Welcome to another edition of Wisdom & Wealth. This past week I’ve started thinking about nostalgia for the past, present or future. The catalyst for this was a sign my wife got me for my home office which reads: “These are the Good Old Days”. Don’t get me wrong I agree with the statement. But something about the way it is commonly understood or communicated in practice gives me pause. So today I’m going to walk through some of what I think are common misconceptions of both sides of this nostalgic coin as it applies to our financial lives. Spoiler alert, there won’t be much math mentioned in today’s edition. Those of you heading for the exits… I respect your decision and standards!

Future – I’ll be able to enjoy life when…

I’ll start with what I’ll call nostalgia for the future. If I’m off base someone just tell me, but I think we as a society run into this trap quite often. It goes like this. One day, in the not-so-distant future, we will have enough money, time, prestige or whatever, and will be content. One of my favorite Keith Urban songs is coincidentally about this very thing. One day, we all probably will have more money, time or opportunity. Some day we may have an easier or less stressful life. However, I’m given pause by the idea that life will be “more enjoyable” then. Using retirement as an example, I’ve heard this quite a bit over the years. It goes something like this: Our goal is to stop working so that we can enjoy life and travel. Adventure is something that awaits when enough money is obtained etc.

If I may, I worry that the mental habits which lead one to believe that the “good life” is somewhere in the future may be permanently reinforcing. When properly understood, every day is an adventure and a gift. I don’t care who you are. The people you meet, the problems you get to solve, the opportunities you get to invest in someone else, ARE the great adventure. If I may pick on my own generation for a minute, the adventure probably isn’t “grammable”. It’s a story and it takes too long to explain via social media. More likely than not, it requires a story at the dinner table. The community you have at this very moment, the friendships via work, church, school etc is a source of wealth which you won’t value until you no longer have them. You don’t enjoy relationships more because you have more money. Rather you enjoy relationships when you are all working towards a common goal. The next, position, role, company, deal, or sale will not magically make us contented enough to enjoy the present. We have to choose it.

Past – we have missed our window. Good things are gone.

The next one is nostalgia. If you don’t think someone my age is susceptible to this, just start scrolling social media and see what people write about the 80’s and 90’s. It is moments like this which I remember that the time period I just referenced was just like when my parents tried to explain the 1960’s to me! But there is this sentiment amongst some that the good days are behind us and that if we’d really been paying attention, we would have paid more attention and enjoyed things more. I hear this all the time from well-meaning people a few decades down the road of life. They will smile and say “don’t blink” it goes fast. They are primarily referring to kids and their development and yes, I do agree they grow quickly, but why do I inevitably feel “guilt” when I hear this phrase. I used to think this was indicative that I was in fact missing something and not being present enough or investing enough time with my kids etc. Then I realized it wasn’t me. It was an admission of guilt of the messenger. You’ll hear this from a planning or investment perspective occasionally too. Life was “simple back then”. No, I don’t want to go back to the days before there was “excel”. I really don’t want to go back to finding the stock prices in the newspaper. And I most assuredly don’t want to go back to paying someone to place individual trades. Life that we have lived is a blessing, but it shouldn’t undercut the blessing, calling and meaning of the present.

Tyranny of the Present

So, this one is rough on me. Mainly because I have young kids whose ages and stages seem to change in milliseconds. I would consider myself a pretty involved Dad. And there are still phases which go by very quickly. But I see this trend where somehow if you are not overscheduled, outside of work hours and if every weekend hour isn’t planned out…you are somehow not a committed parent or grandparent. It makes me wonder if we have lost the value of boredom in the life of a child. It can be great for creativity. But I’ve discovered that the tyranny of the present can often be a stand in for “keeping up with the Jone’s Activities. I feel no pressure whatsoever to keep up with the schedule and or activities of anyone else. What I do feel pressure for is developing the talents, curiosities and capacities of those entrusted in my care. But if I’m being honest, I didn’t find those answers personally in activities, rather I found them by working alongside those I admired and asking questions.

What I am asking for is not that everyone slow down or simply that everyone “find contentment”. Although, I will say it is a rewarding drug. What I am advocating for is that we as individuals make our plans according to our personal goals and the various seasons we have been given. Just as I don’t believe we should all feel the same pressure to be financially independent at the same age, take the same vacations, be on the same travel ball teams, I also don’t think we should undervalue the relationships and experiences we are investing in today. An example recently which came to me was a client asking about investing in a specific experience this summer for their family. They were basically asking if it was okay to tweak the financial plan ever so slightly and if that tweak was going to put them off track. Of course it wasn’t!

I use this example because I think it paints a good picture of holding all of life’s priorities in tension. So when I seek to help clients, my prayer, isn’t that they reach a number or an age so much as a possess a sense of awareness that allows them to invest in the right people and experiences which make their life full, meaningful and fulfilling. When I think of my kids even, I don’t see some bucket-list experiences, but I do want them to become whole. To see the world as it is and to fully recognize their place in it. I hope the people I serve enjoy fruitful work and investment which fuels the relationships which bring them meaning.

So these are the good old days. Tomorrow they will remain so, and a year from now also. The growth we experience along the way will be meaningful, fun, rewarding and fruitful. But the people I admire most, never look back too long, because they are always constantly preparing for what is next.

I’ll leave things there for now. Please reach out with questions as they come up and always remember that I am wishing you and your family continued Truth, Beauty and Goodness ahead.

The Bahnsen Group is registered with Hightower Advisors, LLC, an SEC registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Securities are offered through Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

Third-party links and references are provided solely to share social, cultural and educational information. Any reference in this post to any person, or organization, or activities, products, or services related to such person or organization, or any linkages from this post to the web site of another party, do not constitute or imply the endorsement, recommendation, or favoring of The Bahnsen Group or Hightower Advisors, LLC, or any of its affiliates, employees or contractors acting on their behalf. Hightower Advisors, LLC, do not guarantee the accuracy or safety of any linked site.

Hightower Advisors do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client’s individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor for related questions.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wisdomandwealthpodcast.substack.com

Welcome to another edition of Wisdom & Wealth. Thank you for joining me. This week I want to address a few questions that come up during moments of volatility like the one we are experiencing today.

First, moments like this tend to have a lot in common with the grade school playground in that the most salacious rumors and half-truths make the rounds. Even if you are disciplined enough to verify every data point, talking point and rumor you hear, their net effect is to do what the communists used to call “flood the zone”. You are so overrun with bad information that you are more shaped by the fear of falsehood than by what you know to be true. I’m going to spend the rest of our time today arguing against this. I beg of you, please don’t let the “flood the zone” macro mentality affect your personal financial planning. The entertainment industry has been selling us end of the World cataclysmic stories since we were young and though that was entertaining for a couple of hours, I can’t help but worry about the negative effects those couple hours had on our forward sense of optimism.

If you are reading this, you’ve probably had someone within your sphere send you a YouTube video about how the “end of the World as we know it is nigh.” In fact, it is so “nigh” that the Youtuber is probably recommending that you stop what you are doing and buy their book, subscription etc. Once you are enlightened like them, you will be a part of a select group of people who will see all the pieces fall into place five minutes before the rest of your neighbors. Now hopefully you know that I’m poking some fun here, but the point remains: Conspiracy makes for great entertainment but a poor asset allocator and advisor. You’ve also heard me say that when I was growing up, you had to go the carnival if you wanted your palm read. And you knew it was all make believe. Today the carnival comes to the palm of your hand and tries to convince you it’s real. Most of what you will see that is out there is trying to convince you that this big, broad trend is out there and is trying to conspire against you and therefore you should make a change of some sort.

The other thing that you’ll see is someone “selling the secret”. In fact, this secret is so financially lucrative that it will solve all your problems, and you’ll never have to worry ever again. When I see this, it reminds me of what my Dad and Grandpa used to say about the opportunity of a lifetime being ignored because it was disguised in boots and blue jeans and looked a lot more like “work” than it did a fairy tale or daydream. I’ll spare you what could be an extended commentary of things that further come to mind, but the list is long…rest assured.

With this in mind, I want to focus the remainder of our time on a type of tendency I’ve witnessed in the past. You find a version of this in the advisory world if you pay attention long enough. It goes something like the following.

* You have a review meeting with your advisor

* Your financial plan isn’t referenced

* You review the largely passive investments you own

* You review your YTD total return or rolling one year return (Whichever looks better)

* You never review your “rate of return since inception”

* Advisor advocates for changing the portfolio in some small way based off of a macro trend that he or she recommends.

My issue with this template is that rarely have I seen this done prior to a bear market. Rather, it is done in response to market volatility and in a way, it becomes type of “market timing lite”. Put bluntly it can play into our human desire to try to chase returns. If I’ve just described your life since the great financial crisis, no doubt you’ve heard from that same advisor that the “old buy and hold” strategy doesn’t work anymore because you have to be “nimble and take advantage of new trends.” I get what is trying to be communicated, but even if it were possible to see the wave and get in front of it, I can’t help but wonder if that advisor has replaced “buy and hold” with “buy and pray.” If this is getting uncomfortable for you reading this, I’m not trying to be divisive, but I am trying to shine a light on something that I think is less than genuine and frankly can be harmful. I’m not saying you can’t be successful in the model or that it will not outperform my own planning and investment philosophy. But what I am asking is:

* What are the first principles driving the decisions being made? You can’t call the above a passive allocation when you are actively trying to make changes.

* The second question would be how do these changes affect the income your plan needs?

* How are you resisting the urge to make changes based on feeling rather than data?

At The Bahnsen Group I'm sure you are aware that we are active managers and that we believe in investing based upon income. We invest in well-run companies who earn a profit, grow that profit and share it with our clients in the form of a growing dividend. This philosophy applies to both public and private markets. We allocate based upon income need, time horizon and utilize the yield or cashflow coming from those well-run companies to meet the needs of clients.

The passive allocation I’ve previously described is like buying a puzzle where every company is supposed to represent a piece of the picture on the box, but you have no idea what is all inside the box or how they fit together in your overall financial wellbeing. Our active approach stands in contrast with this because we believe we should know where every last puzzle piece belongs and how it should fit together to meet the needs of clients. This discipline allows you the ability to have cashflow through market volatility and also allows you to stay disciplined based upon measurable data of well-run companies.

I’ll bring us to a close for today. Thank you for reading. Please continue to reach out with questions or suggestions and know that I’m wishing you and your family continued Truth, Beauty and Goodness ahead.

The Bahnsen Group is registered with Hightower Advisors, LLC, an SEC registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Securities are offered through Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

Third-party links and references are provided solely to share social, cultural and educational information. Any reference in this post to any person, or organization, or activities, products, or services related to such person or organization, or any linkages from this post to the web site of another party, do not constitute or imply the endorsement, recommendation, or favoring of The Bahnsen Group or Hightower Advisors, LLC, or any of its affiliates, employees or contractors acting on their behalf. Hightower Advisors, LLC, do not guarantee the accuracy or safety of any linked site.

Hightower Advisors do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client’s individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor for related questions.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wisdomandwealthpodcast.substack.com

This week I look at how your financial plan and land navigation have more similarities than we would like to admit.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wisdomandwealthpodcast.substack.com

This week I’ve invited Parker Polidor from CareAlly to join me on the podcast. Parker and his team focus on helping families plan for the care of their aging loved ones. Often care for loved one’s becomes a line item in a person’s financial plan, but Parker puts those dollars into action by helping map out what next steps need to be planned for and thought through. Listen in for more.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wisdomandwealthpodcast.substack.com

What are you optimistic about matters to the durability of your financial mindset. Listen in for more.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wisdomandwealthpodcast.substack.com

“Should I reallocate?” is a question that prospective clients often ask me. The next question that is really embedded in that question is: “Should I pay the taxes necessary to get a better allocation?” This question has come to the surface the last several months. I’ve witnessed it more and more lately, especially in the realm of do it yourself investors and prospective clients who saw the market as cheap in the mid 2015’s or during the Covid period and dumped significant amounts of money into Index Funds or sector Exchange Traded Funds. Markets have seen a huge run up in the past years and large gains have been banked in passive investments. Today I want to walk through some trends I’ve seen and give some ideas on how to approach this situation.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wisdomandwealthpodcast.substack.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wisdomandwealthpodcast.substack.com

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wisdomandwealthpodcast.substack.com

Welcome in, to another edition of Wisdom & Wealth. Thank you for joining me this week. In the past few months, I’ve had two nagging questions keep coming back to mind. One: Are we as an investing society being lulled to sleep by “V-Shaped” market recoveries? And secondly, how do I help a generation of folks who lived through the GFC, or great financial crisis, as “accumulators,” think about such an event as “decumulators” or retirees?

So, the first question. What do I mean by a “V-shaped” recovery. In the last decade, most markets have quickly bounced back. It’s been a passive investor’s dream. Just like a Disney fairytale everything comes back into focus and ends with a bow on it. Take the 2020 Covid crisis for example. If you’d fallen asleep in January of 2020 and slumbered through to December of 2020 you wouldn’t have thought much of the market gyrations in-between. In fact, you’d probably have thought it was a great year. But I cannot help but wonder if the average investor is building this in as their base case as a sort of recency bias. Are we getting lulled to sleep and thinking that old fashioned things like balance sheets, and valuation don’t matter? If you have followed me for any amount of time or know anything about TBG (The Bahnsen Group), you know the answer to that question already. I’m of the bias that says this is the only thing that is readily knowable enough that a plan can be made around it.

This past year, the top ten companies of the S&P 500 given their scale and market cap carried the lion share of the return for the index. Because of this, I can’t help but wonder if many investors have become numb to the reality that what market cap weighted indexes gave, they can easily take away when a reversal comes into focus. Furthermore, what might happen if markets trade sideways or stay down for a period of time that is longer than we have previously seen? What if a V-shaped recovery doesn’t happen and you have to live through 2-3 years of down markets or sideways range bound markets? Investors from 2000 -2010 experienced this “worst of both worlds” reality in what some have dubbed the “lost decade” because of a decade bookended by the “dot com bubble” and the “mortgage crisis” on the other end. Don’t get me wrong, I’m not trying to encourage fearfulness here so much as I’m trying to advocate for caution. If you are on the “participation train” to the up-side, you most likely will participate to the down side. Asking yourself how a prolonged sideways or bear market affects your personal situation is only prudent.

So now, let’s move on to the second question. How is being a retiree a different situation when experiencing a market pullback or prolonged down market? For starters, it feels different because you are actually living off your portfolio. The psychology is the first thing. You actually feel like you are losing something because you are spending money that can no longer earn you a return. It’s similar to a business that is bleeding cash while not finding new business or not being able to collect on already completed business. You intuitively know it’s going to probably “be okay,” but the waiting and the silence can be deafening. Your imagination can become your enemy.

Numerically, there is the obvious difference that living off your portfolio and taking money out of it during a bear market is just simply different than contributing to your portfolio on a monthly basis via your paycheck and being able to buy into the market at lower prices and valuations. It’s just math. Bear markets during the accumulation phase of life can be your best friend for building wealth. In retirement they can be far less kind. The leverage is working in reverse on this side of the hill. Scoff all you want at financial planning, but this is where the rubber meets the road for most people. If you are asking too much of your portfolio and your plan, bear markets are even worse for your financial health. It is important that an investor actually partners with someone who can communicate to them the realistic truths about their situation. Most people want to spend a lot more of their wealth in the first decade of retirement. If you are in a passive allocation, where “total return” is the focus of your investing, this can present significant cashflow challenges. Challenges which I do not believe have not been fully discovered yet because, wait for it, we’ve been having quick, “V-shaped recoveries. In more passive or growth focused investing, it is not uncommon for me to see total portfolio yields of 2% or lower. Meaning the portfolio itself is only putting off 2% in the form of dividends and interest. Simply put, if a client is living off 4% of their portfolio, paying their advisor 1% and inflation is up 2.5%, this is not a pretty picture.

So please hear me. I’m not advocating for fear. I’m advocating for making a plan that shields you from the inevitable market corrections which are both healthy and normal. Furthermore, I’m advocating for you making a plan which takes into consideration they way your portfolio is built.

If you have questions about these two questions or about your situation, please feel free to send questions along. Thank you for reading and as always, please know that I’m continuing to wish you and your family continued Truth, Beauty and Goodness on the read ahead.

The Bahnsen Group is registered with Hightower Advisors, LLC, an SEC registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Securities are offered through Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

Third-party links and references are provided solely to share social, cultural and educational information. Any reference in this post to any person, or organization, or activities, products, or services related to such person or organization, or any linkages from this post to the web site of another party, do not constitute or imply the endorsement, recommendation, or favoring of The Bahnsen Group or Hightower Advisors, LLC, or any of its affiliates, employees or contractors acting on their behalf. Hightower Advisors, LLC, do not guarantee the accuracy or safety of any linked site.

Hightower Advisors do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client’s individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor for related questions.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wisdomandwealthpodcast.substack.com

Check out this week’s episode of Wisdom & Wealth for more of my thoughts on how we tend to hang on to the positive and negative voices in our lives. I also get into how this tendency can cause us to make poor partnership decisions in our financial lives.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wisdomandwealthpodcast.substack.com