Investment Principals – What I Believe:

  1. I believe the only sustainable basis for a lastingly successful client and advisor relationship is mutual trust

  2. The only rational medium for a genuine advisory relationship is a plan. As simple as a retirement income plan that we write out and agree on, or as complex as a comprehensive financial and estate plan. An investment portfolio is never an end in itself; it is a means to the goals of a plan.

  3. In the long run, the only true definition of money is purchasing power. Currency is not money; it’s just currency, and it loses some of its purchasing power every day because of inflation. Even if you perfectly preserve your principal, and your cost of living doubles over time, you will have lost half your money.

  4. Equities – the partial ownership of companies – have been far more effective than bonds and other fixed-income investments at preserving and enhancing purchasing power. Since 1926 through the end of 2018, large company equities have compounded at about a 10% annual return, high quality government bonds have compounded at about 5.5%, and inflation at about 2.9%.[1] Thus, the real return (net of inflation) of the partial ownership of companies has historically been more than twice that of bonds. This is the fundamental reason why, for lifetime and multi-generational investors, I greatly prefer to be an owner of companies rather than a lender.

  5. The premium returns of equities are a function of volatility. Since 1980, large company stocks have declined annually an average of 13.8%. They have been down between 15 – 20% about one year in five, and more than 20% about one year in eight.[2] But volatility is not the same thing as risk, just as temporary declines are not the same as permanent loss. Equity market declines have historically been temporary, the increases in value and dividend payments have been permanent.

  6. Historically, the real risk of owning quality companies is a function of investor emotions – that is, the proclivity that is hard wired into all of us to fear that a significant market decline is actually the onset of some apocalypse. The dominant factor in long-term, real-life financial outcomes is not so much investment performance as it is investor behavior.

  7. The economy, markets and future relative performance of similar investments cannot be predicted, much less timed. The asset allocation (owning vs. lending) and your behavior are the two variables that can be controlled. The only way to capture the full return expected of your portfolio has historically been to ride out their temporary declines.

  8. No one in my experience has been able to gain an advantage over the equity market by going in and out of it because of current events or perceived threats. I never attempt to analyze or predict the outcome of current events and make corresponding portfolio decisions. I will always counsel that if your goals haven’t changed, you shouldn’t change your portfolio.

  9. My compensation, determined as a percentage of assets under my stewardship, is essentially for behavior management – helping people not to make the really big emotional mistakes around critical market turning points. I firmly believe this behavioral advice – against panic in falling markets and euphoria in market manias – is going to be worth multiples of the annual fee I charge over the course of our working relationship.

  10. I believe that uncertainty – in the markets and indeed in the world – is the only certainty, as we go from one “crisis” to the next. Thus I counsel rationality under uncertainty, which just means that history is the best guide to the long-term future. Legendary investor and philanthropist, Sir John Templeton, perhaps said it best – “Among the four most dangerous words in investing are, its different this time.”


[1] Ibbotson® SBBI® Stocks, Bonds, Bills, and Inflation 1926 - 2018

[2] J.P. Morgan Asset Management Guide to the Markets U.S. 1Q2020 – Annual Returns and intra-year declines