Wealth Planning, Life Planning, and Economics

This week’s post is another curated list of articles that I have been reading over the past few months that have not appeared in my weekly “What I am Reading” section.  I had a two-part series of these curated articles a few months ago here and here.  This batch of articles focus on Wealth Planning, Life Planning, and Economics which do focus on a few of the current election topics. 

I hope that you find a few articles within the groups below that spark your interest.

Wealth Planning

  • 10 Money Revelations in My 30s (A Wealth of Common Sense)
  • Are Investors More or Less Willing to Take on Risk After a Big Money Loss? (WSJ)
  • Can We Fix Social Security? (Barron's)
  • Corporate 529 College Plans Are an Easy Benefit to Implement (WSJ)
  • How Financial Advisers Can Help Close the Behavior Gap (CFA)
  • The IRS Extends Deadline for 401(k) Rollovers (WSJ)
  • What's the Best Corporate Structure to Protect Small Business Owners? (Money)
  • Investment Management vs. Financial Advice (A Wealth of Common Sense)
  • The Art Is Not in Making Money, But in Keeping It (A Teachable Moment)

Life Planning

  • How to Get More Pleasure Out of Retirement Spending (WSJ)
  • Big Goals Can Backfire. Olympians Show Us What to Focus on Instead (NY Mag)
  • Trading Big Mistakes for Little Mistakes (A Wealth of Common Sense)
  • What Should You Choose: Time or Money? (NY Times)
  • Why 4 a.m. Is the Most Productive Hour (WSJ)
  • The Top U.S. Colleges (WSJ)
  • How to Pay for College With Less Stress (NYT)
  • An Online Education Breakthrough? A Master’s Degree for a Mere $7,000 (NYT)
  • Sorry, Offering To Work For Free Is A Really Bad Strategy (But Not For The Reasons You Think) (Thought Catalog)


  • How Shrinking Occupations Could Explain Rising Economic Anxiety (WSJ)
  • One big reason for stagnant wages and rising inequality (CBS)
  • Please don’t tell anyone, but tax cheating is about to rise in the U.S. (Washington Post)
  • Why thousands of millionaires don’t pay federal income taxes (Washington Post)
  • Health-Care Costs Ate Your Pay Raises (Bloomberg)
  • There’s a devastatingly simple explanation for America’s economic mess (Washington Post)
  • Will a Robot Take Your Job? How to Tackle ‘Fear and Anxiety’ in Today’s Economy (WSJ)
  • America’s Dazzling Tech Boom Has a Downside: Not Enough Jobs (WSJ)
  • Donald Trump’s Economic Plan, Up Close, Doesn’t Add Up (WSJ)

The Go-Giver vs. the Go-Taker

60 Minutes this past weekend aired yet another example of professional athletes being taken advantage of by slick talking financial advisors.  This is very similar to a piece that I wrote about back in July when three high profile athletes Mark Sanchez, Jake Peavy, and Roy Oswalt were ripped off for ~$30M.

The key piece in both examples but maybe more so in the 60 Minutes piece is the share lack of due diligence on behalf of the players.  One player, Vernon Davis who plays for the Washington Redskins, said he shoulders much of the blame for his losses.

The 60 Minute piece also highlights some responsibility on behalf of the NFL’s Players Association who put out an approved list of registered financial advisors for whom players can work with.  Advisors are required to pay a fee to be part of the NFLPA’s program but how they are vetted is unclear.

I strongly believe that there is a stereotype that continues to plague the financial advisory industry because of incidents such as the two I have highlighted in this post.  Taking the first step to work with an advisor is sometimes a very scary and daunting task to begin with but made worse with negative headlines of bad people.

One of the underlying principles of why I got into this business and started my firm as an independent was to give back to people.  My beliefs in this principal is highlighted in the book, The Go-Giver by Bob Burg and John David Mann.  This is in stark contrast to those advisors who put their own interests first rather than their clients.

I have talked about how to properly vet and find a financial advisor herehere and here.  I wish I had a way to get this into the hands of the NFLPA’s leadership as it might help their constituents down the road and not be taken advantage of. 

The Holy Grail of Investing

Many of you unless you are into reading about investment management have likely never heard of Jack Schwager author of the Market Wizards series of books.  Within his books, Schwager interviews some of the most legendary investors of our time. 

Within each interview, Schwager tries to get at the heart of what has made that trader successful.  While there is no holy grail to investing, Schwager finds varying insights and strategies that in some cases are completely opposite but have led traders onto individual success.  The point being that there is more than one way to make money investing but that there are some key principles that bind successful investment managers together which include the following; 

  1. Persistence
  2. Self-awareness
  3. Methodology
  4. Flexibility

Within my own investment process that I put to work at TAMMA, I have developed my own key investment principles many of which were also critical to the success of individual investors within Schwagers series of books;

  • Discipline

    • Invest without emotion
    • Stick to your own beliefs
    • Know when to do nothing
  • Risk control = Loss control

    • Cut you losers and let you winners ride
    • To be a winner, you have to be willing to take a loss
    • Don’t be afraid of risk
  • Diversification

    • While diversification can help to lower your risk, it cannot help you when market correlations all turn to one and everything moves in the same direction
  • Opportunity Costs

    • It may make sense to liquidate a holding even if it is a sound investment in order to invest in an even better opportunity
    • Even if it bounces back, holding on to a losing position can be a mistake if you could have invested elsewhere at a greater return
  • What is the catalyst, it is more than simply being undervalued

    • A great company can be a horrible investment if its price has already more than discounted the fundamentals
    • Hope is a four-letter word.  Superior performance requires not only selecting the right investment, but also having the conviction to make it a meaningful part of your overall portfolio

And finally, here are some of the lasting quotes from Schwager’s Market Wizard book;

  • Mark Minervini, “Being wrong is acceptable, but staying wrong in totally unacceptable”
  • Peter Lynch, “If you can’t summarize the reasons why you own a stock in four sentence, you probably shouldn’t own it”
  • Warren Buffet, “The widespread adoption of a new technology doesn’t mean that anyone is going to make a profit”
  • Dr. Ari Kiev, “To achieve a goal, you not only have to believe it is possible, but you also have to commit to achieving it.”
  • Steve Cohen, “You can’t control what the market does, but you can control your reaction to the markets.”

What I am Reading

  • The Jeff Bezos Regret Minimization Framework (A Wealth of Common Sense)
  • Twitter's Identity Crisis Gets in the Way of a Sale (Bloomberg)
  • This is How To Find Happiness: 6 Proven Secrets From Research (Barking Up the Wrong Tree)
  • The Great Productivity Puzzle (The New Yorker)
  • How to Get More Pleasure Out of Retirement Spending (WSJ)
  • 7 Essential Money Questions Sure to Start a Conversation (NYT)

Taking a Leap of Faith

Even the best laid plans in life can require a certain leap of faith.  You can pull all of your numbers together, put forth your best forecast based upon your current facts and assumptions, and arrive at a sound analysis.  Everything indicates that this is the right move but then nothing.  Nothing but fear.

Fear can be a crippling factor within any decision that we make whether it is financially related or some other life decision.  I see this fear often when speaking with prospective clients who are unsure on how to take that first step in putting together a financial plan for their lives.

My wife and I have been experiencing this same fear relentlessly for the past few months.  The decision has centered around her career.  Should she stay at home full time, try to go down to a part-time or reduced schedule, or ask for an extremely flexible work schedule?

Within my own analysis, I was focused on the following critical factors;

  1. Any change away from a full-time career would have a financial impact which would cause us to make some mild to significant lifestyle changes.
  2. For the first 6 years of our children’s’ lives, my wife has missed out on seeing her kids grow and being a positive influence upon their lives due to her demanding career and commute.
  3. The health and well-being of my wife both physically and emotionally has deteriorated over the past year and more dramatically over the past 6 months.

Honestly, the straw that broke the camel’s back for me was factor number 3.  For my wife to not be able to physically pick up any of her kids or in doing so would inflict so much pain upon her was the tipping point for me.  Even though I had poured through all of our financial information and the results were going to require some changes, I knew that this was much more than a financial decision, it was a quality of life decision.

There are situations and decisions that we are forced to make regardless of what the financial outcome may be.  We have to take a leap of faith and believe that everything will work out.  Could we have put ourselves in a better position to lessen the financial blow?  Sure, there have likely been countless opportunities where I should have taken the same advice that I provide to my own clients but didn’t.  Life happens and we need to continue to strive to make better decisions while keeping our personal and financial goals within sight.

I have told close friends who knew about our circumstances that it never ceases to amaze me in how situations like ours have a way of working out.  And when I listen to other people’s stories, I often here the same statement.  It was about a year ago that my wife and I were faced with another major life decision.  We put together a well-crafted plan, had actionable steps to take, and most importantly took a leap of faith in believing that everything would work out.

I am blessed and fortunate to say that everything has worked out today, better than we could have ever planned it.


How Decluttering my iPhone Helped to Eliminate my Facebook App

This weekend my wife and I were able to go on a college road trip with some very good friends of ours.  This was one of the rare trips where I wasn’t going to have to drive and the drive was likely going to be close to 5 hours each way.  I was prepared to get some work done with my laptop, iPad, and iPhone at my disposable.

As my laptop power began to fade on the trip back home (forgot to charge it the night before), I switched over to my iPhone to see what I could do with it.  Lately I have been building up quite the collection of Podcasts which are now taking up a good chunk of storage on my phone.  I decided to begin the task of decluttering my iPhone in order to free up some space.

I have always found that decluttering or cleaning anything can be a very liberating but daunting experience.  I came across so many apps that I had never used that had likely been on my phone for years.  Apps are a double edge sword; they are great when you need one but I can also see where they can become so overwhelming with the sheer number of them.  I took a look at my wife’s iPhone and she must have had hundreds of apps.  I have no idea how she manages them all.

As I began trashing one app after another I came upon the Facebook app.  I had been toying with the idea of getting rid of the app for months.  I am a huge fan of Cal Newport an Associate Professor of Computer Science at Georgetown University, who has done tremendous work on the topic of Deep Work.  Deep Work is a movement if you will that addresses how to seek focused success in a distracted world.

While I have many readers who see and read my content via Facebook, I have found it to be a big distraction at times, but not how you would think.  I have never really spent a lot of time on the site but I found that when I did, it was always when I was waiting somewhere or just had some idle time.  Time that I still considered to be very valuable where I could be more productive, whether that be following up with a friend or client, reading an article on a research topic, or listening to one of those many podcasts.

Although I am not looking to give up social media sites like Facebook and LinkedIn (I don’t use Twitter although my content is posted there), I took the plunge and deleted my Facebook app after watching Cal’s TEDx talk Quit Social Media.

So how does this story of decluttering my iPhone and eliminating my Facebook app have to do with wealth management?  I came up with the following intersecting thoughts;

  • How many mutual funds are you holding onto within your portfolio accounts that have the same stocks, risk exposure, and asset allocation?
  • What is the cost in both time and money by not paying attention to your assets?  Think of the fees that you may be paying or by not having the right asset allocation which could derail your long-term plans
  • Without the distractions, how much more time would you be able to spend thinking about what you really want to achieve in life and a plan to go with it?

Spending time with my wife and friends this weekend once again proved to me that you can still have a social life without social media on your phone.