NYTimes (1/25/13): “Americans seem to be falling in love with stocks again.”

fee-only financial planning2012 was a great year for stocks. Already, in 2013, the main indices are up 5%. Investors are piling into equities, apparently afraid of missing out. Have we reached the “tipping point”, when allocations to bonds should be reduced and equity allocations increased?




Certainly, there has been some very good news recently:

  •  Washington avoided the “fiscal cliff”
  •  European leaders seemed intent on saving the euro
  •  The U.S. debt ceiling has been raised for three more months
  •  The Fed and other central banks have pledged to continue monetary easing
  • China’s GDP growth is up in the fourth quarter to a 7.9% rate from 7.4%
  • The housing market recovery seems to be continuing
  • New claims for unemployment benefits fell to the lowest level in five years.

All good news. But, let’s put it in perspective. Yes, the current financial crises seem to be under control. Yet, the global economy is not back on track yet. Ken Rogoff, Harvard economics professor, put it this way at World Economic Forum in Davos, Switzerland last week:  “It is a little bit calmer, but it is not very pleasant.”

Here in the U.S., our economy is healing, but slowly. The initial forecasts for 2013 were 2% growth in GDP. Now, with the rise of payroll taxes on employees, the new forecasts are for 1% growth. At the same time, the IMF expects the euro-zone economy to shrink by .2% this year. Unemployment in Europe is 12%. With continued austerity programs and tight credit, Europe may not return to growth for some time.

At Davos, a key buzz word was “structural reform.” Europe still is plagued by its lack of competitiveness. And, here in the U.S., the fiscal cliff was avoided by basically “kicking the can down the road.” We have simply averted major crises. The major problems in developed countries hindering global long-term economic growth haven’t been solved and haven’t gone away.

Yes, there are more positive signs today than 18 months ago, including the level of the major stock indices. However, as Brett pointed out in his last market commentary, stock market returns are not directly correlated with the global economy. The S&P 500 index may show good returns in shaky or even slow times. With the unsolved global economy headwinds, we are cautiously optimistic.

Hence, it’s a great time to review your asset allocation. An excellent time to review your risk tolerance, risk capacity and risk perception. And a perfect time to meet again with you DWM financial advisor.

“Saving on Lattes Will Not Make You Rich”

pound_foolish_bmpSo says Helaine Olen, a freelance journalist and author of “Pound Foolish: Exposing the Dark Side of the Personal Finance Industry.”  Ms. Olen takes direct aim at investors and advisers alike in her recently published book. She makes some very good points.

Saving $3 a day on lattes, or $1,100 a year and investing it can help a plan, but it won’t build a fortune. Ms. Olen terms such faddish advice as the financial equivalent of miracle diets. Most people are looking for a quick fix or the next “home run.” A belief in instant riches lured millions into buying internet stocks in the late 1990s and overpriced houses in the mid 2000s. Millions watch Jim Cramer on TV looking for the latest tip when, in fact, Cramer’s picks have not done well. And, over 75% continue to invest in actively managed stock and bond funds when these funds annually underperform passive, low-cost funds.The fact is that there is no single financial elixir or silver bullet that can guarantee personal financial success.

Yet, lots of investors are still looking for that free lunch and promises of double digit returns. According to AARP, over 6 million people attended a free seminar in the last three years. Many elderly are terrified of outliving their savings. Desperation, fear and insecurity become the salesperson’s best friend. At the World MoneyShow, an annual event in Orlando, 80% of the attendees were over 55. As Ms. Olen, puts it, “a panicked baby boomer is their best customer.”

Ms. Olen includes many leading financial women in her book, including Jane Bryant Quinn and Elizabeth Warren. She doesn’t like Suze Orman, whom she criticizes for making huge amounts of money by telling others to be frugal. Further, Orman’s “affiliations with companies like FICO and Lending Tree raise questions about the impartiality of her advice.”

Furthermore, Ms. Olen points out that many financial plans fail because the investor and their advisor forget to stress test the financial and investment planning. Risk management analysis is often completely ignored. A plan with reasonable investment returns may be destroyed by death, disability, long-term care issues, a job loss, or high-interest debt. 

We agree with Ms. Olen. Some investors and advisers should be taken to the woodshed. There are no quick fixes and no one-size fits all solutions. Successful wealth management is a process, not a product.

It starts with investors working with advisers who don’t have conflicts of interests but rather are fiduciaries; putting the client’s interests first. Next, it requires experienced and trusted advisers to understand the client’s goals, resources, risk assessments and constraints to realistically and objectively prepare an initial financial plan. Then, that plan needs to be stress tested from risk management, estate planning, income tax and investment perspectives. Only at that point can an appropriate asset allocation be determined and implemented for the client. Going forward, the entire plan and investment portfolio need regular monitoring, rebalancing and stress testing. To be successful (aka not running out of money), it needs continual on-going professional review.

With the right help, you might be able to have it all: a successful financial plan and all the lattes you want.

DWM 4Q12 Market Commentary


Happy New Year! After a relatively strong first three quarters for both the equity and fixed income markets, fourth quarter readings were pretty muted. Frankly, that’s pretty good considering all of the headwinds we faced going into this last quarter of 2012. Probably the biggest story of all was the so-called “fiscal cliff”. It reminded us of all of the Y2K scares of a decade or so ago. Legislation to forestall this “cliff” passed before trading could start in the new year, and the market reacted by sending up stocks nicely. Ironically, this cliff agreement offered little to address our significant long-term debt issues. The proverbial “can” in WashingtonD.C. was indeed kicked down the road again. 

 Let’s celebrate the honorable return achievements of 2012 before looking ahead to 2013. 

Stocks finished the year up about 16% in most areas (S&P500: 16.0%, S&P600 Small Cap: up 16.3%, S&P400 Mid Cap up 17.8%, and MSCI World Index (ex-US) up 16.4%), reflecting a nice, unusual level rise across almost all equity investment styles.

Bonds showed some fair returns for calendar year 2012: Long-term Treasuries up about 3.5%, the US Aggregate Bond Index up 4.2%, and Munis up a solid 6.8%.

Commodities (which DWM classifies as alternatives) did not produce much evidenced by the Dow Jones-UBS Commodities Index falling 1.1% on the year. Also in the alternative area, some illiquid investments like equipment leasing and private timberland REITs did not provide as much bang for the buck this year. DWM expects these investments to recover as the global economic recovery continues. On the other hand, there were niches in the alternative landscape that fared quite well like public REITs and some absolute return strategies. A few noteworthy liquid alternative funds to mention are Marketfield Long/Short (up 13%+), RiverNorth/Doubleline Strategic Income (up 12%+) and Pimco All-Authority (up 17%+). A portfolio of liquid alternative funds continued in 2012 to help investors’ overall portfolios with solid results and non-correlation benefits in respect to the rest of the portfolio holdings.

All in all, 2012 was a rewarding year for most investors that weren’t sitting in cash. 

Looking forward to 2013, headwinds include lack of household income growth, lackluster consumer confidence, and further Washington political theater.In fact, the latter is a major problem as Congress continues to kick the can down the road. The cliff agreement was no “grand bargain” or a deal looking at both tax revenue and spending cuts in a way that can get our Federal deficit under control any time remotely soon. Certainly, Moody’s didn’t like it, basically putting the US on notice that it will most likely cut its AAA rating if it can’t make something happen soon. And something will need to happen quickly as the federal borrowing limit (aka “debt ceiling”) will be reached around the end of February. Remember the ludicrousness that played out in 2011 the last time we came close to hitting the ceiling?!? Expect more of the same. Long story short, Washington policy stalemate will continue to be a major story.

There are some real positives domestically like the recovering housing market, expanding manufacturing activity, and improving trade balance. But things aren’t so rosy overseas where the Eurozone is still in recession and China’s financial sector looks dicey. For a world where we are becoming more and more connected, we should all hope for a successful global economy. 

In conclusion, 2012 results show that positive results can occur in what may seem like shaky times. DWM cherishes the opportunity of providing its clients with solid investment results and sound financial planning that can help people achieve their long-term goals. DWM wishes a prosperous and healthy 2013 for you and your family.    

Brett M. Detterbeck, CFA, CFP®



How To Fulfill Your 2013 Resolutions


From the Charleston Mercury, January 10, 2013

Happy New Year, readers! I hope you had a great Holiday. How are you doing with your New Year’s resolutions?

Historically, getting physically fit is at the top of most lists. Exercising and eating right keeps you healthy and makes you look and feel better.

It’s no surprise that health clubs are packed in January and early February. By Valentine’s Day, it’s typically back to normal. Many people hate exercising and need outside help. Some hire a personal trainer, or coach, to provide services they can’t do or won’t do themselves. This helps them fulfill their resolution.

The coach, with expertise and commitment to your physical well-being, helps you:

  • Honestly and realistically assess your current condition
  • Identify attainable short and long-term goals
  • Establish a routine
  • Provide discipline, follow-up and encouragement through regular meetings
  • Monitor progress and modify the plan and the routine as conditions change.

Is it any wonder that people using coaches have a better success rate in fulfilling their resolution for improved physical well-being?

Another top New Year’s resolution is to get one’s financial future in order. However, most of these promises are never kept. Many people who can’t or won’t do it themselves are reluctant to use a financial coach, or financial planner. And, by Valentine’s Day or sooner, this resolution is broken as well.

Financial fitness is a lot more than simply investing your money. It’s a process. Good financial planners are like a good coach, helping you get your finances in order, in a holistic way. They will help you:

  • Realistically assess your assets and liabilities
  • Review your tax situation, retirement and college plans, estate planning and insurance needs
  • Put together a plan for the future 
  • Monitor progress, provide encouragement and follow-up through regular meetings
  •  And, as your situation and the world changes, help you modify your plan so that it continues to have a very good chance of success (aka not running out of money).

Financial planning can help eliminate fears and provide financial well-being and peace of mind. The world economy is still fragile. There are lots of uncertainties both home and abroad. A good financial coach can help you regularly assess your situation and let you know, using their expertise, that you are on the right track, and if not, how to get there. Your financial coach may even reduce some guilt by “giving you permission” to spend some more, if everything else in your plan is in order.

 If you’re serious about keeping that New Year’s resolution to get your financial future in order in 2013, consider hiring a financial coach.

Les Detterbeck is one of a small number of investment professionals in the country who has attained CPA, CFP®, and CFA designations. His firm, DWM Financial Group, Inc., a fee-only Registered Investment Adviser, has offices in Charleston/Mt.Pleasant and Chicago. Les may be contacted at (843)-577-2463 or les@dwmgmt.com.

Popular Mechanics: 110 Predictions for the Future


Happy New Year! We hope everyone had a great holiday. With a new year, come predictions of the future. Popular Mechanics (“PM”) weighed in with its 110 predictions for the next 110 years.

For example, in the next decade, PM predicts passwords will be obsolete (replaced by face-recognition software). By that time, vaccines will wipe out drug addiction (creating specific antibodies now working with mice).

Honestly, I didn’t know PM was still in business. Sure, I remember them in the 50s and 60s. We kids read the magazine cover to cover. Apparently, readers, young and old, have now been doing that for 110 years. Fittingly, to celebrate, PM has produced a list of 110 predictions for the next 110 years. Here are some other interesting ones:


  • People will be fluent in every language (DARPA and Google are perfecting that now)
  • Bridges will be repairing themselves (calcium ions react with rainwater and carbon dioxide to create a patch)
  • We’ll be eating synthetic meats (not tofu-rather plant-based, nutritious, low-cost substitutes that look and “taste” like the real thing)


  • Contact lenses will grant us Terminator vision (just place a soft lens on your eye)
  • All 130 million books on the planet will be digitized
  • All purpose robots will help us with household chores
  • Supersonic jets will return (new more efficient engines, using a fuel-air mixture will be used)
  • Navy SEALs will be able to hold their breath for four hours (robotic red blood cells could each hold 200 times the oxygen of a normal blood cell)


  • The Pentagon will stop using submarines (replacing them with underwater robots with laser radar)
  • The last gasoline-powered car will come off the assembly line
  • One of us will celebrate our 150th birthday (there are 300,000 centenarians in the world already)

I can’t wait to see how many of these predictions come true. Cheers!

If you want to read more, here’s the link to the article: