November 2016


This post is not about investing.  It will not have witty anecdotes.  Feel free to skip this one if you’re looking for that stuff today. Fidel Castro is dead. It can feel like this is a news blurb about a place so far away about a people who are not like us.  Why is this such a big deal?  Not everyone’s family was as lucky as mine.  On the way out of Cuba, my great-grandfather merely suffered through the indignity of having a soldier paw through his bag, keeping anything that looked valuable.  Others risked the open water.  Some didn’t make it off the shore.  It’s not my place to tell their stories, but I can tell you the short version of my family’s tie to Cuba and why Castro’s death is a big deal to me. I do not look Cuban.  I don’t speak Spanish.  My grandmother was born there,…

When to Change Plans

One of my favorite bits of wisdom comes from a Fairway client, “Change your plans because of the weather, not because of the forecast.”  He was referring to boating, but it applies to investing as well.  The political winds have shifted, potentially changing the economic and investing climate.  Don’t get caught up in blanket statements about how things should turn out according to an expert’s model.  The markets never behave the way they should.  Likewise, we have three or four false alarms of snowpocalypse every winter and besides, a snow forecast for northeast Ohio means one thing if you live in Westlake, but something else if you live in Chardon (and something completely different if you’re in Naples for the winter!). Have a very happy Thanksgiving.  I hope you get to spend it in the company of family and friends. Matt    

Certain Predictions

I’m tired of hearing the predictions. The people who were certain Brexit would fail were certain Trump couldn’t get elected President.  These same people are certain of how the market will move going forward.  Paul Krugman pulled the fire alarm the night of the election when market futures were down huge saying the market would never recover.  Citigroup and Goldman Sachs predicted the possibility of every scenario except the one that happened (a market rally post-election). These folks wear their authority like a crown and revel in lording it over the masses.  Perhaps once upon a time this authority derived from real, actionable knowledge, but today that crown has been pawned in exchange for pageviews, CNBC appearances, and perfect hindsight.  They are desperate for your cash, but even more desperate for your attention.  There is a fear underlying the headlines.  It is not fear of political change or market turmoil….

Donald Trump

Donald Trump is President-elect of the United States of America.  This election reminded me of the Brexit vote across the pond earlier this year.  An entrenched power bloc assumed it had already won, but woke up the day after the election to a powerful reminder of the world outside of their ivory towers.  I voted and I hope you did, too. So What Does Donald Trump Mean For The Markets? It means the uncertainty over who will be President is over.  No kidding, right?  It is cliche by now, but the market does hate uncertainty and knowing who will be in the White House allows companies to eliminate a variable from their business calculus.  You don’t need to be a genius to navigate your portfolio through an election cycle; you need patience and informed optimism.  Even smart people screw up and overreact to short-term blips.  Nobel laureate Paul Krugman of the New…

Right Said Fred Forecasting

You couldn’t do a little turn on the catwalk in the 1990s without hearing Right Said Fred’s song about the tail wagging the dog.  “I’m Too Sexy” lampooned fashion’s focus on the model rather than the clothes.  More and more it seems that financial pundits are performing Right Said Fred Forecasting rather than providing any realistic or actionable information.  “Smart Beta” firm Research Affiliates recently put out a study that is summarized by Bloomberg in the article “The Next 10 Years Will Be Ugly for Your 401(k)“.  Their prediction tells us more about the forecasters than it does about the future. The Research Affiliates study gives investors a 0% chance of earning 5% annually for the next ten years with a portfolio of 60% stocks / 40% bonds.  This is a great way to catch investors’ attention.  We know that negative outlooks carry more weight with people than positive outlooks.  A…