If 2000-2009 was the "lost decade" for U.S. equity markets, 2010-2019 might be dubbed the blissful Goldilocks decade. But just how good was it? In a graphic-heavy look back at the decade that was, here is what caught our attention. Source: Bespoke Investment Group The above graph shows the S&P 500's % price change by decade. We were surprised that the 2010s was only the 4th best performing decade since the 1900s. Looking ahead, do U.S. investors get lower future returns (

What would you do if your investment lost 20%? A) Buy more B) Sell C) Do nothing You've probably seen or taken a risk tolerance survey with similar scenarios. Gathering out of context inputs and manufacturing a risk profile is the norm for most advisors. The practice is outdated, obsolete, and more importantly, can lead to dangerous conclusions about how you view risk. The textbook definition of risk is to expose (someone or something valued) to danger, harm, or loss. With

"Some taxpayers close their eyes, some stop their ears, some shut their mouths, but all pay through the nose." - Evan Esar, American Humorist Thanksgiving marks the home stretch for the remainder of the year. Turkey, football, and family make way for Christmas, New Year's, and (gulp) tax season. With a little tidying up, we can take the low hanging fruit and boost our after-tax returns, setting aside any worldly insights about what the market is going to do next. Tax-Loss H

“To be absolutely certain about something, one must know everything or nothing about it.” – Henry Kissinger I can't go one day without reading or hearing about the "uncertainty of the 2020 presidential election." The information often reveals the political tilt of the source or person delivering the message. A right leaning publication will tell you how the Democratic nominee is going to crash the market. My left leaning neighbor tells me she moved all of her investments t

“That man is richest whose pleasures are cheapest.” - Henry David Thoreau Most people associate wealth with large bank accounts, extravagant homes, and luxury cars. But that's only one form of wealth. One of my Twitter friends, Ben Carlson (@wealthofcs) wrote about another form of wealth that is often understated, but equally (or even more) important than tangible stuff. For example, a career you enjoy, having a flexible schedule, meaningful relationships, etc. We are quic

I was sipping on a watered-down passion fruit iced tea waiting for my 1 o'clock to arrive. I had never met the person face to face so I had a watchful eye on the comers and goers at the local Starbucks. Complicating things was the "private" table I selected, back in the corner, underneath a bellowing music speaker. Amidst the coffeehouse pop music, I overheard the following conversation between two middle-aged gentlemen: "Listen, just copy me. I'm loading up on Amazon sto

“This is the central illusion in life: that randomness is a risk, that it is a bad thing.” - Nassim Taleb, Author Humans use statistical models to make sense of the world. Some activities have simple payoffs and are easy to model. Think the flip of a coin or the outcome of a baseball game. Other activities have complex payoffs and a wider range of outcomes. This is where models are dangerous and can lead to significant consequences. Nassim Taleb's book "The Black Swan"

"Your margin is my opportunity." - Jeff Bezos, Amazon It was a dreary fall evening. It must have been a Tuesday or Wednesday because there wasn't any football or golf on TV. My default background TV station is Bloomberg News. If you're familiar with the program, a vertical news ticker cycles through the daily headlines. It was the beginning of 3rd quarter earnings season. Big banks and financial services companies were the first to report. "XYZ Bank reports strong number

"We should target high dividend payers because bond yields are offering nothing." - Random investors everywhere. U.S. bond yields have plummeted in 2019 reigniting a search for portfolio income. The above chart shows the yield for 10-year U.S. Treasury. After a brief run-up in U.S. bond yields, the hunt for portfolio income is back on. A CBS Marketwatch story highlighted a study from Bank of America calling to "reconsider the role of bonds in your portfolio." The article ci

Much goes into crafting a detailed retirement plan. We account for income, expenses, unexpected healthcare events, annual home maintenance, travel, etc. A good plan gets down to the very last detail to make sure we are on the right track. But what about those pesky state income taxes? Could the annual drag of state taxes derail your long-term plan? Meet the Engleberts and the Humbertos. Both couples are 65 and newly retired. They have the same income, expenses, investabl

Everywhere we turn people are convinced the presidential election adds a layer of uncertainty to the financial markets. Depending on your politics, the election could find you emotionally charged up. "I can't even look at my statement." "I want to get out of the market because the election has me worried." "I'm so nervous about the upcoming election." Is all of the angst justified? Is it based on historical evidence? Emotion? The media? Your personal opinion of the Presi

If we tracked the most commonly asked client question over the past six months, a variation of "when is the next big recession coming?" would be leading by a landslide. My go-to answer is, "avoid operating in the extremes (either too pessimistic or too optimistic) and get your financial house in order before an event happens." It's not BS either. There are very few inputs we can control in the financial markets. Tying up our loose ends seems like a no-brainer, but it's als

You have a huge landscaping project in front of you. While you've done some basic lawn care in the past, this project will require the expertise of a seasoned professional. Upon completion of an exhaustive due diligence process, including cost estimates, draft plans, and timeline, you hire Butch & Co. and are ready to get started. You feel great about your decision. On the morning of the project, you hear the work crew pull-up. Right on schedule. So far, so good. Peerin

We were sitting outside on a beautiful late summer Portland day. I was having a spirited conversation with a retired prospective client who was working with another advisor. The gentleman was unhappy with performance. "This is BS. I might just put my money in the S&P 500 and call it good." It was almost uttered as a veiled threat. Half crazy talk, but hardly the worst thing I've heard. After all, the S&P 500 has been a runaway freight train for the past decade. Source: Y

We shared a laugh about how easy it was to come up with a list of potential landmines for the financial markets. The conversation was centered around the heap of things that could go wrong. After a brief pause in the conversation, our new client leaned in and asked a simple, but brilliant question: "What's the optimistic case for U.S. stocks?" I was impressed and caught off-guard at the same time. The client was simply inverting our position to understand the other side.

"Well, that escalated quickly." - Ron Burgundy, Anchorman It should be obvious by now that presidential tweets are untradable, unpredictable, and financial markets are paying attention. Last Friday's tweetstorm was an inexpensive lesson to get it right today. Source: Twitter Which led to... Source: Bespoke Investment Group Which led to the following conversation... New Client: The market really is taking a beating. What should we do? Me: Nothing. We originally built the p

"Complexity gives a comforting impression of control, while simplicity is hard to distinguish from cluelessness." - Morgan Housel, The Collaborative Fund As financial markets flare up, the drumbeat for alternative strategies gets louder. We wrote about the big push into alternatives by Wall Street last May (see Hedge Fund Hold Up). A few highlights: According to a Barron's survey from 2017, the average recommended allocation by wealth managers to alternative strategies is 1

"Pay attention to what they do, not what they say." - Anonymous I was perusing a research note from another financial institution on their portfolio positioning. It read something like a sad romantic novel. "Inverted yield curve. Negative yielding debt. Slowing global growth. Hong Kong unrest. Erratic trade war. Currency manipulation. We remain overweight equities." Wait, what? It felt like someone describing all of the things wrong with their relationship only to procl

A client asked me what our crystal ball was saying after the turmoil this week. It's impossible to know what happens next, but it did pique our curiosity. How common are nasty pullbacks (defined by 5+% declines) over the past ten years? In other words, how often do we get chaos in the midst of a bull market? In short, "mini shocks" are more common than we thought. Since March 2009, there have been 31 instances when the market has declined 5% or more. While the last 18 mont

I give people advice about what to do with their money. Therefore, you have a right to know how I personally invest, and my attitude toward money. I've been wanting to do this for awhile. Recently, I noticed some of my Twitter finance influencers talking about how they invest. They've inspired me to do the same. In my opinion, transparency is king. It's also the quickest way to cut through the BS. I have a buddy that makes a good living as a real estate investor. He's