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This Holiday Season, Ignore the Relatives

‘Tis the season to gather and celebrate with friends and family. Each year, old traditions are remembered and new traditions are made. We reconnect with those we see often and long-lost relatives alike. Reliability has become an evasive event in the busy world we live in today. In the craziness and uncertainty of our day-to-day lives, we take solace in the certainty that some of these events provide.

In some families, it is a holiday tradition to attend church or temple together. In others, Grandma will play the piano while everyone sings along. And in others, it is a virtual certainty that everyone will get their year’s worth of invaluable wisdom from that goofy brother-in-law that goes by “Blaze”.

Celebrating with relatives is a wonderful thing, but this time of year, we must all be more conscious of the unrelenting human desire to compare ourselves and our decisions to the people and things around us. The relatives you ought to ignore are not people, but perceptions. (more…)


All Wealth is Relative

A recent article on CNN Money cited that “a whopping 70% of those with at least $1 million in assets that are invested or available to invest, excluding home values, don’t consider themselves to be wealthy…it’s only when they hit the $5 million mark that millionaires begin to feel ‘wealthy.'”

I would submit that our feelings of wealth are far more associated with the life decisions we make and social circles we participate in, than the numbers we see on our net worth statements. Ted Roosevelt once said, “comparison is the thief of joy.” Feeling wealthy is a function of feeling that you have enough…of wanting what you have, rather than being consumed with what you want. (more…)

Approximately Right vs. Precisely Wrong

Photo Credit: ThinkStock

Photo Credit: ThinkStock

The second president of the United States, John Adams, made a prediction years ago in a letter to his wife:

“The second day of July, 1776, will be the most memorable epoch in the history of America. I am apt to believe that it will be celebrated by succeeding generations as the great anniversary festival…It ought to be solemnized with pomp and parade, with shows, games, sports, guns, bonfires and illuminations, from one end of this continent to the other, from this time forward forever more.”

Make no mistake about it, John Adams painted an incredibly accurate picture of what was to come! This coming month, a mere 237 years later, our nation will celebrate its great anniversary festival by hosting parties, parades and fireworks with our neighbors, family and friends.

But focusing too heavily on the details, however, one could also argue that John Adams was wrong. After all, we celebrate our nation’s independence on the fourth of July, not the second!

In hindsight, it seems ridiculous to claim that Adams was incorrect. In the moment, however, it is easy to get distracted by minutia that has little relevance to our financial well-being. We easily become critical of ourselves and envious of others, resulting in us completely missing the big picture. (more…)

Ruminations on Q1 of 2013

punxsutawney-philLike the winter that will never end, the US stock market continued its unwavering advance in the first quarter of 2013. And just like those that planned their spring planting around the forecast of Punxsutawney Phil on Groundhog Day, folks relying on the state of the global economy to predict the direction of markets are experiencing a rough spring.

How long this market advance will continue is anyone’s guess, but rather than attempting to predict that, we will continue to focus on establishing a sound financial planning and investment framework that provides the highest likelihood of achieving long-term objectives regardless of short-term gyrations.

Over the last several months, we have endured more of the same political discourse in the form of debt ceiling negotiations, “the sequester” and “furloughs.” Once again, Congress enjoyed getting a bunch of attention for a few days, and then punted.

As predicted in January, once we passed the February debt ceiling deadline and ran out of things to report here in the US, our media turned their attention overseas.



We started to hear of more nuclear threats from North Korea, but fortunately for all of us, the great US ambassador, Dennis Rodman, made his way overseas to hang-out with Kim Jong Un and patch things over.

On a more serious note relating to the threats from North Korea, there was a wonderful op-ed written about a week ago by a young woman interning for The Verge (, titled “What North Korea’s Threats Sound Like to a South Korean College Student.” It is a wonderful read to provide some perspective about life on the Korean Peninsula. Those of you viewing this via PDF can simply click the link. Alternatively, if you have a moment to search for that title online, it will pop-up as your first search result.

We also turned our attention overseas just in time to learn about the country of Cyprus, which bolsters an economy smaller than the state of Vermont – the smallest state economy in the United States. The country made headlines by suggesting that they were literally going to take money out of people’s bank savings accounts to help maintain the solvency of their banking system. This prompted many pundits to begin suggesting that if it can happen there, it can happen here. That proclamation is utter nonsense for more reasons than we can get to in this letter.

bitcoinFueled, in part, by the bank crisis in Cyprus, we also saw the rise and fall of the “bitcoin,” a so-called digital currency that is supposed to provide an alternative to the risks of holding actual money. The creator of this digital currency remains anonymous today. This is not a joke.

Bitcoins have actually existed since 2009, but were relatively unheard of until gaining enormous attention the past few months. As a byproduct of that attention, the price of a bitcoin has swung wildly from $13 on January 1, 2013 to as high as $266 on April 10, 2013. Within 6 hours of hitting its high, the price of a bitcoin dropped from $266 to $105 before closing out the day at $160. Given that the most important tenet of a reliable currency is price stability, it is safe to say the bitcoin is anything but that. Not surprisingly, this sudden rise in demand for bitcoins coincides almost perfectly with the recent drop in commodities prices, particularly gold and silver.

Investors must recognize the difference between speculating and investing. Making investment decisions based on anything written above is nothing more than speculation, no matter how much support and conviction you believe you have. But it is far better to invest your hard earned assets in things (companies) that actually make more money, rather than hoping a greater fool will come along and pay more for something you previously purchased.

Money is a Servant to Your Life, Not Its Master

It has been often said that money is a wonderful servant, but a horrible master. While each individual boasts a different definition of financial success, people that treat money as a servant to their life tend to enjoy a much higher degree of happiness and satisfaction.

Money itself is a dull, lifeless, man-made creation with zero utility. However, because we have assigned it a value, we can use it to purchase things and experiences throughout our lifetimes. But we must not confuse the pursuit of money with the pursuit of happiness. The inherent value of money is not money. Instead, it lies in what it allows you to experience, whether that is a great meal, a trip to Bora Bora, the freedom to do whatever you love to do, or the feeling you get when you give to someone in need.

In his book, Your Money and Your Brain, Jason Zweig explores the time-honored phrase that money cannot buy you happiness in reverse: can happiness buy money? He writes that “happen and happiness come from the same Old English root word, and happy people seem to make good things happen more often.” Because money is so intertwined in everything we do and experience in our lives, it is imperative that we make an effort to position our financial lives and use our money in a manner that increases the likelihood of good things happening. (more…)

This is How Your Brain Works

Fascinating video by AsapSCIENCE explaining how our brains really process things. This video is based on the work of Daniel Kahneman and his book, Thinking, Fast and Slow:


DOW 14,000! Is it Finally Safe to Invest Again?

As we approach the four year anniversary of the market lows reached on March 6, 2009, recent headlines are touting the DOW’s return to 14,000. While the economy continues to slug along amidst a cloud of uncertainty, investors are starting to wonder if it is finally safe to invest in the markets again. Sadly, these headlines and questions continue to repeat themselves after every market downturn, and the proverbial herd is beginning to follow.

Until recently, investors had been consistently pulling money out of stocks and investing in bonds or cash since 2008. While the broad market has more than doubled since March 2009, net mutual fund flows from US stock funds has been overwhelmingly negative.

FearGreedThis phenomenon underscores the reality that managing your investment behavior is more important than managing your investments. The image to the right, courtesy of Carl Richards at, demonstrates that we feel good and bad about investing at precisely the wrong times, leading to decisions that are detrimental to our financial well-being. (more…)