, and outstanding bills. So what should you do? Read More >

This week’s Distillery seeks to plant a tiny seed of healthy paranoia into the back of your minds throughout tax filing season. As always, the schemers get smarter, more creative and technologically savvy each year. Below are this year’s most popular tax scams, as identified by the Federal Trade Commission. Happy filing! They’re at it again... tax scammers scheming new ways to steal personal information and money. In the first scenario, identity thieves file a fake tax return and have the refund deposited into your bank account. The thieves then contact you, often by phone, and — posing as the IRS or debt collectors for the IRS — demand you return the money to the IRS. But following the thieves’ instructions actually sends the money to them. In another version… Read More >

As we all switch gears and begin to think about how much fun it will be to sit down and file our 2017 tax returns soon (by Tuesday, April 17^th for most of us), The Distillery also switches gears and highlights an increasingly common question among clients with parents living at home. “Can I claim a parent as a dependent?” Enjoy! For that time in a person’s life when he or she begins to take care of their parent, it is important to know that the IRS allows those individuals to claim their parents as dependents on their tax return. As is the case with anything tax-related, you’ll have to meet the requirements... Read More >

This week’s The Distillery deals with an investment term that’s oh so common in our financial planner dialects, yet often extremely hard to objectively define (much like asking a physicist to define “time”). In Michael Batnick’s recent piece, he pulls excerpts from Warren Buffet’s 2017 Annual Letter to investors of Berkshire Hathaway, to provide additional context around the meaning of risk. I’ll jumpstart your mind by delivering you my favorite line:   People invest for a purpose, but absent a plan, it’s easy to lose sight of why we’re doing this in the first place.… Read More >

If you’ll recall, the third quarter commentary was titled “The Calm Continues….”; that came to an abrupt end on Tuesday January 30th.  More can be found on 2017 below (below “2017 In Review”) but let’s quickly address the recent volatility and spectacular overvaluation of the US stock market.  It is precisely this overvaluation that allowed for the volatility.  Think of it as going farther and farther out on a limb that will eventually break.  Each step that is slightly askew leads to greater unbalance.   What is possibly the most interesting aspect of any large under or overvaluation is how investors... Read More >

This week’s The Distillery is a relatively “oldie but goodie” from Carl Richards of BAM Alliance. He’s famous for his simplified sketches of Financial Planning and Investing topics, on hors d’oeuvre-sized napkins! As much as we don’t like calling attention to day-to-day market gyrations, we know that it’s hard to go about your day without hearing or seeing something related to this week’s move in the equity markets. We hope this influences your thoughts/feelings of this week’s move in a good way. Enjoy!     Read More >