The Good Old Days

In my office, I have some Life, Post and Look magazines from the 1950’s and they get me a little nostalgic and thinking about the good old days. The best of times were during the holidays.

Thanksgiving was a big deal when I was a kid. For us, it was always a big turkey dinner at our ranch in Alexander Valley. Relatives gathered. We ate and ate, and then ate some more. Turkey, stuffing, mashed potatoes & gravy…yum. yum, yum!

In our house you couldn’t mention Christmas until after the Thanksgiving meal. So, you know us kids would yell out “Christmas” as we swallowed our last bite. Then came Christmas.

I vividly recall the day and weekend immediately after Thanksgiving as something really big and special, when I was a kid. That was the official start of the Christmas season. That’s when you drove into the big city (Santa Rosa), to the big department stores (Sears, Montgomery Wards) downtown (no malls back then), and saw Santa Claus, and shopped, and, in my case, got a bag of popcorn from the little candy and counter inside of Sears.

The death of the downtown department store as mecca has destroyed a lot of ‘specialness.’ Now the holiday shopping experience surrounds you and bombards you.

Worse, now Christmas season starts before Halloween. I’m sick of it before Thanksgiving even gets here. I don’t think we’ve done the kids, ourselves or even retail commerce any favors by stretching the season into a calendar quarter.

But the bigger point is how much of “the special” has been taken away, spoiled, diminished and diluted. There’s real opportunity here for us parents to find a way to give our children a truly special event, something to look forward to with anticipation, to experience with awe and wonder and fun.

I may just be getting old, but I think there is more to it than just starting the holiday seasons earlier. I recall shopping for a special little something for each of my family members. The stores were crowded, but they were clean and orderly, the sales clerks were attentive and caring, the music was soft and cheerful. The store windows were all beautifully decorated. Families were shopping together. Then, it all seemed normal. Now, it would seem magical.

It may be my Leave It To Beaver upbringing, but I do miss the good old days. Having neighbors that talked to each other and kids that showed respect to their elders—are from days gone by. For me, I try to hang on to these ideals and propagate them where I can. In my own home, at the very least. I have also found a remnant of this lifestyle in church. It depends on where you go, of course.

That being said, I’m launching into this holiday season by taking my son Joseph out for a special father-son outing. We are going to Colorado together in early November to attend a Christian Conference. We’ll be hearing, talking about and sharing some good old fashion family values. We will, of course, be visiting my two daughters, Luisa and Shannon, while we are out there. I want this to be another one of those memories that Joseph looks back on someday and says, “Those were the good old days!”

Have a wonderful Thanksgiving and a blessed holiday season!

The Bloody Money Trail

A few Sunday’s back, the Press Democrat ran a front page story called “The Money Trail.” It was subtitled: “How one adviser’s promises of real estate wealth unraveled and investors’ life savings evaporated.” It was about a “financial advisor” here is Santa Rosa, named Gary Armitage and his associate Jeff Guidi. If you didn’t read the article, you should get a hold of it and read it—for your own self-preservation and not falling into such a scam as many Sonoma County residents did.

Armitage was promising people no risk investments in various real estate deals. He placed 100% of a client’s portfolio into private placement real estate partnerships—many of which he had some ‘related-party’ association with. These types of investments pay the salesman (Armitage) a big commission as soon as he gets the client to sign up and fork over the dough. You have to understand, this guy is a salesman, not an advisor.

Many clients of his sat by and watched their retirement nest egg vanish into thin air as the real estate and mortgage markets went in the tank. I suspect that if these clients ever catch up with Armitage, the Press Democrat may run another front page article called “The Bloody Trail.”

Some of his ex-clients are now my clients—so I know the damage which was done. Unfortunately, Armitage is not the only “financial advisor” in town that has a very warped idea of what prudent financial strategies are. Being in the business, I see what these advisors are doing and I just shake my head in disbelief. I suggest you get to know the character of the person you are entrusting with your money.

Another recent story in the news was about a fellow who lost $2 million in the stock market and jumped to his death off some cliff near Mt. Tamalpias. My feeling is this guy was taking this whole thing way too seriously. Markets go up and markets go down—we all know that. Mistakes happen—we know that too. But, sometimes, you just need to stop everything and count your blessings!

The stock market is in shambles—okay, stop, take a deep breath and count your blessings. Life goes on… and what you should be doing now is 1) assessing the damage, 2) considering options for getting your investments stabilized and 3) taking action to implement the best of these options.

This is a perfect time to review The Eight Great Mistakes Investors Make, which I’ve made available to you in the past. Here is a list of them (name only, if you want the full report call Milady and ask for it):1. OVERDIVERSIFICATION. 2. UNDERDIVERSIFICATION. 3. EUPHORIA. 4. PANIC. 5. SPECULATING WHEN YOU THINK YOU’RE STILL INVESTING, AND NOT REALIZING THAT YOU’VE CROSSED THE LINE. 6. INVESTING FOR YIELD INSTEAD OF FOR TOTAL RETURN. 7. LETTING YOUR COST BASIS DICTATE YOUR INVESTMENT DECISIONS. 8. LEVERAGE.

It’s difficult to avoid all investment pitfalls – even for the savviest of investors. That’s because many investors simply don’t have the time to process the vast amount of information available today and apply it to their complex investment needs.

With the money I manage, I began cutting back in my exposure to equities back in August of 2007. As the market has declined further, I’ve cut back further. The cash that I’ve freed up has been put into Conservative Allocation Funds, Money Market Funds and 3-Month Bank CDs. Now, I’m watching, waiting, counting my blessings, and looking for the right moment in the economic cycle to reallocate back to my usual, up-market investment holdings. I suggest you do the same.

My clients know they can call me or come visit me anytime they want to. If they leave me a phone message, I return their calls. We have open and frequent communication. Weekly e-mail update communications. Quarterly investment performance report meetings. My clients also know that I investment my own Mother’s investment portfolio in the same way and style as I do theirs. I take the business of managing my client’s money seriously and professionally. I never want to see my picture on the front page of the Press Democrat for having caused harm to anyone. More importantly, I don’t ever want to face a single client of mine that I have somehow been responsible for their financial ruin. I take this seriously, and earn my financial advisory fees each and every day—in good markets and bad. Hang-in there, I’ll talk to you again soon.

Nightmare on Wall Street

Nightmare on Elm Street is the name of an old movie, perhaps you’ve heard of it. I’ve heard of it—never seen it. Well, last weeks headline of a weekly paper I subscribe to was “Nightmare on Wall Street.” The U.S. financial crisis is worst than any horror movie and it is having a frightening effect on many. With the S&P 500 stock index down 20.46% in the past 12 months, who hasn’t been affected in some way?

Fortunately, I have very few accounts that have declined anywhere near that of the S&P, and those are limited to clients who chose an aggressive strategy with a small portion of their wealth. My average client is down about 5% over the past year. I feel pretty good about that, considering how brutal the market has been lately—and, also having seen what has happened to some people and their investment accounts this past year—prior to becoming my client.

I use a Tactical Asset Allocation methodology to adjust portfolios for major changes in the market cycle. August of 2007 is when I began reducing exposure to equities. I’ve made a few other changes since than and any new clients coming in have been mostly out of the typical equity positions. Last Friday, and today, I’m making additional reductions in equity positions. I’m protecting your down-side exposure to this market—which I believe will get worst before the year is over.

By the way, I’m making the same type of allocation adjustments in my accounts and my mom’s accounts as I have been making in your accounts. I’ve been through lots of market cycles over the years, but, I’ll have to admit this one has been interesting and I’ve definitely learned a few new things. And, wouldn’t you know it… I’ve added a few more grey hairs to what is left.
Have a great week!

"You have no right to anything you have not pursued."

From Charlie (a fellow member of a business/marketing group I belong to): “About 18 months ago, I told you about a friend of mine, Jim, who went from being an absolute zero in terms of marketing to being named ‘Marketer of the Year’ at his company after only 8 months. I was glad to assist him, introducing him to the basics of our style of marketing. While Jim’s success story was what we like, the past 12 months’ story may be more instructive if less pleasant. About a year ago, response went down from his mailings and Jim got discouraged. He told me that “this ‘new’ kind of marketing” just wasn’t working anymore. I kew this couldn’t be since this ‘new’ marketing has been working for over 100 years. So I probed, to find how quick success turned to failure:

1. Not watching the results. Jim did so well initially he just assumed it would all keep working as it did at first, and didn’t watch the numbers. The numbers told of the need to tweak things, but…
2. Lazy. He stopped at doing only one or two things. Kept using the same two mail pieces until they got stale. Added no ‘touches’, no fence building, nothing except overt asking for business.
3. Cheap. I told Jim that as a friend I would help him get started but that he MUST do the following: join our business group, read the books, etc. – list provided, and invest in his continuing education. He did none of this. Didn’t even read the books I loaned him. He cited ‘time and costs.’ He has thrown away the ability to keep bringing in 6-figures annually and would up right back where he started from. “

My thoughts: I am thankful I never squandered opportunities as Jim did and so many do. Loaned a book, I read it. Told of one, I went and got it. But beyond that I knocked down doors, made a pest of myself, invested money that—at the beginning—I did not have to get knowledge. Charlie has seen in Jim three of about five or six bad behaviors that keep most people decidedly mediocre. It happens all the time. They have very unrealistic expectations about how successful they ought to be in exchange for doing something once but then not continuing to work on it. As if buying a tractor should itself provide the yearly harvest. Not only do you need to actually use the tractor, you better change its oil now and then, sharpen the blades on its tiller, maintain it. And keep looking for better ways of using it. Sophisticated soil analysis so you fertilize each square yard differently based on need rather than using the same fertilizer over the whole farm, evaluating that harvest, making adjustments to improve the next. You can’t be cheap about maintenance of your own attitudes and aptitudes either. It’s common for people to have some early success, doing SOME thing, maybe two, but then stop there. But lazy is the worst. Reading through a newsletter I got a great line: “You have no right to anything you have not pursued.” Big. Ought to be the answer to every entitlement scheme of government, every request for hand-out or help made of you as it becomes evident you are thriving—by your lazy relative, etc. Amongst the lessons Charlie has hopefully learned from his Jim experience: the futility of dispensing free advice.

There's Drama in the Market, But I'm Rehearsing My Scene

This last week I went out to the 6th Street Playhouse and saw the “Music Man.” My wife and I, along with another couple, had a wonderful time. This brought back lots of fond memories. When I was in high school, I was in all the school plays. I played Bo Decker in Bus Stop, Murray the Cop in The Odd Couple, Romeo in Romeo and Juliet, I played percussion for the musical You’re a Good Man Charlie Brown. And, in my senior year, I was the President of our Drama Club. I had lots of fun during these years, but upon graduation that was the end of my acting career. My dad told me I had to go out and make a living for myself. Ha, ha. Good advice from my Dad. Well, anyway, great memories and its fun to go out and see a play now and then. It’s much more fun than going to a movie. Have some fun—go see a play.

Talking about drama… the stock market moves this past week were like watching a soap opera. Who would have thought Fannie Mae and Freddie Mac would need to be bailed out by the government? (Who is going to bail out the government someday?) I think the market will continue to decline and therefore, I’m continuing to make conservative adjustments to investment portfolios.

I'm also in the research and development stages on a new portfolio design, I'm calling it the Green Label Portfolio. It's objective will be to achieve positive annual returns in any market conditions. When I was in the pension management business, we had a portion of the portfolio that had a "Tactical Asset Allocation" style to it--this is much different that a market-timing strategy. This TAA strategy makes moves between a few different asset classes based upon broad moves in the stock market cycle, with an attempt to take full advantage of up markets and protection from the down markets. Anyway, I'm still working on it. If you're interested in knowing more about this, send me an e-mail stating your interest.

Personal note from Monty...

September may always be a month of reflection for me. Not only is it my birthday month, but I lost my dad in September 2005. He lived a good long life (83 years) and then only suffered briefly with cancer. For that, I’m very thankful! Whichever way you want to discuss it or remember it—the passing of your father is a very sad and significant life event. My dad was a good provider, protector and parent—a pretty awesome role-model. And, of course, being a dad myself, I now have a whole new appreciation and perspective of him. I remember going fishing, hunting and hiking with my dad, and of course working with him—most always working. We worked hard together and I’m thankful that he has taught me a good work ethic. I’m sure there were a few “rough” spots over the years where we didn’t necessarily see eye-to-eye, but as I reflect back, all I really see are all the good times. My dad told me that he loved me and I got to tell him I loved him—in words and in actions. As I think back, I think about the significance of the relationship and how I’ll always remember and value him. In the end, what else do we really have than the relationships with those around us and the satisfaction of being a good friend, provider, protector - dad. So why am I saying all this? I’m just saying that I have an increased sense of appreciation for the people in my life, my family, friends and all of you—my clients. There’s no better time than the present to enjoy the people around you.

Better Advice for Your Money

When I was just about 22 years old a neighbor of mine got me involved in the investment business. He was a very well known businessman in Alexander Valley—where I grew up—and had his busy fingers into lots of different ventures. He would take me around to investment seminars in his big, comfy Cadillac and we would eat together at fine restaurants. I was quite impressed!

I wanted to make money in the investment business and I wanted to help my clients make money. I wanted to really understand this business. I started reading everything about investing. I even read all the mutual fund prospectuses—you know, those things with lots of fine print that no body ever reads. My neighbor/mentor told me I was wasting my time. I didn’t need to know anything—except how to fill out the mutual fund order form and ask the client for their check. That’s it! Anything more was a waste of time—according to him.

Personally, I thought the brokerage model was flawed since it was focused more on selling products than providing advice. The fee-only model didn’t exist back then, but I was an early adopter of it, because I strongly believed that it could serve clients better.

My role is not defined by giving you the hottest stock tip, convincing you to buy this year’s best performing mutual fund, or trying to sell you a product to solve a problem you don’t have. Instead, it’s about helping you clearly envision and define your long-term goals and providing the prudent, comprehensive advice you need to get there.

If you may be interested in the kind of investment management work I do, and the independent advice I give, won’t you consider giving me a call?

There are lots of people out there that are getting “sold” investment products by well-meaning, very friendly guys driving around in Cadillacs. But… they are not getting the best advice for their money!

Five Great Goals

There are five things that virtually everyone I speak with is trying to achieve with their money. These goals represent the most primal emotional/financial needs of real people; they speak to the deepest yearnings of Americans for their own financial well-being and that of the people they love. And since these five issues are the main financial concerns in my own and my family's life, I have a genuine empathy for my clients and their well-being.

The Five Great Goals of Life Are:

1. Retirement without compromise in lifestyle, or any real concern about outliving your income.
2. Meaningful intervention in the financial lives of your children.
3. The education of your grandchildren.
4. The ability to care for your parents, if and when they need it.
5. An important legacy to institutions/charities you believe in.

The central financial planning problem of our time is simply that almost no one is investing enough capital to have a real shot at achieving all their goals. I help my clients face the potentially huge gap between what they're doing now, and what they need to be doing, in order to get where they say they want to go. The critical issue isn't investment performance, but investor behavior. And that's where I partner with you.