Insights

Fourth Quarter 2015|Jim Williams| With the completion of 20 years of operations, I hope you enjoy a glimpse back at what we were (I was) thinking about 20 years ago, and how things have changed (and what has stayed the same). Our investment management process began as a careful and laborious screening and filtering and analysis of actively managed mutual funds. The screening encompassed virtually the entire mutual funds universe. At the bottom of the mutual fund analysis process was the search for Alpha, or market-beating performance. This search was driven by the desire to meet the expectations of the broadest population of the investing public, many if not most of whom expect their investment manager to “beat the market”.

Third Quarter 2015|Jim Williams| We have always used an individually designed Investment Policy Statement (IPS) to govern the management of each client’s investment portfolios. The IPS documents and formalizes a meeting of the minds between you the client, and us the investment advisor. Why is an Investment Policy so important? When markets turn down, the advertisers come out of the woodwork screaming and braying that the only way to make the pain of the downturn go away is to subscribe to their high cost solution. This taps into the normal fear reaction which carries with it the urge to “do something”. We are serious skeptics regarding those who sell or promote market-beating strategies. Most of the strategies are no more than kabuki; designed to make you believe your advisor is really working hard for you. In reality, most of the kabuki works against you.

Second Quarter 2015|Jim Williams| The transition from paper documents to electronic documents is but one piece of the technology landscape. The changes brought about through networking, first local, then through the internet have been really astounding. The internet extends the user's reach around the world, and extends the user's access to information and services beyond the wildest dreams of even 25 years ago. The good news is that you may be able to reach around the world. The bad news is that criminals around the world may be able to reach you. Incidence of cyber-crime is increasing, and criminals are getting more sophisticated and reaching out from farther away. Here are some thoughts on security we think are worth considering.

First Quarter 2015|Jim Williams| Whether your personal goal is to expend all your funds in retirement, leaving nothing, or to continue to grow the portfolio to accumulate funds for your heirs, or something in between, the withdrawal rate is the only one that we can directly and affirmatively control. The question is how much and where from?

Fourth Quarter 2014|Jim Williams| As we age, we experience a constant and continuous and increasing series of losses. Some of the losses, like loss of a parent or sibling or a spouse, are substantial and significant. Some losses are pretty minor, but in aggregate, become substantial. Gradual loss of physical strength and endurance, loss of recuperative powers, and lower energy levels are minor on a daily basis, but cumulatively represent fairly large transitions. Each of us can formulate his or her own approach to dealing with aging. This can run the gamut from denial to acceptance, from passivity to frantic exercise; from withdrawal to energetic engagement. I think a large part of how we approach aging is based on how we frame and understand the aging process.

Third Quarter 2014|Jim Williams| The recent volatility in stocks around the world seems to be fear-driven. Fear of Ebola. Fear of Isis. Fear of the Fed. Fear that the market will go down. My own limited understanding of brain functioning and chemistry is that the fear reaction originates primarily in the part of the brain called the amygdala. The amygdala is involved in memory, decision-making and emotional reactions. The amygdala is sometimes referred to as the lizard-brain. An intense emotional fear reaction in the lizard brain can hijack all brain function in a millisecond (limbic hijack) and cause a person to act without thinking (jumping out of the way of a snake) or act irrationally and destructively. If we get the sense that our investment program is going off-course, there may be an impulse (from the lizard brain) to “grab the wheel” and do something. This impulse is futile at best and destructive at worst. Abandoning a carefully constructed and well thought out investment plan because our lizard brain tells us to is a mistake. We can choose what we fear and what we will worry about. It’s probably best to focus on the things we can control. If your lizard brain is acting up, give us a call. We believe we have the cure.