Beware of the Wolf in Sheep's Clothing

June 1, 2020

The Holy Grail in investing, if there was one, is an investment that provides equity-like returns without the discipline and stomach often required to achieve such returns. This is what every investor hopes for. We want the short cut. And Wall Street knows this!

There are investments that allege to provide growth and income while protecting or limiting the downside. As investors, one of our biggest nemesis is volatility, so these types of investments are very alluring. They tend to perform satisfactory in good markets, but they can fail miserably in bad markets – the very conditions we expect them to do well. And a few blow up completely.

Buyer Beware

Risk management isn’t about finding the Holy Grail (it doesn’t exist). It is about having the right allocation for you, knowing what you own and transparency in execution. Investment success isn’t about owing the “best” fund. It’s about having the discipline to stick with your plan when times get tough.

There will always be something more attractive than what you own. Investing is a constant battle of tradeoff such as Risk/Return and Feeling/Rationality. Beware of investments that sound so good we are willing to abandon our own investment plan.

Beware of the wolf in sheep’s clothing.


(c)2020 The Behavioral Finance Network. Used With Permission

1 WSJ May 20, 2020. “The Day Coronavirus Nearly Broke the Financial Markets”

2 Barrons Feb 10, 2018. “How Funds Failed Investors”


The Virtue of Optimism

May 1, 2020

The current pandemic breeds a lot of uncertainty and fear. The media actively participates spreading the fear. Headlines often accentuate the negative because that is what gets us to tune in.

Pessimism and cynicism are weirdly addictive. While addictive, they can also be destructive – both mentally and financially. Most of us don’t seek them out, but when we encounter them, we just can’t turn away. They can consume our thoughts and affect our mood. It is easy to be a pessimist. It is more difficult, yet more virtuous, to see the good - even in bad times.

Get All the Facts

We seldom get unbiased and complete information. Our knowledge of current events is largely driven by the news sources we frequent. Have you ever wondered why the media printed “that story”? Have you thought about why they reported a story in a certain way and not another? The news we receive is filtered through their lens.

In difficult times like these, we can step back and see the good. We can choose to see the same facts in a different light. We can be optimistic. While it may not change reality, it can improve our perspective and ultimately our decision making.

See the Good

From this crisis, and as well as those in the past, we see much good in humanity. Religious, political and other differences are put aside in a sense of unity:

  • Many are donating time and resources making masks for front line workers
  • Drive by parades for first responders, teachers, students and high school graduates
  • Sending notes, dropping off gift baskets, chalking uplifting messages on others’ driveways
  • Families having time together – parents and children connecting on a deeper level

We Will Come Out Better

We humans are great at adapting and adopting. We will learn from this crisis and come out stronger and healthier. Our health habits will improve. Surfaces will be sanitized frequently. People will wash their hands more. And hand sanitizer will be the new American Express card – we won’t leave home without it. These habits will improve our overall health and well-being.

What a great time to be alive! We are living in a significant period of mankind’s progression. We are learning to live smarter and safer, both for our own health and for generations to come.


(c)2020 The Behavioral Finance Network. Used With Permission


Preserving Your Mental Health

April 1, 2020

The challenges we face today are unique and significant. The Coronavirus has unleashed uncertainty, economic pain and shelter-in-place for much of the population. Any one of those alone can impact our mental health; the combination of all three can wreak havoc on us.

It is completely normal to experience feelings of loneliness, fear and anxiety during these unprecedented times. We may not be able to control the initial feelings, but we control our internal dialogue. What we tell ourselves and what actions we take can either alleviate or intensify the negative feelings.

We protect our mental health by focusing on things we can control. There is no sense worrying incessantly about those things we cannot control. We accept our situation as fact and figure out what we can do to make the most of the situation. Finding joy isn’t so much about our circumstance as it is in the actions we take.

Choosing to act, rather than be acted upon, supports a healthy mindset. I have included a list of actions that may be helpful:

  • Turn off/take a break from the news and social media
  • Continue your daily habits/routines to the extent you are able
  • Exercise, walk, stretch – get the blood flowing
  • Perform an act of service for someone else
  • Think purposely about today; accomplish something each day
  • Appreciate the simple things in life, count your blessings

I included several actions that have to do with our individual self-care. Yet, one of the most powerful ways we can feel good is to forget ourselves and do something nice for someone else. Whether that is mailing a card, dropping off some cookies or just talking with someone and lifting their spirits. For some reason whenever we serve another person, we are usually the ones that benefit the most.

Stay healthy – both physically and mentally!


(c)2020 The Behavioral Finance Network. Used With Permission


Investing - Simple, Yet Difficult

March 1, 2020

Warren Buffett said, “Investing is simple, but not easy.”  Sounds like a contradiction, but in real life simplicity has little to do with ease. Take losing weight. Very simple. Burn more calories than you take in. Not so easy! 

The Challenge

The path to our long-term goals is often filled with conflicting short-term desires. As investors, we want to achieve good returns with minimal fluctuation. We want to maximize return in good times and prevent the chance of loss in the short term. This desire is heightened even more during periods of crisis and uncertainty.

We have the best of intentions. We want to provide for our family and not have to worry about money so our efforts can be on those things that matter most to us. But our emotions can get in the way. Sometimes we make financial decisions that satisfy our short-term emotional urges at a significant long-term cost.

The Cost of Following Urges

Markets can move quickly in both directions. Did you know that over the past 20 years six of the ten best days occurred within two weeks of the ten worst days? Just missing a few days in the market can be very costly.



There is a cost to feeling comfortable. Uncertainty and discomfort are the price we pay to achieve greater long-term returns. We may understand this, but it still doesn’t make it easy. We cannot predict the market, but we can counsel together to ensure your decisions are made with the correct perspective and in line with your long-term goals.

Source: JP Morgan, 2019 Guide to Retirement. Page 41.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. All indices are unmanaged and may not be invested into directly.


(c)2020 The Behavioral Finance Network. Used With Permission


The Coronavirus: A Healthy Perspective

February 1, 2020

We have our first surprise of the year: The Coronavirus.  Just last month I wrote in my annual forecast that we will be surprised by something this year. This is likely the first of several unexpected, unpredicted events we will experience in 2020.

It’s a good time to take a step back and identify what we know, what we don’t know, what we can control and what we can’t control. Those types of thinking exercises can help us make good decisions.

The Coronavirus is still in its infancy. We don’t know how much it will spread nor the economic toll it can take. It could be over in a few days with little economic impact or it could go on for some time and affect global economies. We have had similar health scares in the past 20 years: SARS, Avian Flu, Swine Flu and Ebola. All of those elicited similar panics in the media and temporary economic impact. As far as the stock market goes, the market has done quite well in the past 20 years despite not one, but several global health care scares

If the flu worsens, corporate earnings could be impacted, and the stock market may sell off. But, if it is anything like the past, it would be temporary. Therefore, if the market sells off, we should be looking at good entry points to buy high quality stocks on sale. Economic and stock market crises may be scary in the moment, but they provide lower prices for investors that actually want to “buy low”.

Turn on any media today and the headlines are dominated by Coronavirus and impeachment. What if neither was happening? What would they be talking about? And what happens when impeachment and Coronavirus run their course? What will the media talk about then?  I don’t know – except, I know they will find something and make it seem like a very big deal.

We can’t control the news. We can’t control how other investors behave. But we are in complete control of what we choose to pay attention to and how we choose to respond. Choose wisely.


(c)2020 The Behavioral Finance Network. Used With Permission


A Reliable Forecast for 2020

Jan 2, 2020

If you read my forecast for 2019, you will notice it was spot on. This is because it was not a forecast of the economy or markets (which is like trying to predict a casino game). No matter how much we wish, no one can predict the market. No one will know when to go to cash and when to go all in. Like a broken clock, sometimes forecasts can be correct, but they lack persistence.

My forecast is persistent and reliable because it is based on how we feel, and temptations we face as investors. Not only are these more predictable than market outcomes, they are also more important to investor well-being.

While we cannot control the volatility and outcomes of the stock market, we can control how we behave and respond to market outcomes. Financial markets are only one side of the investing equation, the other side is the choices you make. Best to focus on the part we have control over. And understanding what we may face can help us improve our decision-making process.

My 2020 Forecast

In full disclosure, this is nearly identical to the forecast I had for 2019 (and years prior to that).

  • The economy/market will do something that surprises us
  • Investors who watch the market often will experience more stress than those that don’t
  • While we can’t predict the future, all will seem obvious in hindsight
  • You will be tempted to abandon your plan at some point based on expert forecasts and/or short-term market performance
  • Investors that focus on those things they can control will have a better investment experience than those that focus on what they can’t control nor predict
  • Investing with your gut, or feelings, will result in lower returns and higher stress than if you remain disciplined to your financial plan
  • Not looking, aka “strategic ignorance”, will result in less stress and greater personal enjoyment than watching the market

Investing is simple, but not easy. It is difficult to stick with a strategy when it is out of favor. Patience and discipline are virtues because they aren’t easy, yet they are essential for your success. As your advisor, one of my most important roles is helping you decipher the noise from what really matters for your financial success.

I wish you a prosperous, fulfilling and happy 2020.  Thank you for allowing me to be your trusted partner along the journey.


(c)2020 The Behavioral Finance Network. Used With Permission