Because its relevance and importance cannot be overstated, it will be worth describing the nature of my philosophy of advice as it relates to financial and investment planning. These principles constitute the basis of my work and value to clients and have been developed through experience, careful observation, faith, and humility.

Generally speaking, my experience has been that successful investing is goal-focused and planning-driven, while most of the failed investing I've observed was market-focused and performance-driven.

Another way of making the same point is to tell you that the really successful investors I've known were acting continuously on a plan—tuning out the fads and fears of the moment—while the failing investors I've encountered were continually (and randomly) reacting to economic and market "news."

I’ve observed too many investors eschew easily obtainable average returns to seek more fleeting above-average returns, only to settle for nearly constant below-average returns. My instincts say that a well-funded portfolio achieving “merely” average returns over an investor’s lifetime can yield impressive results.

Most of my clients are working on multi-decade and even multi-generational plans, for such great goals as education, retirement, and legacy. Current events in the economy and the markets are in that sense distractions of one sort or another. For this reason, I make no attempt to infer an investment policy from today's or tomorrow's headlines, but rather align clients' portfolios with their most cherished long-term goals.

I don't forecast the economy; I make no attempt to time markets; and I cannot—nor, I'm convinced, can anyone else—consistently project future relative performance of specific investments based on past performance. In a nutshell, I'm a planner rather than a prognosticator. 

I believe my highest-value services are planning and behavioral coaching—helping clients make the appropriate long-term financial decisions while avoiding overreactions to market events both negative and positive.

My essential principles of portfolio management in pursuit of my clients' most important goals are fourfold:

  1. The performance of a portfolio relative to a benchmark is largely irrelevant to financial success, rather the only benchmark we should care about is the one that indicates whether you are on track to accomplish your financial goals.
  2. Risk should be measured as the probability that you won't achieve your financial goals.
  3. Investing should have the exclusive objective of minimizing risk to the greatest extent practicable.
  4. Investment expenses should be minimized. A penny saved is a penny compounded.

Once a client family and I have put a long-term plan in place—and funded it with the investments that seem historically best suited to its achievement—I very rarely recommend changing the portfolio beyond its regular annual rebalancing. In brief, my principle is: if your goals haven't changed, don't change the portfolio. My unscientific sense is that the more often people change their portfolios, the worse their results become. I agree with the Nobel Prize-winning behavioral economist Daniel Kahneman, when he said, "All of us would be better investors if we just made fewer decisions."

Going back to 1980, the average annual intra-year decline in the S&P 500 has exceeded fourteen percent. Yet even without counting dividends, annual returns have been positive in 29 of these 38 years, and the Index has gone from 106 at the beginning of 1980 to 2678 at year-end 2017.

I believe the greatest lessons to be drawn from these data are that—historically, at least—temporary market declines have been very different from permanent loss of capital, and that the most effective antidote to volatility has simply been the passage of time.

I can't predict that it will always work out this way. I can only fall back on the wisdom of the great investor and philanthropist John Templeton, who said that among the four most dangerous words in investing are it's different this time.

The nature of successful investing, as I see it, is the practice of rationality under uncertainty. We'll never have all the information we want, in terms of what's about to happen, because we invest in and for an essentially unknowable future.

Therefore, we practice the principles of long-term investing that have most reliably yielded favorable long-term results over time:

· comprehensive planning focused in the areas upon which we can control;

· a rational optimism based on experience, humility, and faith; and, most critically,

· patience and discipline.

These will continue to be the fundamental building blocks of my investment and planning advice until an indisputably superior approach challenges my principles.

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