Patrick Williams Insurace

People often joke that life insurance is a bad bet, since one has to die to win.

That may be true, but really ALL insurance is simply a way to replace something you can’t afford or cannot replace by yourself. That’s why we have insurance on our homes, our cars and valuable things. We don’t want our house to burn down simply to collect the insurance money and we don’t want to have a car accident just to get a claim check… (except for criminals, perhaps)

I say no to extend warranties on the $100 gadgets I buy at the electronic store. I simply can afford to replace it. (I’m still upset when the thing breaks right after the warranty runs out)

Over 40 years, I have personally insured thousands of people. Although death claims are few,

I have still paid out many claims in those years, a lot of them for $1 million and more, at a time when it was most needed. I have truly seen the good and positive effect of a simple decision someone made years ago.

Over 20 years ago a husband and wife bought insurance to protect their family. Once the children were grown the husband still had to work into retirement years as saving wasn’t their major priority in life and as many seniors today they still had a small mortgage on their home. They needed coverage still, but the term policy was nearing its end. Even though his health was failing we were able to convert it to a permanent plan using an option in his policy.

A few years later in his early 70s the husband passed away leaving his wife a settlement amount that many would think was lot of money. But as I said they didn’t have a lot of savings. One of their children was living with them.  Yes a 40-year-old, (sound familiar). I don’t think the wife had the claim check a month before the family was already into her for a good piece of it. She was a kind and loving mother who couldn’t say no. I knew that in a few years the money would be gone, and the husband rolling in his grave. So she agreed to sit down and listen to my advise to her.

  1. Pay off the remainder of her mortgage and any debts she had.
  2. Put some of the money aside in a savings account at the bank for emergencies and FOR YOURSELF ONLY. At retirement you cannot recover from bailing out your family.
  3. Take the rest of the money and put it in an annuity with an insurance company that will give you a guaranteed income for the rest of your life, and in the event of your death, any remainder of the funds would go to your beneficiaries.

She took my advice and now, combined with her Social Security benefits and the insurance benefit from the annuity she has a comfortable monthly income for life with no expenses and safety cash in the bank. Now when her children’s ask for money she can truly say here’s $20, it’s all I have on me to spare.

So that’s what we do, we help people. Maybe we can help you and your family.

Article by Patrick Williams

Investments: 2016 In Review

As we look back at 2016 and ahead to 2017, we’ll leave the political discourse and analysis to others and focus our comments within our circle of expertise: the creation of evidence-based financial plans tied to our client’s most important long-term goals.

The year 2016 began with what have been termed the worst first six weeks in equity market history – the S&P 500 declined more than eleven percent from its 2015 close through February 11, 2016. In June, the  market went down nearly six percent in a day and a half following the Brexit vote. There was a moment, somewhere around 2:00 am eastern time after the presidential election, when we saw the futures on the Dow Jones Industrial Average down 800 points!

Yet despite all that unnerving market volatility, the S&P 500 closed out the year at 2038. With dividends of about two percent, the market’s total return this volatile year was roughly 12 percent. In a sense, then, the equity market put on a tutorial in 2016, highlighting the wisdom of tuning out shocking current events and the attendant volatility. During such episodes, it seems to us that the best investment advice we can offer is always, “Turn off the television.”

2016 confirms our long experience that most successful investing is goal-focused and planning-driven, while most of the failed investing we’ve observed is market-focused and short-term performance driven. The really successful investors we’ve known were acting continuously on a plan – tuning out the fads and fears of the moment – while the failing investors we’ve encountered were continually (and randomly) reacting to economic and market “news.” 

While we continually monitor portfolios against relevant investment benchmarks*, our essential principles of portfolio management in pursuit of our clients’ most important goals are fourfold. (1) The performance of a portfolio relative to a benchmark is largely irrelevant to financial success. (2) The only benchmark we should care about is the one that indicates whether you are on track to accomplish your financial goals, (3) Risk should be measured as the probability that you won’t achieve your financial goals and (4) investing should have the exclusive objective of minimizing that risk to the greatest extent practicable.

All of us at Align Wealth Management wish you and yours a happy, healthy, peaceful and prosperous New Year.

Thanks for taking a look!

P.S. All Align portfolios were up solidly last year as they have been over the longer term. For current performance of our four most popular strategies, feel free to give us a call at 727-455-0033 or email us at hello@alignmywealth.com.

Article by Brian Puckett, JD, CPA, PFS, CFP® AlignMyWealth.com

Money: Evidence-Based Investing

In 2017, we hope that you will continue to focus on evidence-based investing as a guide for investment. Whether you have an investment advisor or are looking for one, keep these suggestions in mind.

Markets are Fairly Efficient – It’s wiser to work with rather than against the financial markets.  Too many  investors squander time and money trying to beat the markets.

Ignore the Siren Song of Daily Market Pricing – Rather than reacting to ever-changing conditions, invest your money according to factors that are knowable and controllable.

Financial Gurus & Other Unicorns – The evidence indicates that their ability to persistently beat the market is  “rarer than rare.”  Don’t waste your hard-earned money.

Full-Meal Deal of Diversification – In place of speculative investing, diversification is among your most important allies.

The Essence of Evidence-Based 

Investing – What separates solid evidence from flakey findings? Evidence-based insights demand scholarly rigor, an objective outlook and robust peer review.  Academic research is interested in what actually works. Wall Street research is  designed to sell you stuff.

Factors That Figure in Your Evidence-Based Portfolio  – 60+ years of evidence-based inquiry has identified three key stock market factors (equity, value and small-cap) plus a couple more for bonds (term and credit).

The Human Factor in Evidence-Based Investing  – Behavioral finance helps us understand that our own, instinctive reactions to market events can easily trump any other market challenges we face. An objective advisor can help you avoid mishaps that your own myopic vision might miss.

Take-Home 

When we began our series, we promised to skip the technical jargon, replacing it with three key insights for becoming a more confident investor.

Understand the Evidence. 

You don’t have to have an advanced degree in financial economics to invest wisely. You need only know and heed the insights available from those who do have advanced degrees in financial economics.

Embrace Market Efficiencies. 

You don’t have to be smarter, faster or luckier than the rest of the market. You need only structure your portfolio to play with rather than against the market and its expected returns.

Manage Your Behavioral Miscues. 

You don’t have to – and won’t be able to – eliminate every high and low emotion you experience as an investor. You need only be aware of how often your instincts will tempt you off-course and manage your actions accordingly. (Hint: A professional advisor can add huge value here.)

How have we done so far in our goal to inform you, without overwhelming you? If we’ve succeeded in bringing our evidence-based investment ideas home for you, we would love to have the opportunity to continue the conversation with you in person. Give us a call today for a free, no obligation second opinion on your investment strategy.

Article by Brian Puckett, JD,CPA,PFS,CFP® www.AlignMyWealth.com

Call for a FREE Second Opinion: In today’s uncertain environment, doesn’t it make sense to get an independent second opinion? There’s no cost or obligation so you’ve got nothing to lose. Simply call us at (727) 455-0033

Please note: Brian Puckett is affiliated with Align Wealth Management, a Federally Registered Investment Advisor. This article is for educational purposes only and is not intended as investment advice or a solicitation thereof. The views herein are those of Brian Puckett (not Paradise News) and are subject to change without notice.

While all information is believed to be from reliable sources, we can make no representation as to its completeness or accuracy. Certain material in this work may be proprietary to and copyrighted by third parties and is used by Brian Puckett and Align Wealth Management with permission. Reproduction or distribution for commercial purposes is prohibited. Please remember that all investing entails risk.

Investments: Instincts – Great for Survival, Bad for Investing

align-wealth-managementNow that the emotionally charged US Presidential election is over (along with all the media hoopla and guru predictions), we turn to the most significant factor in your evidence-based investment strategy: the human factor. In short, your own impulsive reactions to market events can easily eclipse any other investment challenges you face.

Exploring the Human Factor  Despite everything we know about efficient capital markets and all the solid evidence available … we’re still human. We’ve got things going on in our heads that have nothing to do with evidence and rationality.  

Historically, these primordial instincts have served us well.  Our prehistoric ancestors depended on them when being attacked by dinosaurs. Even today, our child’s cry brings us running without pause to think.  These natural human instincts are not only good – they can actually foster our survival.

In finance, where the coolest heads prevail, many of our human instincts cause more harm than good. If you don’t manage them when they occur, your own brain can trick you into believing you’re making rational decisions when you are, in fact, being high-jacked by ill-placed  “survival” instincts. As William Bernstein, MD, PhD, said:  “Human nature turns out to be a virtual Petrie dish of financially pathologic behavior.”

Behavioral Finance

There is a growing field of evidence-based inquiry known as behavioral finance. What happens when we stir up that Petrie dish of financial pathogens?

Wall Street Journal columnist Jason Zweig’s “Your Money and Your Brain” provides a guided tour of the findings, describing what happens in our brains to generate illogical financial decisions.  To name a couple of examples:

When markets tumble – Your brain’s amygdala, the trigger point for the  fight or flight response, causes fear to take over and every instinct screams “Sell!”

When markets soar – Neurons in the reflexive part of your brain fire up. Greed takes over convincing you to “Buy Now!” or miss the boat.

An Advisor’s Greatest Role: Managing the Human Factor

Beyond these market-timing instincts that lead you astray, your brain cooks up plenty of other insidious biases to overly influence your investment decisions.  To name a few, there’s confirmation bias, hindsight bias, recency bias, overconfidence, loss aversion, sunken costs and the herd mentality.  

So, managing the human factor in investing is another way an evidence-based financial practitioner adds value. By recognizing when clients are falling prey to a behavioral bias, we can “ hold up a mirror for them”  so they can see it too. This allows the client to return to their evidenced-based financial plan which is in service to their most cherished financial goals.

At Align Wealth Management, our job is to help you make the most of your one financial life.  It’s who we are.  It’s what we do.

Thanks for taking a look!

Brian Puckett  “Don’t you deserve a fiduciary advisor that puts your interest first and backs it up in writing? Call now for your FREE consultation.” (727) 455-0033

Please note: Brian Puckett is affiliated with Align Wealth Management, a Federally Registered Investment Advisor. This article is for educational purposes only and is not intended as investment advice or a solicitation thereof. The views herein are those of Brian Puckett (not Paradise News) and are subject to change without notice.

While all information is believed to be from reliable sources, we can make no representation as to its completeness or accuracy. Certain material in this work may be proprietary to and copyrighted by third parties and is used by Brian Puckett and Align Wealth Management with permission. Reproduction or distribution for commercial purposes is prohibited. Please remember that all investing entails risk.

Investments: What Sells or What Works

Evidence-based investing is the practice of grounding your investment strategy in a rational methodology backed by peer reviewed academic research.  The goal of academic research is to find the truth about how capital markets really work, while the goal of Wall Street research is to sell you stuff.  As fiduciary advisors, we don’t work on commission, so we don’t care about what sells.  We care about what actually works as we build portfolios to help clients make the most of their one financial life.  When we look at risk factors in a portfolio, we:

  1. Assess a factors’ capacity to deliver expected returns and diversification benefits repeatedly.
  1. Understand why such factors exist, so we can assess whether they’ll persist.
  1. Explore additional factors that complement our structured approach.

Assessing the Evidence

Academic research has identified three long-term stock market factors:

  1. The equity premium

Stocks have returned more than bonds.  Stocks are more volatile than bonds over the short term.

  1. The small-cap premium

Small-cap stocks have returned more than large-cap stocks.  Smaller companies are more volatile than larger companies.

  1. The value premium

Value companies (low price to book stocks) have returned more than growth companies (high price to book stocks.)  K-Mart is riskier than Walmart.

Similarly, academic research has identified two key factors driving bond returns:

  1. Term premium – Longer dated bonds have returned more than shorter bonds (albeit with more volatility).
  1. Credit premium – Bonds with lower credit ratings have returned more than bonds with higher credit ratings.  Lower quality bonds entail more default risk.

Caution: targeting premium returns involves engaging more risk so effective diversification is crucial.

Understanding the EvidenceEvidence – based investors strive to determine not only that various return factors exist, but why they exist. This helps us determine whether they will persist such that we can capture them in a client’s portfolio.  The key is to consider all of these powerful risk/return factors in creating a portfolio aligned with your particular goals and circumstances.  The goal is to help you make the most of your one financial life.  That’s what we do.  

Call today for a free second opinion.  There is no cost or obligation.

Brian Puckett  “Don’t you deserve a fiduciary advisor that puts your interest first and backs it up in writing? Call now for your FREE consultation.” (727) 455-0033

Story by by Brian Puckett, JD,CPA,PFS,CFP®  AlignMyWealth.com

Investments: You, the Market and the Prices You Pay

align-wealth-managementWelcome to the 2nd installment of Evidence-Based Investment Insights:

When it comes to investing (or anything in life worth doing well) it helps to know what you’re facing. In this case, that’s  “the market.”  How do you achieve every investor’s dream of buying low and selling high in a crowd of highly resourceful and competitive players?  The answer is to play with rather than against the crowd, by understanding how market pricing occurs.   

The Market: A Working Definition

Technically, “the market” is a plural, not a singular place. There are markets for trading stocks, bonds, sectors, commodities, real estate and more, in the U.S. and around the globe. For now, you can think of these markets as a single place, where opposing players are competing against one another to buy low and sell high. Granted, this “single place” is huge, representing an enormous crowd of participants who are individually AND collectively helping to set fair prices every day. That’s where things get interesting. 

Group Intelligence: (Together) We Know More Than You and I (Alone)

Before the academic evidence showed us otherwise, it was assumed that the best way to make money in what seemed like an ungoverned market was by outwitting others at forecasting future prices and trading accordingly. Unfortunately for those who are still trying to operate by this outdated strategy, a simple jar of jelly beans illustrates why it’s an inherently flawed approach.  Academia has revealed that the market is not so ungoverned after all. Yes, it’s chaotic, messy and unpredictable when viewed up close.  But it’s also subject to a number of important forces over the long run. One of these forces is group intelligence. The term refers to the notion that, at least on questions of fact, groups are better at consistently arriving at accurate answers than even the smartest individuals in that same group … with a caveat: each participant must be free to think independently, as is the case in our free markets. (Otherwise peer pressure can taint the results.)

Writing the Book on Group Intelligence 

In his landmark book  “The Wisdom of Crowds,” James Surowiecki presented and popularized the enormous body of academic insights on group intelligence. Take those jelly beans, for example. In one experiment, 56 students guessed how many jelly beans were in a jar that held 1,670 beans. The group’s guess – i.e., the aggregated average of the students’ individual guesses – came relatively close at 1,653. Only one student in the class did better than that. Similarly structured experiments have been repeated under various conditions; time and again the group consensus was among the most reliable counts. Now apply group wisdom to the market’s multitude of daily trades. Each trade may be spot on or wildly off from a “fair” price, but the aggregate average incorporates all known information contributed by the intelligent, the ignorant, the lucky and the lackluster. Thus the current prices set by the market are expected to yield the closest estimate for guiding one’s next trades. It’s not perfect mind you. But it’s assumed to represent the most reliable estimate in an imperfect world.

Your Take-Home 

Understanding group intelligence and how it governs efficient market pricing is a first step in more consistently buying low and selling high in free capital markets. Instead of believing the discredited notion that you can regularly outguess the market’s collective wisdom, you are better off concluding that the market is doing a better job than you can at forecasting prices. Your job then becomes efficiently capturing returns that are there for the taking.  But that’s a subject for a future Evidence Based Investment Insights. Next up, we’ll explore what causes prices to change. Chances are, it’s not what you think.

Please note: Brian Puckett is affiliated with Align Wealth Management, a Federally Registered Investment Advisor. This article is for educational purposes only and is not intended as investment advice or a solicitation thereof. The views herein are those of Brian Puckett (not Paradise News) and are subject to change without notice. 

While all information is believed to be from reliable sources, we can make no representation as to its completeness or accuracy. Certain material in this work may be proprietary to and copyrighted by third parties and is used by Brian Puckett and Align Wealth Management with permission. Reproduction or distribution for commercial purposes is prohibited. Please remember that all investing entails risk.

Story by Brian Puckett, JD, CPA, PFS, CFP® (AlignMyWealth.com)