Buy Low, Sell High…

An investment makes sense only if you see a return – either the value increases and/or it produces income of some type.

Most investments have a sponsor, syndicate or other entity that has a stake in you investing in it now.

Years ago, when traditional open ended mutual funds were more popular, the sponsor at many professional dinners I would attend was invariably a wholesale sales representative for one of them.  In exchange for paying a fee, they would get a few minutes to address the group.  Without exception, they would cite a study done by Dalbar that said if you missed the 10 best daily market increases every year, your return over time would be much less than if you were always invested.  The implication was that nobody knew when those days would be or if something was overvalued in the market, and we should always be fully invested – in their fund, of course.

When I would ask what the return would be if we missed the 10 worst days of the year, they would reply that they didn’t have that information and would get back to me.  They never did.

I continue to see that thinking all the time from the investment sales side.  It doesn’t matter what the investment is, to them there is never a bad time to invest in whatever they are pushing.  That’s how they get paid. 

In many cases, the sales squad did not live or work through a bad market or economic cycle.  In other words, they weren’t born yet when inflation was even higher than the last few years, interest rates exceeded 15%, or the stock market crashed in 1987 and melted down again in 2001.  Often, they weren’t adults when the real estate market collapsed in 2009.  They say “that won’t happen again”, and “it’s different this time.”  That’s how they get paid.

Today, I see real estate syndicators acting as if prices and rents always go up.  They don’t.  I see stock analysts telling us that any company associated with “AI” is a good bet.  I heard that with “dot com”, and it wasn’t true.  Every situation is unique.

I am not making a blanket statement that the sky is falling.  My point is that there are always risks, and at different times and in different situations certain investments do not warrant your capital when evaluated on a risk return basis.  My job is to make sure my clients make smart investments that work for them.  Not to pay the sales squad.  That’s why I get paid.

The Bottom Line:  Filter the sales noise to invest successfully. 

–Michael Ross, CFP®

George Washington Had It Right…

Lying to a client or prospect is never good in business, but it’s an especially bad way to start a relationship.  I received an email today from “Victoria Lopez” at “Growth Titan”.  The subject said:  “Michael, just pinged your Linkedin”.  It opens with “I messaged you on Linkedin to arrange a call, but thought this might be better”.  Of course I received no such message or connection request in LinkedIn.

Victoria is in the lead generation business.  I am inundated on a daily basis with pitches from firms that want to set up appointments for me with prospective clients.  It’s not a service I am interested in.  I guess Victoria is just trying to get everyone’s attention.  Unusually for me, I did open her email.

Once I realized she opened with a lie, I had no interest in anything she had to say.  Even if she was selling something I needed or wanted, how could I trust her?  Would you?  It’s also an industry that doesn’t have the best reputation.  Stories of the same lead being sold to multiple customers are common and many are not screened for whether they are a match to what the person or firm on the other side of the desk does or the type of clients they work with.  In other words, bad apples give the industry a bad rap.

This got me thinking about my own profession.  In the broadest “big-tent” category of “financial services”, there is a well deserved lack of trust.  There are squadrons of sales reps pushing all types of financial products and services.  Most are held to a suitability standard – meaning the product or service has to be something that you might need or benefit from.  Consumers end up with purchases that have little value to them, cost too much, and are far from the best solution to their problem, to name a few shortcomings.  They often get the “this is the greatest thing since sliced bread” sales pitch and a stack of legalese disclosures that they don’t understand and hence usually don’t read.  Any questions they do ask are often glossed over.  Bad apples again give everyone a bad reputation.

My space in the tent is very different.  As a Financial Planner and Wealth Manager I work differently.  Federal and State regulations, as well as those of the CFP Board of Standards who issued my certification as a CFP®, require me to work as a Fiduciary.  It is the highest standard in dealing with my clients.  If you are not familiar with the Fiduciary Standard – you can read more here: 

I realize my most important value to my clients is my fiduciary duty – an unwavering dedication to putting their needs and interests first in all cases.  In a world full of sharks, I will always be their lifeboat.

The Bottom Line:  There is always room in my lifeboat.

–Michael Ross, CFP®

Don’t Assume…

When I was in High School, my health teacher (and lacrosse coach) once wrote the word Assume on the blackboard.  He said “when you assume, you make an Ass out of U and Me”, as he separately underlined the three parts of the word.  You could have heard a pin drop – even in a class where we had watched a film of a baby being born.  Teachers didn’t say Ass back then – at least not in class, although on the lacrosse field his language was frequently a bit more colorful.

Once we all got over the shock, I realized there was wisdom on the blackboard.  What he was really trying to convey is Knowledge Is Power.  However, I doubt if he had written that on the board, I would remember it decades later.  I also now realize if he had trademarked the U as a synonym for You, he would have made a killing when texting was ultimately invented.

It involves getting a verification confirmation via snail mail, so it can take a few weeks.  However, once you are registered you can log on and get your info any time, which you should do annually, even if just to check the accuracy of their records.  It’s important to know where you stand and incorporate reality into your planning.

I am sharing this wisdom to emphasize the importance of knowing the facts of where you stand financially.  This is a cornerstone of the Financial Planning process.

One assumption many of our clients and friends often make is what their Social Security benefit will be when they begin to collect.  While claiming strategy is often a complex decision, your estimated benefits should not be a guess.  An inaccurate assumption here can really harm your retirement plan.  It’s information we will collect from every Financial Planning client.  Whether you retain a Financial Planner or do it yourself, you can get this information.

The Social Security Administration sends out an annual statement (SSA-7004) to all taxpayers over the age of 60.  That’s a bit late to start incorporating that info into your planning.  Everyone can get one by going here:  The registration process is cumbersome as it combines government bureaucracy and inefficiency with the financial sectors fraud paranoia.  You will need a Drivers License, and verifiable street and email addresses.  The DNA sample requirement proposal did not pass the Congress. 

It involves getting a verification confirmation via snail mail, so it can take a few weeks.  However, once you are registered you can log on and get your info any time, which you should do annually, even if just to check the accuracy of their records.  It’s important to know where you stand and incorporate reality into your planning.

The Bottom Line:  Knowledge Is Power In Your Financial Planning.

–Michael Ross, CFP®

Goals Are Important…

Goal setting is one of the cornerstones of Financial Planning.  Sometimes something in my own life reminds me just how important.  While this isn’t Facebook, please allow me to share.

I have always been a runner.  It was necessary in my younger athlete days for stamina and great for my health as I have aged.  I also find I do some of my best thinking while I am running – if I could only remember everything I think of when I get back. 

About three decades ago, I started logging my running.  I can still look up every day I ran, where, how far and how fast.  The only goals I would set were how far, or how fast on a daily basis.

As 2020 came to a close, I noted that in all the years I had never run more than 320 days – meaning I always averaged one day or more a week off.  Those would be rain days, snow days (up north), illness, injury, business travel, or just plain laziness/lack of motivation.  I decided that I would try to run every day in 2021 – not missing a single day.  It quickly became an obsession and I just ran on those days I formerly would have skipped a day or week or more.

At the end of the year I had successfully completed my goal.  I decided to do it again in 2022.  Another success.  This year I realized that I would soon have run for 1,000 consecutive days.  That day was today!  I ran every day through thunderstorms, in the dark on those early start days, with minor injuries, and even when I finally caught Covid a few months back.  We didn’t get one, but I’m pretty sure I would have gone for it had we had a hurricane.

This process reminded me how powerful goal setting can be.  My goal was defined, reachable, measurable, and I kept pushing it higher.  I made myself accountable.

It reminds me how important goal setting is with my Financial Planning clients.  Financial Planning is a process.  Goals are where you want to go.  Once you establish that, discipline and execution are how you get there.

Successful Financial Planning demands definable, reachable and measurable goals.  It is the motivator to be disciplined and sometimes do the things that are not easy, like living within a budget.  If you are willing to set goals, and be disciplined and accountable, you are a candidate to succeed in your Financial Planning journey.  Are you ready to try?

What Are Your Goals?

The Bottom Line:  Goals are important both in life and your Financial Plan.

Attention Florida Homeowners…

If your home is currently insured by Citizens Insurance (the State run company), you may be one of the 304K policy holders that will receive a “takeout” letter from Citizens.  This will contain an offer from a private insurer to take over your insurance from Citizens on October 17th.

If the offer is over 20% greater than your current Citizens premium, you can opt to stay with Citizens.  You need to notify them by October 10th if you wish to stay.

If the offer is less than 20% greater than your current Citizens premium, your insurance with Citizens will end on October 17th.  If you do nothing, the takeout insurer will become your new insurer on that date at the new premium.  You also have the option to find another carrier on your own, but you will need to notify Citizens by October 10th.  An insurance agent representing the new company you select should be able to do the notification for you.

It is important that you do not ignore this letter.  As a closing thought, I’m not sure why they would do this during hurricane season.  The chaos of so many new policy holders having claims just days after the switch date would be insane.

The Bottom Line:  Read the takeout letter, and explore your options.

–Michael Ross, CFP®

Resist The Temptation…

It’s finally time to get a new car.  The supply shortages have eased and there is inventory. 

But, a few things have changed…

Prices are much higher, and interest rates have skyrocketed.  The average new car sells for over $45K and interest rates are in the 8-10% range.  Even used cars are far more expensive.

If you have a 401(k) plan, you may be able to take a loan from your plan to finance the new car.  Most 401(k) plans allow for participant loans.  Some rules and rates are set by your individual plan, but regulations say a plan loan cannot exceed 5 years or $50,000.  You also must make level payments at least quarterly.

There are some alluring advantages to using a plan loan to finance a vehicle purchase.  Interest rates are often lower than bank sourced auto loans.  You are paying interest to yourself, in a period where your portfolio may not be growing much due to market and economic conditions.  It doesn’t affect your credit score, and there is no lean on the vehicle title.  What’s not to like?

The plan loan comes with a big risk.  If your employment terminates for any reason, the entire loan balance becomes due.  Depending on the plan, it’s usually immediately or at months end.  It does not matter, why your employment terminated.  Whether you quit, got fired, or laid off, it’s all the same – the balance is due.

If you do not repay the loan, it will be considered a plan distribution.  That means it becomes taxable income, subject to ordinary income tax and a 10% penalty if you are under age 59 1/2.  Depending on your financial situation, that can range from an annoyance to a nightmare.  It carries risk under good economic times, and can influence a decision on whether to switch jobs.  Now that the economy faces some risk of a recession, a layoff is not when you want a large bill, either loan repayment or tax.

Everyone has their own financial situation and plan.  Depending on yours, you may be better off resisting the temptation of a plan loan.

The Bottom Line:  Evaluate all the risks of a 401(k) plan loan.

–Michael Ross, CFP®

ESG Investing

ESG investing is a popular theme today.  It involves allocating investment capital to companies that operate on policies of Environmental, Social & Governance (ESG) principals fitting progressive, liberal, socialist, or woke criteria or values.  These policies are often put ahead of earning profits. For profit corporations exist to make money for their shareholders.  They have an obligation to act lawfully and ethically, but other than that, their responsibility is to the shareholders.  Other “stakeholders”, be they employees, customers, communities, nations, etc. should only have their wishes considered to the extent doing so has a direct or indirect benefit to the profitability and growth of the company.

That said, in the absence of a directive by the client, any Fiduciary Advisor with the power to invest in, or influence or vote shares in a company supporting ESG, Equity, or Affirmative Action, without being able to draw a direct line on how that vote or initiative specifically benefits that company, is in violation of their fiduciary duty.  Failure to put the best person in a job, taking actions to reduce sales or revenue, or increasing costs in the pursuit of ESG policies, have no direct benefit for the company, and is rarely if ever, in the interest of the investor.

The Bottom Line:  Fiduciaries have the obligation to put the investors interests first.

–Michael Ross, CFP®

Pennies On The Dollar

In a capitalist economy, recessions are a good thing.  Just like in nature, the weak put a drag on the strong.  Well capitalized businesses can benefit from a recession.  It is their reward for being well run.

A recession or economic downturn is a painful thing.  People lose their jobs and income.  Assets are often reduced in value.  Businesses that sometimes took decades or generations of development go belly up.  But they are also a healthy process.  Excesses are reduced or eliminated. Resources are freed up for investment in more productive and new endeavors.  Efficiency is rewarded. 

Whether you are looking for places to invest, or you are an entrepreneur seeking to grow your business, a recession can be an opportunity.  Sometimes you have to take one step backward to take two steps forward. 

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Transient Inflation – LOL

The government has expanded the money supply by over 35% since the Covid Pandemic began.  The printing press was being run 24/7 and the output was dropped out of helicopters on everyone, whether they needed it or not.  In addition, they forced huge sectors of the economy to shut down for months and even longer.  What we have is more money chasing fewer goods and services.  A recipe for inflation in any scenario.

To make things even worse, they impaired domestic energy production by cancelling the XL pipeline.  This has forced us to import more oil and gas at much higher rates.  And labor costs, were not spared.  People were paid more to sit home than return to work, minimum wages were raised significantly, and unions were given unprecedented preferences and privileges.

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The Clock Is Ticking On Year End Tax Planning

It appears as I write this that any modifications to our tax laws and system will not be enacted nor take effect until 2022.  Additionally, there is very little likelihood that any tax rates will be lower in 2022 than they were in 2021.  While it’s usually beneficial to defer taxes when possible, it can be even more advantageous to pay taxes at the lowest rate possible.  It is clear that for some taxpayers 2021 will be the lowest rate for the foreseeable future.


It’s not too late to do some year end tax planning.  Based on my assumptions above, some of these actions and strategies may be beneficial for you.

There are three basic strategies in play…

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