Is it Time We Change how we Talk and Think about Savings?

What would have happen if we started to believe:

  •  To save is to be grateful there is money to save?

  • To save is to celebrate the resistance of the myth of consumptive satisfaction?

  • To save is acknowledgement of life being lived in abundance?

Read More

Reading the Plum Leaves

Last weekend as I was mowing, I noticed the leaves of our young plum tree yellowing.  The tree, planted about two summers ago, produced a couple of plums this year, but it is still trying to get its footing. 

The most likely culprit is water deprivation, and while we have had some decent rainfall this summer, it was clear from the dryness of the ground, a good soaking would offer some welcome respite. I watered it a little and a downpour eventually came one afternoon a few days later. The tree looks better, though a little thinner, having shed the leaves the tree sacrificed out of its sense of self preservation.  It's future is hopeful, but uncertainty remains.

 Scott's fledgling plum tree

Scott's fledgling plum tree

I thought about my plum tree as I have seen and heard, more than once this week, "experts" express opinion about the ending of this market cycle.  From economists, to wall street watchers to the always vocal market pundits and investment professionals with their own vested interests, they all seem to warn that a bear market is nigh.

Here is the thing about "expert" opinion.  It sounds expertly and it always includes some bit of logic that resonates with the "non-expert".  "Bear markets' sounds scary.  It motivates people to feel the need to do something. Anything. Wall Street loves it when people have this feeling. So some will change their investment strategy, others leave the market entirely.  In doing this they feel they have regained control.  But this is an illusion.  

The truth is no one knows when a market cycle ends, at least not until we have the benefit of hindsight, and as you can gather from the term itself, once you have hindsight, it is too late.  We want foresight, but foresight, at least as it comes to markets, is just expertly sounding guesses. No one knows.  No one. 

After seeing my tree, I pulled up my weather app on my phone.  The week called for greater than 60% chance of rain everyday this week, with some days approaching 80%.  Despite the concensus forecast, saying there was a greater than even chance of rain everyday, I watered.  It only rained once.  

I guess what I am trying to say, is read the plum leaves and do what you can do but don't get caught up in predictions.  If the leaves are yellow, water.  If it rains, great, but if it doesn't you have done what you can do. 

Somethings are beyond our control.  Bear markets are one of them. We could be in the throes of a bear market by autumn.  Which year however, no one knows.  Just because there are clouds in the sky and the experts say there is a 60% chance of rain doesn't mean your tree gets watered. The future is hopeful though never without uncertainties.  

 

A World Cup, creating memories and financial planning

I am not a sentimental person, but I will admit to some rare feelings of nostalgia as the World Cup begins in Russia.  Four years ago today, my wife and I boarded subway at Copacabana Beach and made the 45 minute journey to the famed Maracana Stadium to witness Argentina and their star Lionel Messi defeat Bosnia, in the first of four games we watched in Rio over the next week and a half.  

    I have been going through pictures and videos of our adventure and remembering what it was like to be at the world's biggest sporting event in a country that loves that sport like no other.  Looking back it is still a little surreal to me that we were there.  After all, I am a relative homebody, who had only fallen in love with the sport a mere four years prior during the same event in 2010. 

    In June of 2010, Tracy was nursing our youngest daughter. We were trying to figure out how to play man to man defense with the kids when previously we had gotten accustomed to playing zone.   It was a harder transition than I had imagined, and the World Cup was an "escape" I could make from the comfort of our home.  I didn't know a lot about the game then, but I watched with an open mind until the sport seduced me.  All those countries, all that passion. 

    I still remember to this day where I was when Landon Donovan slotted in a goal in the 91st minute against Algeria to save the U.S.  Ian Darke's call became one of legend in US Soccer.  

Go, go, go, USA!

And one doesn't have to speak Spanish to appreciate the thrill of Andres Cantor's call. 

Goooooaaaaaallllll!

    Four years later, after four years of saving (we didn't have a lot to save back then) we boarded a plane for Brazil and a trip of a lifetime. Next year and four more years of saving, we will do the same, this time with our girls in tow, as we go to the women's world cup in France.

    There are many things one can do with their money.  We have spoken with hundreds of people about their plans. As I reflect on those conversations, one thing that sticks out are the conversations I have had with people about their experiences.  The return on experiences seems to far surpass the return on material items.  

    We don't make judgments regarding one's expenses. We seek to allocate their resources towards those things they have identified as valuable and important to them.  If spending the bulk of your income on a house or a new car every three years satisfies you, then I am happy.  I can only say that from our conservations with people, more happiness is derived when money is used for a lifetime of memories rather than the fleeting satisfaction of a "new car" smell.  

    You see, most of us have finite resources. We have to make decisions about how our resources are used as there is only so much to go around.  Financial planning is about intentionally thinking about what money is available, how is it being used, where is it going, how it a can grow, and how one can avoid costly mistakes that endanger one's goals. It is about finding the right balance between the present and future need.  It is not easy and it requires some compromise but with the right planning more can be accomplished that one might think. If you think financial planning is only about investments and buying products, you have a greatly out dated impression. 

    Financial planning is about making memories, living life, providing for family, and preparing for the future.  Whatever it is that captures your imagination, we would love to talk with you about it. 

Enjoy this year's World Cup.  Let us know in the comments who you are supporting in Russia. 

What the Yanny/Laurel Brush Up Teaches Us about Investing

The latest evidence the internet has divided the world, amplified our differences and seduced us into an unproductive echo chamber of our own proclivities happened recently.  Like the blue dress/ white dress debate of a few years ago, the country became obsessed with a flaky audio recording from which no one could agree on what was being said.  Was it Yanny or Laurel?  
 

    It will come as no surprise to you, our faithful reader, that it got me to thinking about how our biases affect our beliefs. We all have biases, everyone of us.  We can aspire to make unbiased decisions and while this may be a worthy endeavor, it does not come without extreme effort and uncomfortableness. It is really, really hard to see a possibility beyond one's initial frame of reference.
 

    When ColeFP was first started, we used the phrase "unbiased advice" in our messaging. It was an attempt to communicate our advice was not motivated by a financial incentive from a third party, like most of the financial advice offered.  We were trying to say our advice was given with the client's interest as our sole motivation and that is still true today, however, I came to realize the use of "unbiased" as not being truly possible.  
 

    Why? Because we are indeed biased.  We have biases toward our clients, biases with regard to investment philosophy, biases regarding insurance, biases about appropriate levels of debt and cash.  We do not come to this industry without prejudices about standards of care.  So we abandoned "unbiased" as a integral part of our marketing.
 

    Some heard Yanny and sought out those who heard Yanny.  Others heard Laurel and did the same.  Some were blue dress people and others refused to accept anything other than a white dress.  You see,  we have a strong desire to confirm that which we already believe.  Hince the arguments ensue, the battle lines are drawn, the positions become more and more entrenched. When one combines emotion with bias the argument can make the front page of the internet. 
 

    These, of course, are decisions of no real significance, but when one comes to financial decision which can rarely be separated from emotion, the stakes are much higher.  Finding a unbiased financial planner won't be possible, but having someone emotionally removed from the situation can be of supreme value.

    I have strong "do it yourself" tendencies and empathize with that mentality, but there are some things in life requiring an unemotional perspective. Good financial advice is not void of bias, but it is should not be clouded by emotion.  Proverbially speaking, a good financial advisor helps his or her client see the forest when the client can only see the trees. And while we may have difference of opinion about what types of tree are in the forest, the good planner finds the trail one needs to follow to be best navigate through it.  

    When you need a fresh perspective we would love to be your guide.  We will have opinion and prejudices, we can't help it, but we will champion your interest, your history and your hopes and use our experience to help you find your best path, should we ever be so honored to be your financial planner.