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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…)


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.

Berkshire Hathaway Annual Shareholder Letter

Warren Buffett’s annual letter to the shareholders of Berkshire Hathaway is now available. As always, this is a fantastic read and chock full of great nuggets of wisdom.

Some of the content may be completely irrelevant to you, but instead of focusing there, simply pay attention to the way Mr. Buffett and Mr. Munger think. Anyone looking for some calm and reason in the middle of the storms we face today would be well served to spend the 15 minutes it takes to read through it.

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…)

Are You a Hunter or a Farmer?

“I consider myself to be a farmer—not a hunter. And I think most people on Wall Street are hunters. They like to fell big beasts and I’m very comfortable planting a few rows and just tending to them carefully.”

– Tom Russo, Gardner, Russo & Gardner

Investing is often referred to as a game, or talked about as if it belongs in a casino. If you invest like a hunter, it absolutely is a game…and the odds are stacked woefully against you.

Jim-Cramer-733045We all know the hunters. They are never shy about talking about the dragons they have slayed and are full of hypotheses, forecasts and opinions about the next big thing. They make investing sound very exciting and easy. To the hunter, investing is all about the next big score and the only way to win is to out-hunt everyone else searching for prey.

Wall Street’s mission is to turn everyone into a hunter. The more activity they create, the more they win. Not only does increased activity create a greater likelihood of mistakes, but more activity creates more trading commissions, so they win regardless of whether you win or lose. (more…)

Lemmings: $22 Billion Flows into Equity Mutual Funds – Highest Since 2000

lemmings_mediumOn the heels of a 16% advance by the S&P 500 in 2012, investors absolutely poured money into stock funds during the first week of 2013 at the highest rate since the year 2000. In fact, this was the second largest week EVER, and the first week of inflows greater than $5 billion since 2003!

Time to celebrate, right? The coast is clear now that we know who our president is for the next four years, we survived the fiscal cliff scare, the economy and housing markets are recovering, and we haven’t heard anything about Europe for a few weeks… (more…)