Skip to main content


Sound Advice: February 1, 2023

  Alphabet Soup When I began as an investment adviser, I was disappointed to learn how uninformed most folks were about financial matters and financial advisers.  One example was a gentleman who had difficulty understanding the difference between an investment manager and a stockbroker.  My response?  The investment manager is the architect of the portfolio; the stockbroker is the builder of the portfolio.  That concept is easy enough to grasp, but given the multiplicity of letters that may follow one’s name, the situation appears to get much more complex.  A few of the designations require considerable effort and time to acquire.  And then there are those that can be obtained by a modest charge on one’s credit card and no time spent learning about anything. One tipoff is when there are numerous cryptic designations following one’s name.  More often than not, a series of this sort will strongly suggest that the value is what our British brethren call rubbish. For investment adv
Recent posts

Sound Advice: January 25, 2023

Why Asset Allocation? Asset allocation is a fancier way of describing diversification.   For Wall Street purposes, it’s a variation on “don’t put all your eggs in one basket.”   That phrase is the bottom line for what’s known as Modern Portfolio Theory.   Sounds complicated, but it’s nothing more than the reality that in the world of Wall Street, all investments do not always move in the same direction.   In fact, with rare exception, their paths of progress differ considerably.   Equities, more familiarly known as stocks, move up and down in reflection of the trend of profits of the underlying companies.   When business is good, companies make more money and stocks go up.   And vice-versa. Fixed-income holdings, most of which are bonds, rise and fall in price in response to changes in interest rates.   When rates are rising, the prices of most fixed-income investments will fall.   In the U.S., interest rates are largely controlled by the Federal Reserve Board as part of its ongo

Sound Advice: January 18, 2023

Crypto Eulogy Late last March, when bitcoins were at their year’s peak above $47,000, I was interviewed by Paul Vigna of The Wall Street Journal, who asked me about my thoughts on cryptocurrency.  Rather than an extensive response with all the reasons for my opinion, I offered a simple answer: “My clients would kill me if I bought bitcoins for their accounts.”  Since then, the ceiling has all but caved in on this and other fantasy currencies, not surprising since, in the words of Mihir A. Desai, professor at Harvard Business School and Harvard Law School, “. . . they are a manifestation of a magical thinking that had come to infect part of the generation who grew up in the aftermath of the Great Recession . . .” Cryptocurrencies have no underlying value.  There is no consumer protection.  There are no dividends.  So long as they are trading and prices are swinging up and down, those who are willing to accept extraordinary risk may buy for brief periods in expectation of quick gains. 

Sound Advice: January 11, 2023

The Bigger Retirement Question Although financial planning is best begun as early as possible, the reality is that most folks don’t begin giving serious thought to what lies ahead until they are in their 50s . . . or even 60s, a time when it’s getting perilously close to being too late.   I recall a couple who pulled up in two brand new Mercedes sedans when they arrived for a talk about their retirement years.   Those who would be impressed by this display might have speculated that this couple’s finances were in good shape.   The reality was otherwise.   When we began their review, we noted that their assets were barely more than $200,000.   That was before getting to their debts and how their prospective income stacked up against their expected expenses.   Sad to say, it only got worse from there.   Even so, the question about whether you will have enough pales in comparison with an even more important concern: What will you be doing when you are no longer working?   A surprisi

Sound Advice: December 21, 2022

Withdrawals in Retirement After folks save money during working years, the obvious question that needs answering is whether enough has been put away to support one’s desired lifestyle in later years.   So if, for example, you have managed to accumulate $1 million, it will be helpful to estimate your future returns on that total as well as other income, such as Social Security benefits you will receive.   You will also need to estimate your ongoing expenses. If you earn 4% on your investments and receive $2,500 a month from Social Security, you will have an available pretax total of $70,000, which will leave disposable income of $55,000 to $60,000 depending on the tax bite in the state where you live.   If your expenses are above that level, you’ll have to dip into the investment principal regularly to fill the gap.   That may be a concern if you hope to leave a substantial legacy for children or others.   In the absence of better returns, there will be a shortfall without even cons

Sound Advice: December 14, 2022

Inside Information Have you ever wondered about unusual price changes in stocks?   These days, more often than not, atypical price movements are the result of new information about the related companies.   Some of the time, it’s about the possibility of a merger.   Other times, the information is about potential surprises in the pace of operations.   Perhaps there’s a large new contract on the way or maybe the level of incoming business has slowed dramatically.   Whenever such a change will impact profitability, there’s likely to be a reflection in the stock’s price. Before government regulations were tightened, it was entirely possible for analysts to get a head start on important information and take advantage by buying or selling a stock.   As part of their research process, analysts always ask about things like incoming order rates, supply issues, acquisition possibilities, and what’s new in company pipelines.   Those who were in regular communication were the first to know.