Investor Psychology and Temperament Trump Fundamentals

In almost an unbelievable fashion, the worries that were front and center during the first 6 weeks of the year have been almost wiped out over the last 6 weeks of Q1 this year; or at least in terms of the U.S. equity market performances.

Not too worry, the same worries that most people were concerned with have actually not abated so what has led to the turn in stock performance?  Two likely scenarios are, more accommodating central banks and potentially less bad news with company sales and profits.

A more accommodative European Central Bank (ECB) + a “Lower for Longer” Fed = Less bad negative EPS (earning per share) estimate revisions with this ultimate solution leading to higher stock prices. 

But as we have talked about in previous newsletters, companies cannot continue to cut their way to prosperity and/or financially re-engineer their EPS through stock buy backs forever.  Eventually the market is going to need to see some real revenue growth to not only support higher stock prices, but also the increases in jobs.

According to Nick Raich at The Earnings Scout, his firm saw companies reporting earnings for this current quarter falling at a lesser rate which should be good news for stock prices. 


However, Nick along with myself, are both cautious on whether or not this rally can be sustained.  I am particularly focused on companies’ ability to drive higher revenue growth which has always been a key investing tenant of mine at TAMMA.  To take that a step further, I will be interested to see if we get any slowdown in job growth and if there is a delayed correlation between the high job creation numbers we have seen over the past 12 months vs. the decline in company revenue.

The 40 Year Journey

In less than 24 hours I will be turning 40-years-old.  I seem to be more reflective at this birthday milestone than the last one when I turned 30.  I look back at that point in my life where I was still trying to figure "life" out.  Little did I know that I was just beginning to scratch the surface of what would become the foundation of my business that exists today.  However, I would discover that I would need another 10 years of human capital growth and a few major developments in order to reach the place where I am at today. 

There have also been three key developments that have occurred along the way to get me to this current place in time.  The first major event would be to marry my wife Theresa who carries the T in TAMMA almost 10 years ago.  The next would be the birth our triplets filling in the two A's and one M in TAMMA.  And finally, the birth of our plus one as we so eloquently refer to her as which adds the last M to form TAMMA.

However, as the actual story goes, I cannot take full credit for the naming of the firm.  That honor would belong to the creative work of my long-time mentor and extended family member Camille Jayne.

I have been the recipient of having an extremely supportive wife, family, extended family, and a mentor that would not accept anything less than success and to see TAMMA flourish.  But just as important, if it weren't for a handful of initial clients who had entrusted me with their life assets and faith in me to help them build a financial future and plan that would help them to achieve their life and financial goals, TAMMA may not be here today.

While the journey has not always been easy, the ultimate goal of helping people and companies to solve some of their most unique and complex financial, life, and business decisions has been clear and the ultimate reward in serving my clients.

I look forward to continuing to help and serve my family and clients for the next 40 years.


What I learned from My Trip to Disney World

What I learned from My Trip to Disney World

Whenever I go on a trip it typically turns into a research or fact finding adventure for me.  Recently my family of six headed south to Disney World in Florida.  I have personally owned Disney stock for nearly ten years and had been to Disney World twice, once as a child and another as an adult in my late 20’s.  While I planned to try and enjoy the sights and sounds, I also wanted to observe how part of the Disney machine (its theme park operations) runs.

Here are some of my observations on both a personal and professional level:

  • Chasing after 4 kids 5 and under is not a vacation.  While I love my children, there was likely zero chance that they were all going to be happy at the same time, even at Disney World. 
  • To that point, there is no end to what a parent will do or spend on the happiness for a child.  With kids throwing tantrums at the most magical place on earth, candy, food, and toys are some of the plentiful options there to help sooth your children.  And once your child sees some other child with something that they remotely want, it’s game over for the parents.  Just bust out the credit card or in Disney’s case the wrist band.
  • You can see the technological advances all around Disney and I am not just referring to the amazing rides and scenery.  You literally have this Disney arm band that is your gateway to everything from getting into parks, your room, and ideally spending your money on the food and souvenirs.  They are likely tracking your every move similar to a Fitbit.  My wife and I even talked to security personnel (told you this was also a fact finding trip) that told us that they have used these bands to track down lost children because of where the child last swiped their wrist band.
  • These arm bands are likely capturing a treasure chest of data on you that Disney will ultimately likely use to get you to spend even more of your money through their plethora of marketing channels.  The more times they put the marketing material in front of you, especially with your children around, the harder it is to say no.
  • Without having any exact figures in front of me, the purchase of Lucas Films and the Star Wars franchise is likely going to pay for itself from this first movie installment.  Disney is genius at taking a movie and turning it into additional revenue streams namely by re-packaging merchandise of all shapes and sizes for consumers to spend.  I wonder how many millions of $30 light sabers they sold in the past 12 months?

The Magic Kindgdom

So what would be some of my investment ideas from the trip:

  • Disney stock itself has always been a long-term position within our client portfolios for the past 5 to 10 years.  The stock is up 276% over the past 10 years while the S&P500 is up almost 58%.  The key to owning a stock like this is to rebalance the position as part of a normal asset allocation or rebalancing plan so it doesn’t become too big of a percentage of your total portfolio.  By rebalancing, you are taking some of your profits off of the table and potentially adding to the position when the stock price is down.  I realize that there is currently a big concern over the loss of subscribers at ESPN which is valid, but one of the greatest attributes about Disney is the multiple massive revenue streams the company has; Parks, TV, Movies, Merchandising, ESPN, and Licensing deals just to name a few.  
  • I’m not sure how Disney pulls together all of the data it collects from its customers, but there are specific companies out there that help companies collect and analyze this type of data in order to creates plans to drive you to spend more of your money with a company such as Disney.  Disney is not the only consumer company trying to find out everything that they can about you so this may be an up and coming industry to follow.

Of recent news, I can see why a company such as Comcast with a portfolio that already includes Universal Studios, has agreed to buy DreamWorks Animation for $3.8 billion.  Because of the business diversification that I just referred to that Disney carries, there is really no other player/business that is in Disney’s ballpark.  It will be interesting to see how this competition between Disney and Comcast plays out.

What I am Reading This Week

I Hate This Market, I Love This Market (WSJ)

This is how the NFL hopes to keep its players from ending up broke (MarketWatch)

Costco's new credit card has some of the best rewards in the market (Yahoo Finance)

Since the Recession, We’re Spending Again—But With Less Income (WSJ

The Latte Factor; Likely Not Going to Make You a Millionaire

Have you ever heard of a theory called the Latte Factor?  The theory goes that if you gave up your $5 a day Starbucks latte and invested that money over time you would reach a sizeable amount of money to help you achieve your retirement or some other wealth management goal.

Here is the math on this theory using one scenario:

Latte Factor

While slightly coming to an amount over $72k that spans a 25-year period is nothing to snicker about, it is hardly going to make you a millionaire.

Here are some further assumptions that I used and why they aren’t likely to happen:

  1. Compounded monthly return – compounding is that magically formula that keeps on giving in the world of finance.  It is the rate at which your money grows without you having to do anything to it.  I used monthly because you would get a bigger bank for your buck vs. annually or quarterly compounding, but less than if I would have used daily.  The more frequent the compounding schedule, the more compounding works in your favor i.e. the more money you make.  The problem with this is that no investment option is likely to pay out a steady gain of 6% annually compounded on a monthly, quarterly, or even annual basis especially if you invest the money in the stock market.
  2. Length of time to invest – any of these assumptions can be changed (you can email if you would like to receive the simple excel file that I built for this) but I used a 25-year period given that it is likely a good duration of time in order to save for retirement.  However, do you realize how much discipline it would require to not only save the expense of the latte Monday thru Friday, but then to have the extra discipline of not touching the money that you are saving for something else?

Bottom line, I see two major factors working against you; the ability to sustain a constant return over time and the discipline to save and not use the money over time.  So if saving $5 on a latte or some other small daily or monthly expense is not going to make you a millionaire then what will?  Paying attention to the “big stuff” might help you reach that millionaire dollar bogie.

So what are some examples of big expenses to look out for:

  • Buying a house
  • Buying a car
  • Choosing where to live
  • Choosing where and what to do on a vacation(s)
  • Where you go to college
  • Having children

But just as important, here are some of the big items on the income side which could help you prosper:

  • Deciding what profession to enter
  • Determining how much time are you willing to invest in yourself to advance your career

While many people would like you to believe that by cutting back on the small things in life will get you to where you want to go in your wealth plan, that is simply poor advice.  People need to focus on making the right financial decisions when it comes to big items in life.  The issue is that many people spend more time analyzing the small items such as what big screen TV to buy or what smart phone to go with vs. spending more time analyzing how much you can afford on a monthly rent or mortgage payment.

At the end of the day there are two key tenants that will help you achieve a financial goal, save more and spend less.  While return on investments play some role in helping you to reach a big financial goal such as retirement, these two basic ideas of saving more and spending less is what gets you to the financial mountain top.  However, these two ideas are enhanced with the right financial plan and a strong discipline to follow that plan.

What I am Reading This Week

You’ve Bought a Small Business. Now What? (NYT)

Since the Recession, We’re Spending Again—But With Less Income (WSJ

What are the chances of a recession? Not what you’d think (WP)

Smartphones Are Boring: Here’s What Happens Next (WSJ)

Four Likely Common Retirement Goals for All

Recently I was doing some research on the retirement income challenge and while many of us diligently save each month in an employer sponsored retirement plan such as a 401(k) or 403(b) or an IRA option such as a Traditional or Roth, do we really understand what we are savings for?

While each individual will have their own unique answer to this question and personal goals, we are all likely trying to achieve four common goals within our retirement plan which are;

  • Lifestyle
  • Longevity
  • Legacy
  • Liquidity

Let me break down specifically what I am referring to with each of these goals


The primary goal for most people is to maximize their spending power in such a way that they can continue to spend at a level that affords them the lifestyle that they were accustomed to during their working years.  This means that spending during retirement remains consistent and sustainable without any drastic reductions no matter how long retirement may last.


Longevity is likely the most fundamental risk when it comes to retirement planning simply because no one knows exactly how long we may live.  But at the end of the day, we want to ensure to the best of our abilities that we have enough money to make it to the end.  Here are some fascinating stats regarding life expectancies;

  • A healthy male who reaches age 65 has a 50% chance of living beyond 85 and a 25% chance of living beyond 92
  • A healthy female who reaches age 65 has a 50% chance of living beyond 88 and a 25% chance of living beyond 94
  • A healthy couple who reaches age 65 has a 50% chance of living beyond 92 and a 25% chance of living beyond 97

A long life can be wonderful, but it can also be costly.  Looking at only your investable asset to self-manage your longevity can this be very risky.  However, there are various strategies that can be used to help transfer some of this risk utilizing insurance and annuities. (Further details on this topic will be provided in an additional article)


The U.S. is about to undertake the greatest transfer of wealth from one generation to the next as the Baby Boomers begin to retire and make plans to leave behind their estates.  For some, this is of crucial importance to them personally as grandparents want to help fund education plans and even help their own children with homeownership not to mention a variety of other philanthropic causes.


Just as we try to build emergency cash reserves as part of a balanced wealth management plan today, maintaining a sufficient reserve amount for unexpected contingencies during your retirement years is of great importance.  When you couple not knowing how long you may live with not knowing how your investments may perform, even the smallest of unexpected financial expenses could wreak havoc on your overall retirement plan

So if anyone is struggling to take that first step in the retirement planning process understanding what these four goals mean to you should help get you started.  Remember that the first step within any aspect of building a wealth management plan is likely the hardest.  However, by developing a vision for what success looks like and knowing what you would like to accomplish, can and likely will make this journey extraordinarily rewarding.

For more information about how we can build help you build your own customized wealth management plan you can reach us at 248-860-2279 or  You can always visit our website at for more articles such as this one.

What I Am Reading

You’ve Bought a Small Business. Now What? (NYT)
Since the Recession, We’re Spending Again—But With Less Income (WSJ
What are the chances of a recession? Not what you’d think (WP)