Our Blog

DWM is committed to learning for its team, clients and friends. In this changing world, it’s extremely important to stay current in all areas impacting your financial future.

We encourage all of team members to “drill down” on current topics important to you and contribute to our weekly blogs.  Questions from our clients and their families are often featured in our blogs.  

Financial literacy for clients and their families is very important to us.  We generally hold an annual wealth management seminar for all of our clients.  We encourage regular, at least semi-annual, meetings in person with our clients to review family updates, progress on financial goals, asset allocation and performance of investments.  We’re happy to assist younger members of the family as part of our total wealth management program.

Here’s our latest blog:

 

Print
PDF

New Year’s Resolutions- How Do You Eat an Elephant?

Written by Les Detterbeck.

Elephant eatingCollege football playoff national champion coach, Dabo Swinney, has the answer:  "One bite at a time."  His Clemson Tigers did it Monday night when they scored in the last second of regulation to edge Alabama's Crimson Tide.  Fantastic game!  Kudos to both teams and their coaches!

Both teams are champions.  Both have high goals and have a process in place to accomplish these goals.  For those of us in the second week of our New Year's resolutions there are some real lessons to be learned by the way Clemson and Alabama go about putting together their championship seasons.  They don’t do it the same way, yet both have had great success.

Alabama coach, Nick Saban, has created the “Elephant” of college football, guiding Alabama to four of the last eight national college football championships.  He's all about process. Coach Saban is often called a control freak who is never satisfied. Here are some of his great quotes:

"There are two pains in life. The pain of discipline and the pain of disappointment. If you can handle the pain of discipline then you'll never have to deal with the pain of disappointment."

"What happened yesterday is history.  What happens tomorrow is a mystery.  What we do today makes a difference-the precious present moment."

Coach Saban knows that “discipline is about changing behaviors.”  His players know that the process is accomplished one step at a time. That’s certainly a key point toward keeping New Year’s resolutions.

Dabo Swinney's process is different, though every bit as successful.  Nick emphasizes the journey, Dabo focuses on the joy in the journey.  It’s no surprise that Coach Swinney loves Chicago Cub skipper Joe Maddon’s style.  Dabo visited Wrigley field last summer and was “blown away” by the disco ball, drum set and celebration room in the Cubs’ clubhouse.  Of course, Clemson's new football facility includes miniature golf, a bowling alley and a movie theater. Joy needs to be part of the journey. Perhaps it is not by coincidence that both Dabo and Maddon have celebrated recent championships.

Now, let's take these championship lessons and apply them to the setting and keeping of your New Year's resolutions.  Approximately 50% of Americans make resolutions each New Year.  The top ones include weight loss, exercise, stopping smoking, better money management and debt reduction.  You're probably still doing well on your 2017 resolutions after only two weeks. Historically, by February most people start backsliding.  And by the end of the year, people are generally back to where they started or often even further behind, due to another year of “failure.”    Keeping resolutions isn't easy.  We're talking about changing behaviors and changing your thinking.

Here are some suggestions on making and keeping your resolutions:

Be realistic.  Don't resolve to “eat an elephant.” Break up your long-term goals into smaller “bites.”

Focus on the process, not the outcome.  If you want to run a marathon, don't be disappointed if you can't run 26 miles initially. Simply resolve to run a little farther each time and gradually work your way up to longer distances.

Rework your thinking.  You have to create new neural pathways in your brain to change habits.

Set positive goals.  For example, don't verbalize the goal as losing 50 pounds but, rather, reinforce how good you'll feel, in many small ways, once you've done that.

Celebrate successes.  Add joy and fun to the process.  Focus on your wonderful journey at hand and the milestones your reach, not the distant outcome.

Use an Accountability Buddy and Coach. You need a trusted friend to help you set your objectives, help you monitor your progress, provide suggestions and criticism and encourage you to meet and exceed your goals. 

Saban and DaboNext week’s blog will continue this New Year’s Resolution theme by focusing on your financial goals and how a trusted friend, such as DWM, can help.

Print
PDF

DWM 2016 Year-End Market Commentary

Written by Brett Detterbeck.

Over the holidays, I heard a lot of people whine about 2016 and how they were happy that it was over. Obviously, as a Cubs fan, I am biased. 2016 delivered a gift that has been waited upon for decades! One more time, “Go Cubs Go, Go Cubs Go, Hey Chicago, What Do You Say…” Sorry, I digress. Really, beyond breaking goat curses, what’s not to like about a year like 2016 when all major asset classes were up? For all the doom and gloom, not only early on in the year when stocks were getting hit in January, but also later in the year with Brexit and then during our “nasty” US Presidential Election, 2016 turned out to be a pretty darn good year for most investors.

Let’s review:

Mkt Commentary Blog Graph edited w title

Equities: The graph above shows the performance of the MSCI AC World Equity Index, which finished the year up 7.9% in 2016. You can see that it was rough going early on and definitely some blips here and there, but ultimately a solid showing. Large caps did well, as represented by the S&P500, up 12.0%. But the big winner was in domestic small cap value where the Russell 2000 Value notched in a 31.7% return! Mid cap* stocks also shined, up 20.2%. Emerging markets** sold off in 4q16 after the Trump victory, but still finished up 11.2%.  Value continued to outperform growth, in some cases, by a 2 to 1 margin. At DWM, our clients follow a diversified strategy within their equities portfolio which feature the areas above and a value tilt.

Fixed Income: 2016 was another positive year for bonds, but ended with a thud, if you’re looking at the most popular bond benchmarks. The Barclays US Aggregate Bond Index lost 3.0% in the fourth quarter, finishing 2016 up 2.7%. The Barclays US Aggregate Bond Index had a horrendous 4q16, down 7.1, and finished +2.1%. Why the fourth quarter sell-off? Well, the Trump victory caught a lot by surprise and created a “rotation” of assets in the markets. In other words, with Trump’s pro-growth/ decreased regulation / America-first agenda, people traded out of bonds (that can get hurt from this new expected inflation brought on by growth), and traded into domestic equities particularly smaller caps and industries currently weighed down by regulation like financials and those that will benefit from infrastructure spending. The 10-yr Treasury Note yield which went as low as 1.3%, with some even worried about potentially going negative, spiked up, closing at 2.4% to end the year. That, folks, is a huge move for bonds, but is something that can happen when rates have been held down artificially for so long, and forecasts what we may be in store for. These upward moves in yield bring downward moves in prices. With the Fed signaling three rate increase of 0.25% each in 2017, traditional bond index investors could be seeing flat to even negative returns in 2017 and beyond! Bonds are no longer the safe haven they have generally been for the last three decades. This is not your Grandfather’s Oldsmobile! If you’re heavily invested in bonds, make sure you are working with a professional wealth manager that can position the portfolio appropriately or you could be caught with your pants down. Here at DWM, we aren’t a bond “closet indexer” which means the components that make up our clients’ bond portfolio are quite different than that of those indices mentioned above. Furthermore, we feel we can better position the portfolio for this new environment by adjusting the duration – or sensitivity to rates – to a very low measure. Our DWM clients have benefitted from this approach.

Alternatives:  In general, alts had a positive performance in 2016. The Credit Suisse Liquid Alternative Beta Index which was up 5.4% for 2016. Winners included precious metals like gold**** +8.3%; MLPs +14.8%; and catastrophe insurance-linked bonds notching in at 8.8%. But all was not peachy. Hedge funds*** as of the latest data available (11/30/16) were only about flat on the year. And many managed futures had negative showings, having a particularly tough time with the trend reversals following Trump’s victory.

So after a year where a balanced investor may have had registered a handsome high-single digit return, now what? It really is hard to forecast what will happen in 2017 as nobody knows exactly how this new Trump agenda will play out. We do know that the latest US quarterly GDP reading was the best in two years at 3.2%. US unemployment at 4.7% is hovering around its nine-year low. US companies are coming off the sidelines and are starting to invest their cash piles. Beyond this recent optimistic attitude domestically, investors are even encouraged with the outlook in the Eurozone, Japan, and China, more so than just several months ago. Brighter economic fundamentals could lead this stock market even higher.

In conclusion, we’re at a very interesting time. It’s only several days until Trump takes office and when his administration and Republican congressional majorities start trying to do all of these pro-growth/pro-economy measures. The markets are up since Election Day because investors have bought into the theory that they will indeed be successful in cutting taxes, loosening regulations, and providing fiscal stimulus. If they are successful, the legs on this bull market will continue to grow. If they are unsuccessful, America might not be so great again. Only time will tell. In the meantime, DWM will continue to monitor all client portfolios in pursuit of protection and growth in this new environment.

As I could hear Joe Maddon, coach of the Chicago Cubs saying, “2016 was a pretty darn good year. Now let’s go out and do it again!” Hey Joe, at DWM, we’re up to the challenge!  

Brett M. Detterbeck, CFA, CFP®, AIF®

DETTERBECK WEALTH MANAGEMENT

 

*represented by the Dreyfus Mid Cap Index Fund

 

**represented by the MSCI Emerging Markets Index

 

***represented by the GSAM Hedge Fund Index as of 11/30/16 (latest available)

 

****represented by the iShares Gold Trust

 

† represented by the Alerian MLP ETF

 

‡ represented by the Pioneer Insurance-Linked Interval Fund

 

Print
PDF

Happy Holidays – Lessons from Star Wars

Written by Les Detterbeck.

rogue oneGrandsons Matthew and Henry and I went to the see “Rogue One: A Star Wars Story” yesterday.  With Carrie Fisher (Princess Leia) having passed away in the morning, it was a surreal experience.  Even so, we all loved it.  This is the eighth Star Wars film, all of which have been commercial blockbusters, amassing combined box office earnings of $7 billion.  But did you know that the Star Wars films have also provided some great financial lessons as well? With thanks to wealthmanagement.com for the idea, here are some of the key ones:

There is tremendous power in holistic planning.  Young Luke Skywalker’s advisor Obi Wan Kenobi (“OWK”) taught him that the Force, an energy field created by all living things that binds the galaxy together, is the source of his power. In the same way, a well-developed holistic financial plan can give you tremendous power to meet your goals.  Of course, once implemented, the plan needs regular monitoring and modifications as conditions and goals change.

Stick to the Plan.  Do you remember when Luke was just a neophyte, learning the ways of the Force,  and the skeptical Han Solo, disregarding the advisors like OWK pushed Luke to be a risk-taker, like him?  After Luke got distracted by Solo’s taunts, OWK reminded him to trust his plan instead of making knee-jerk reactions.  While things got rocky along the way, Luke eventually reached his goal- to become a Jedi Knight.  It’s an important lesson.  You need to stick to your plan, particularly with investments.  Trust in your plan and your allocations and focus on long-term goals.

Quick and Easy Leads to the Dark Side. In the 1980s, the Jedi Master Yoda taught Luke about the Dark Side.  Yoda told Luke that chasing instant gratification, like investing heavily in a hot stock, can lead to ruin.   When Luke ignores the advice, he’s almost defeated by Darth Vader.  Yoda reminds us that patience is a key in investing.  At DWM, we firmly believe that you should adopt an appropriate, diversified asset allocation and stay fully invested.  Don’t try to time the markets or chase performance. Stay disciplined.

Value is the key.  Despite his other issues, Han Solo does understand value.  Luke was shocked when Solo initially disclosed his fees to pilot them across the galaxy in the Millennium Falcon.  Luke said he could buy and pilot his own starship for less, but OWK knew expertise can command a fair price and even offered to spend more to ensure results.   Yes, value is the key.  Expertise and honesty command a fair price and offer the best possibilities of helping you get to your lifetime destinations.

Family is everything. In “Star Wars VII: The Force Awakens,” Solo played the role of advisor to next generation heroes Rey and Finn, but was unable to guide his own son Ben. As a result, Ben disregarded Luke Skywalker's teachings and sought out the advice of Snoke and converted to the dark side, as the evil Kylo Ren. At DWM, our focus is on families.  We do our best to meet, understand and communicate with everyone, sometimes three or four generations, and, as part of our total wealth management service, provide financial assistance to all family members, regardless of the size of their current investment portfolio.

Use a Fiduciary. Along with Yoda’s warning about the quick, easy and seductive dark side, the heroes of Star Wars are frequently working not just for themselves, but in the best interest of the galaxy. General Leia (no longer a princess) formed the Resistance when the First Order rose to power in the ashes of the Empire. The evil First Order did not support plans made in the best interests of the galaxy.  Finn abandoned the First Order after he was asked to attack innocent villagers and used his knowledge to aid the resistance.  Unfortunately, there are many providers in the financial service industry that are part of the quick, easy and seductive dark side.  Align yourself with advisers who are fiduciaries, legally bound to put your interests first, and who are passionate about adding value and helping you reach your goals.


MAIN-Princess-Leia-changed-name-in-new-Star-WarsMay The Force Be With You Always!

Let's Get Acquainted

We offer a complimentary "Get Acquainted" meeting to describe our services, and to see if our services are right for you.

Contact Us