Q4 Letter to Clients

I could sit and watch a stream or river all day long.  There is constant movement, and yet, the water is always right there in front of me, covering the same ground, falling over the same rocks and touching the same boundary on each side.  The water isn’t in a hurry. It shapes rock by returning to the same line again and again. That felt like a useful reminder for investing but really, for life – we make real progress by showing up with purpose and relentless consistency, not by forcing outcomes.  It’s a lesson that I seemingly must learn over and over again, but also continues to inform my approach to good, sound financial planning.

Market and Economic Overview

The third quarter brought plenty of headlines around interest rates, inflation reads, and geopolitics, yet the market’s tape told a different story. U.S. stocks advanced through the quarter, with the S&P 500 posting gains in July, August, and September and notching several new record closes in September. It didn’t move in a straight line, but it did move – and more than the headlines alone might suggest. For context, late September trading steadied after inflation data came in as expected.  Day-to-day swings will keep coming, but they don’t change the core job of a long-term plan.

Developed markets outside the U.S. also showed strength. Part of their performance stems from a weaker U.S. dollar, which amplifies returns in dollar-terms for overseas equities. This has also supported returns in emerging markets, which have surpassed U.S. equities.  The theme continues to be that different markets lead at different times, and spreading risk across geographies helps steady the journey.

Planning Moves That Matter

Just like the water in my favorite stream, we’re focusing on things that compound quietly and that make meaningful changes over time:

  • Cash segmentation for spending needs – matching an appropriate amount of known withdrawals to high-quality cash vehicles (money markets, Treasuries, short-term bonds or other ladders) so the rest of the portfolio can do its long-term work.
  • Rebalance with intent – trim what has run, add to what’s lagged inside your target ranges, and redeploy new cash strategically into the asset classes most out of balance.
  • Year-end tax work – harvest losses where appropriate, manage capital gains distributions, and pair giving with taxes: direct appreciated shares to donor-advised funds, consider QCDs if you’re taking RMDs, and review state-specific opportunities before December 31.
  • Purpose-built buckets – where it fits, we’ll keep leaning into liability-driven investing that ties assets to time horizons instead of a single, generic “risk number.”

If your cash flow, goals, or time frames have shifted recently, let’s update the map now rather than after January 1.

Money and Meaning

Optimizing your money is obviously important but not if it comes at the expense of optimizing your life (I’m speaking to myself here).  Recent On Adventure conversations offered a thread worth carrying into Q4.

  • Bob Becker spoke about finishing Badwater 135 at age 80 – not with bravado, but with gratitude, routine, and a stubborn gentleness that kept him moving when it got ugly.
  • Lisa Smith-Batchen (will be released on October 3) reminded us that the best crews and mentors hold a mirror to your ‘why’ when your legs want to quit.
  • Wells Jones talked about drawing a line in the sand – not as a dare, but as a promise to live aligned with what matters.

Nature is saying the same thing right now. The light changes. The trail looks different. The real work is to keep showing up with intention. Money is just one of the tools that helps you do that – to buy time, fund experiences with the people you love, support causes that reflect your values, and create margin for the kind of adventures that make you feel most alive.

Thank you for your trust. If something in your world has changed – a new goal, a liquidity event, a move, college bills, eldercare planning – let us know and we’ll adjust the plan together.

Q3 Letter to Clients

July 2025

The days are already getting shorter – barely noticeable, but real. And while many of us in the South still have some scorcher days ahead, the halfway point of the year is a good time to pause and reflect.

Market and Economic Overview

Feeling some whiplash from the markets lately? You’re not alone. It’s been a wild ride, and once again, it reminds us why we’re such big fans of staying in your seat. Global tensions have kept uncertainty front and center, which usually means more market volatility. In plain terms, the roller coaster gets steeper—both on the way down and the way back up.

History has shown that some of the biggest market gains come right after sharp declines. The problem is, we never know exactly when that rebound will happen. Guessing wrong can be costly – and in some cases, set a portfolio back for decades (see the chart below).

In moments like the February 19th to April 8th drawdown this year – when the S&P 500 fell nearly 19% in just a few weeks – the temptation to jump off the ride can be strong. It will take your breath away.  But staying disciplined and committed to your plan is what makes the difference. It’s time in the market, not timing the market, that leads to long-term success.

One note of caution: it’s important that money needed for near-term living expenses isn’t exposed to these kinds of market swings. Lately, we’ve become strong advocates of a liability-driven investment approach – matching your investments to specific future spending needs – rather than just thinking in terms of general asset allocation. If that’s unfamiliar, we’d love to talk more at your next meeting.

Money in Service of Values

When markets get noisy, perspective matters. Money is at its best when it serves what you truly value. That’s a theme I’ve heard repeatedly from recent guests on my On Adventure podcast—entrepreneurs, musicians, conservationists. The thread that runs through all their stories? Wealth isn’t the end goal. It’s a tool to create freedom, meaning, and impact.

What’s the point of building bigger buckets if the money never gets used to shape a better life—for yourself or someone else? When aligned with purpose, money becomes transformative. It allows us to live with integrity, build what matters, and contribute beyond ourselves. And yes, to seek out a few great adventures along the way.  In that light, money becomes more than just currency. It becomes agency.

Thank you for your continued trust. Please feel free to reach out anytime.

Q2 Letter to Clients

As we wrap up the first quarter of 2025, I want to briefly reflect on recent market activity and share some thoughtful insights on maintaining perspective during volatile times.

Market and Economic Overview

This quarter reminded us that markets rarely move in a straight line. The S&P 500 saw a decline of a little more than 4%, driven largely by investor unease over inflation concerns and uncertainty about global trade policies. Additionally, international markets showed surprising resilience, with the MSCI All Country World Index ex-U.S. index outperforming the S&P 500 index by nearly 11 percentage points, marking the strongest first-quarter performance for international stocks since 1987, demonstrating the importance of diversification in your portfolios.  And yet, these numbers mean nothing to me, and they shouldn’t to you either.  Index returns, especially over one quarter, say nothing about whether you are on track to achieve your own personal goals or more importantly, about whether you are living your great life right now.  You should be tracking your ROL index, and the stock market has nothing to do with that!  These short-term returns are just noise, distracting you from the conversation that really matters.

Strategic Opportunities Amid Volatility

While volatility can feel uncomfortable, it’s essential to recognize the opportunities it creates for a long-term investor. We continuously monitor your portfolios for opportunities like tax-loss harvesting – turning short-term declines into meaningful tax savings – and strategic rebalancing which keeps your investments on target to your risk model.  Or better yet, if you have cash on the sidelines, putting new cash to work in your investment accounts is a great way to take advantage of lower asset prices, which has an outsized effect on your future portfolio!  Volatility coming from risk is also the price we all must pay in order to expect longer-term returns that outpace inflation. 

Great New Content

In line with our belief in tuning out short-term noise and focusing on long-term goals, Dimensional Fund Advisors recently released an exceptional documentary film called, “Tune Out the Noise,” directed by Academy award-winning filmmaker, Errol Morris. I highly recommend this impactful video, which beautifully captures the essence of remaining grounded and focused amid market distractions, spoken from the perspectives of some of the smartest people in finance over the last 60 years.  Check it out in the link below.

Above all, remember that your financial plan is built specifically for times like these – grounded in your personal goals, risk tolerance, and life’s milestones. Markets will always fluctuate, but our commitment to your financial well-being remains constant.

Thank you for your continued trust. Please feel free to reach out anytime.

Election Day Reflections

I sent this letter out initially in the midst of Election Day.  There obviously was a lot of energy in the air. Anticipation runs high, and the headlines were filled with speculation on what the choices mean for the markets. But here’s the perspective we can hold: while political outcomes may feel momentous, they rarely dictate the path of long-term investments.

Here are some helpful reminders as we continue to move through this election cycle:

Election outcomes and stock market outcomes are not correlated.

Election results and market returns are often far less connected than the news might suggest. For example, research by Fidelity has shown that, over time, the S&P 500 has performed comparably under both Democratic and Republican administrations—regardless of who held Congress. Since 1976, every market sector has had periods of growth during both Democratic and Republican terms. Across election cycles since 1976, each sector has performed well at times, regardless of which party holds the White House.  The markets, it seems, march to a rhythm of their own.

Cause and effect in the markets is rarely direct.

During election seasons, it’s tempting to act on predictions about how new socioeconomic policies might influence the markets. However, even the most astute commentators cannot reliably forecast market reactions to political shifts. Financial writer for Forbes John Jennings compares this to scientists who understand why volcanoes occur but cannot predict each eruption. In markets, just as in nature, the ability to explain an event is different from the ability to foresee it.

Elections come and go; your investments have a much longer time horizon.

We may vote for a president every four years, but your portfolio is designed to endure and grow over decades. Data spanning nearly a century, illustrated by Dimensional Fund Advisors, shows that U.S. equities have consistently trended upward, no matter which party was in power. Staying the course remains the most effective path forward for reaching your long-term goals.

So as the election buzz fills the air, know that your investments are positioned for resilience. Let’s keep our sights on the horizon, with our long-term objectives leading the way.

Steady onward.

 

I have a Lump Sum in Cash – Should I Invest It Right Away?

Whether it’s a work bonus, inheritance, or proceeds from selling a business, receiving a large sum of money can leave you wondering, “What do I do with it now?” It’s natural to feel a bit stuck—especially with the market going through its usual ups and downs. Do you invest it all at once, or spread it out over time?

This is a common question, and honestly, it’s understandable. We all worry about making the wrong move—invest too soon and the market might drop; wait too long and you could miss a rally. But there’s no need to over-complicate it. Let’s break down your options.

Start with Your Goals

Before diving into the numbers, ask yourself: What do I want this money to do for me?

If you’ve got short-term goals, like paying for your kid’s college tuition in the next few years, you may want to lean toward more stable, less risky investments—think bonds, bond funds, or CDs. These are less likely to be impacted by the market’s short-term swings.

On the other hand, if this money is for long-term goals, like retirement, then putting it into the stock market might make sense. Over the long haul, markets tend to rise, despite the short-term ups and downs.

Lump-Sum vs. Dollar-Cost Averaging

Now, should you invest all the cash at once or spread it out?

Lump-sum investing gets all your money into the market right away, which could be great if the market’s on the rise. But no one can predict the future, and there’s always a chance the market dips right after you invest. If that possibility stresses you out, dollar-cost averaging (DCA) might be more your speed.

With DCA, you invest a set amount regularly—say, $1,000 a month for a year. When prices are high, you buy fewer shares; when prices drop, you buy more. It’s a steady approach that smooths out market fluctuations over time.

However, here’s the kicker: research shows that lump-sum investing tends to outperform dollar-cost averaging about 68% of the time. So, if your main goal is maximizing returns, lump-sum might be the way to go. That said, the difference in returns between the two strategies isn’t massive, so if dollar-cost averaging helps you sleep better at night, it’s worth considering. After all, the last thing you want is to panic and sell when the market dips.

The Bottom Line—Don’t Wait

Whether you go with lump-sum investing or dollar-cost averaging, the most important thing is not to delay. Holding onto cash means missing out on potential growth from stocks and bonds. And trying to time the market? That’s a tough game to win.

In fact, studies show that average investors who attempt to time the market often miss out—by as much as 5.5% compared to just sticking with the S&P 500. So, whatever you decide, get started. Both approaches will help you benefit from the market’s long-term upward trend, which is key to achieving your financial goals.

Need help figuring out which approach works best for you? Reach out, and we’ll walk through it together.

Less is More in Election Years

I am getting tons of questions right now (and every 4 years historically) about what does the election cycle mean for my investments and what should we do to ‘protect’ ourselves.  These are legitimate questions coming from an honest place of concern about important matters.  My answer has been pretty consistent now for over 20 years, but I could not write this any better, so I’m going to leave this to an expert.  This is a must read from Dr. Daniel Crosby, Chief Behavioral Officer with Orion.  He is a psychologist and behavioral finance expert with a New York Times best seller.

 

 

As the 2024 election approaches, the political noise is deafening. Campaigns are in full swing, pundits are making predictions, and market analysts are offering endless advice on how to manage your investments. However, the best strategy for your portfolio during this tumultuous time might surprise you: do nothing.

In times of great political and economic uncertainty, the instinct to take action can be overwhelming. This tendency, known by shrinks like me as “action bias,” is the inclination to favor action over inaction, especially when the stakes are high. It’s a concept that’s particularly relevant in the world of investing.

Consider the world of soccer, where goalkeepers, faced with penalty kicks, often dive dramatically to the left or right. A group of researchers examined 311 penalty kicks and found that goalies dove to the left or right 94% of the time. However, the kicks were distributed roughly equally: one-third to the left, one-third to the right, and one-third down the middle. Goalkeepers who stayed in the center had a 60% chance of stopping the ball, far greater than the odds when diving left or right.

So why do goalkeepers choose dramatic dives over the more effective strategy of staying centered? When we put ourselves in the shoes (or cleats) of the goalie, especially in high-stakes situations, the reason becomes clear. When the game and national pride are on the line, goalies want to appear as though they are giving a heroic effort. Staying centered can look like complacency, even though it’s statistically the best choice. This same dynamic applies to investors who, in times of market distress, feel compelled to act, even when inaction would serve them better.

When Vanguard examined the performance of accounts that had made no changes versus those that had made tweaks, they found that the “no change” condition handily outperformed the tinkerers. Meir Statman cites research from Sweden showing that the heaviest traders lose 4 percent of their account value each year to trading costs and poor timing and these results are consistent across the globe. Across 19 major stock exchanges, investors who made frequent changes trailed buy-and-hold investors by 1.5 percentage points per year.

Perhaps the best-known study on the damaging effects of action bias also provides insight into gender-linked tendencies in trading behavior. Terrance Odean and Brad Barber, two of the fathers of behavioral finance, looked at the individual accounts of a large discount broker and found something that surprised them at the time.

The men in the study traded 45 percent more than the women, with single men out-trading their female counterparts by an incredible 67 percent. Barber and Odean attribute this greater activity to overconfidence, but whatever its psychological roots, it consistently degraded returns. As a result of overactivity, the average man in the study underperformed the average woman by 1.4 percentage points per year. Worse still, single men lagged single women by 2.3 percent – an incredible drag when compounded over an investment lifetime.

The tendency of women to outperform is not only seen in retail investors, however. Female hedge fund managers have consistently and soundly thumped their male colleagues, owing largely to the patience discussed above. As LouAnn Lofton of the Motley Fool reports, “…funds managed by women have, since inception, returned an average 9.06 percent, compared to just 5.82 percent averaged by a weighted index of other hedge funds. As if that outperformance weren’t impressive enough, the group also found that during the financial panic of 2008, these women-managed funds weren’t hurt nearly as severely as the rest of the hedge fund universe, with the funds dropping 9.61 percent compared to the 19.03 percent suffered by other funds.”

As the 2024 election unfolds, resist the urge to make dramatic changes to your portfolio. Remember, sometimes the best action is inaction. By staying the course and avoiding the pitfalls of action bias, you can protect and grow your wealth, regardless of the political landscape.

Source: The Laws of Wealth, Crosby  

 

Is the Debt Ceiling Bringing You Down?

What does the U.S. debt ceiling debate really means for you? I am getting this question regularly, which means it is probably on the minds of many more folks.  As potential threats loom large, we’re seeing articles in abundance, explaining where we’re at, how we got here, and what to expect next.

We wouldn’t be human if we didn’t share in your frustration over the maddening lack of resolution to date. It’s stressful to watch huge, consequential events unfolding, over which we have no control. And who needs more stress in their life?

Which is why we encourage you to think of your investments as a bright spot of relief in an otherwise unmanageable world. In the face of everything we cannot control, the one place you can call your own shots is within your well-structured, globally diversified investment portfolio.

And here’s more good news: As an investor, you don’t really need to know that much about the real-time details of the debt ceiling negotiations. Instead, as with any other breaking news, a healthy degree of arm’s length disinterest will likely serve you best, especially if you might otherwise respond to the current fever pitch of news that’s news because it’s in the news.

To illustrate, let’s look behind three different doors to consider your most advisable investment strategy under various outcomes.


Door #1: Opportunistic Agreement

With history as our guide, it is perhaps most reasonable to expect today’s political brinksmanship-as-usual will lead to some form of resolution, probably arriving at the last possible moment. This is exactly how the debt ceiling debate has played out on multiple occasions, with each side of the isle using it as an opportunity to score new political points, and there is no reason to think this time will be any different.  Then what? Most likely, the “fix” will be partial and imperfect, and the hand-wringing will continue apace over the next challenges inherent in the latest patch.  The self-preserving nature of the Congressional representative role seems to always come through to make sure the economy doesn’t screech to a halt.  The talking points might shift, but markets will remain as volatile and unpredictable as ever. In this most likely scenario, we would advise …

Staying invested in your carefully constructed, globally diversified investment portfolio, structured for your personal financial goals and risk tolerances.


Door #2: Meltdown

What if negotiations in Washington fail? What if we experience U.S. credit rating downgrades, debt defaults, and unpaid Social Security benefits (to name a few of the uglier possibilities)? In a worst-case scenario, the U.S. dollar could lose its global currency status, a position it’s held since before most of us were born. What then?

If a worse- or worst-case scenario occurs, our marvelously efficient markets would once again respond by pricing in the good, bad, and ugly news well before we can successfully trade on it. Global diversification would be as important, if not more critical. Selling in a panic as markets adjust to the worsening news would remain as ill-advised as ever. In other words, your advisable course would remain …

Staying invested in your carefully constructed, globally diversified investment portfolio, structured for your personal financial goals and risk tolerances.


Door #3: Proactive, Compromising Agreement

Last, and probably least likely, what if Washington defies our doubts, and achieves a happy and timely debt ceiling resolution, with little to no harm done? Hey, anything is possible. In this best-case scenario, the breaking news would be better than most of us expect, so markets would likely respond at least briefly with better-than-expected returns, rewarding us for staying put. At the same time, just in case the next bit of news were to disappoint, or even be less exciting than expected, we’d want to temper any concentrated market exposures by, you guessed it …

Staying invested in your carefully constructed, globally diversified investment portfolio, structured for your personal financial goals and risk tolerances.

This is by no means a perfect hedge against black swan events, but it’s a good start and would allow for some long-term benefits by taking advantage of stocks in decline through strategic rebalancing.  We would be happy to offer more insights and analysis about the debt ceiling if you are interested in learning more. We’re also here to review your portfolio mix any time your personal circumstances may warrant a change. Otherwise, guess what we would advise you to do while the debt crisis continues? If you’re not sure, please give us a call. We always enjoy hearing from you!