News

No Picture

It’s Forecasting Season

  From the Fairway Wealth Management Blog: As the leaves fall from the trees and the temperature starts to drop here in Cleveland, I am reminded that forecasting season is right around the corner. The same people who predicted $200+ oil, hyper-inflation, and multiple Federal Reserve rate hikes for 2015 will be begging for you to believe that they know what is in store for 2016. They do not. Beware predictions of what the market will do, particularly if they are precise. It may be an interesting game to play for fun, but anyone making a prediction on the S&P 500 out to two decimal places is a charlatan. Predicting the markets is like predicting the weather except that meteorologists realize that predicting the exact weather conditions twelve months in advance is lunacy. The financial entertainment industry is not as self-aware. On December 31st, 2016, what will Cleveland’s exact temperature…


1.21 Gigawatts

On October 21st, 1985, Marty McFly went back in time 30 years to escape Libyans, save Doc Brown’s life, and turn his dad from a weenie into a hero.  He also wound up with a rad 4×4, but before he could take it for a spin, Doc Brown stopped by in a flying DeLorean to whisk him 30 years into the future, to 2015.  Hijinks ensued as bully Biff Tannen got ahold of a sports almanac from the future and made a fortune betting on sports, but Marty saved the day with skateboarding, 1980s pop culture references, and a soundtrack provided by Huey Lewis and the News. Since this month marks the date that Marty and Doc Brown arrived in the future, it provides us with a convenient frame of reference for what a 30 year time period feels like.  From 1985’s perspective, 30 years into the future felt like…


No Picture

3rd Quarter Commentary

This year’s market movements are not unexpected nor are they out of the ordinary.  The S&P 500’s average return is about 10% with an average drawdown of 14% sometime during the year.  Many pundits called for a correction (stock market drop of 10% or more) this year and were lauded for this supposedly bold stance.  History tells us to expect a drawdown of 14% each year and this year we got one of 12%.  Again, this is not unexpected.  We should only be surprised if there isn’t a sizable drawdown during the year.  I admit, it would be highly entertaining if we had a panic button we could hit here in the office that set off klaxons and red strobe lights in the event of market emergencies.  Unfortunately, that button would be largely unused.  Negative returns are part of a normal market and we are a long way from hitting…


Love

The Federal Reserve must be barraged by lonely singles looking for dating advice because they recently put out a working paper called “Credit Scores and Committed Relationships”.  The Fed finds that people with similar credit scores tend to get together and that the higher the credit score, the more trustworthy the person.  Having a high credit score doesn’t necessarily mean you’re relationship material so much as it lowers the likelihood of a breakup due to financial disagreements.  There are jerks with high credit scores, too.  Here’s a nice summary of the paper if you don’t feel like reading all 55 pages. The Wall Street Journal is another unlikely source of relationship advice, but they’re giving it a shot anyways, saying grammar has become a major factor in the dating scene.  There are even apps that will comb dating sites for you and grade prospective partners’ grammar for you!!! If you’re…


Federal Reserve – Data Driven?

Janet Yellen pulled the markets offside with a hard count yesterday.  Instead of a hike, we heard about global weakness that suddenly warrants the Fed’s attention.  The market reacted as though there was a hike – you could say we’ve been in the red zone the last two days (I can’t help myself).  Most concerning is that the Fed continues to move the goalposts (last one, I swear).  Janet Yellen has insisted that under her guidance, the Federal Reserve will be data driven, but so far this hasn’t played out.  The first bogey was unemployment.  When unemployment recovered quicker than expected, they kept lowering the target, delaying a possible rate hike.  These delays were understandable as there was certainly room for improvement in the economy.  Now, however, the US economy is looking quite robust.  Unemployment has vastly improved and GDP looks good.  Inflation is low, but some top-of-mind costs (school tuition,…


ARPKD

Saturday, September 19th is the Northeast Ohio Walk for PKD.  Please take a minute to read about a cause that is near to my heart. My son, William, has ARPKD (autosomal recessive polycystic kidney disease).  This is a genetic disease that led to complications after he was born and ultimately shut down his kidneys.  William went on dialysis and was lucky to have a kidney transplant when he was 2 years old.  He needs to take about a dozen medications every day to manage the transplant and everything that goes along with that. The great news is that William is doing incredibly well now.  He is going to kindergarten and doing all the other things a boy his age does such as sliding down the stairs on his butt, riding the dog like a small horse, and sneaking downstairs early in the morning to eat ice cream for breakfast. If you’d…


Wild Monday

So what happened to the market on Monday? I don’t know and anyone who says they do know is full of it.  Because investing involves lots of numbers and math, it is easy to assume that there are clear answers to questions like this.  Math is constant.  2+2=4.  Investing is not constant.  2+2= whatever the next guy is willing to pay for it and that person might value 2 differently than you or I.  Increasingly, the next guy isn’t even a person at all, it’s a computer.  Math serves more as a frame of reference in investing than as an absolute. Ok, that was a boring non-answer.  I’ve found that people asking about investing don’t actually want an update on the reality of the markets so much as a quick story  – the more outrageous, the better.  We want someone to blame when the market goes down and we want someone to tell us…


Fiduciary

There is a silent struggle over the word Fiduciary in the financial services industry.  I am biased not only because the firm I work for has a Fiduciary duty to its clients but because I think it’s the ethical thing to do.  One of the most frustrating things is discussing investing with a friend or relative and slowly realizing that they are being sold the investment product of the month by someone they think they can trust.  They are convinced that investing is about making timely trades in and out of asset classes, sectors, or even individual securities and that “their guy” has an edge.  This edge never seems to be quantified as their client statements don’t show returns or benchmarks in any meaningful context and there is no master plan that includes both their taxable and retirement accounts. The Fiduciary battle is important and is something all investors should be aware…


No Picture

Greek Crisis Translated

2001 Greece:  Hey can we join the Eurozone? Europe:  How is your economy? Greece:  I’d say strong to um… quite strong? Europe:  Welcome aboard! 2010 Greece:  Hey Europe!  We’re having a tough time with the financial crisis.  Could you lend us some money? Pundits:  CONTAGION!!!  PIIGS!!!  RINGWALL!!! Europe:  Sure, this should cover you for the next three years or so.  Try to cut back on expenses since times are tough, ok? 2012 Greece:  Ok, this is kind of embarrassing, but do you think you could spot us some more cash?  We’ll use that to make payments on the money you loaned us three years ago and we’ll definitely pay you back this time. Pundits:  GREXIT!!! Europe:  Ok, but you’ve really got to cut back on expenses this time. 2014-2015 Greece:  I was going to pay you back, but ummm Europe:  Hey I did some digging and your economy wasn’t ‘quite strong’ in…


Selling Greece

Photo by Eastlaketimes As has been the case for every Monday over the last X weeks, Greece is the financial headliner.  It was dragged kicking and screaming back to the negotiating table this weekend.  Little negotiation was had.  A deal was made… but not really.  Basically, Europe scolded Greece and everyone decided to give Greece a little more time (72 hours) to get their act together before negotiations begin in earnest.  This sounds like another silly kick of the can down the road, but this time Europe might really take action beyond a strongly worded letter.  They have attained concessions from Greek Prime Minister Alexis Tsipras (dubbed the ‘AGreekment’ *groan*) that go beyond the previous negotiating round’s demands.  This sounds odd since Tsipras fought these demand tooth and nail just a couple of weeks ago, the Greek people voted against these demands last week, and it seems like part of the demands…