7th Inning Stretch?

Parrott Wealth Management, LLC.

The longest baseball game in Major League history occurred on April 18, 1981 between the Pawtucket Red Sox and the Rochester Red Wings with the Red Sox winning 3 to 2.   It was 33 innings long and lasted over 8 hours.  Each year about 9% of Major League Baseball games go into extra innings.[1]

Sports analogies are common on Wall Street.  A few analysts have mentioned that the market is currently in the 7th or 8th inning because of its historic rise and current valuation.  They’re speculating that the end is near.

Of course, no one knows when or how the stock market’s run will end.  The fans who attended the Red Sox v. Red Wings baseball game thought they’d see a 9-inning game not knowing it would continue for another 24 innings!  Those who stayed for the entire game endured the equivalent of 3 ½ games.

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7th Inning Stretch?

The longest baseball game in Major League history occurred on April 18, 1981 between the Pawtucket Red Sox and the Rochester Red Wings with the Red Sox winning 3 to 2.   It was 33 innings long and lasted over 8 hours.  Each year about 9% of Major League Baseball games go into extra innings.[1]

Sports analogies are common on Wall Street.  A few analysts have mentioned that the market is currently in the 7th or 8th inning because of its historic rise and current valuation.  They’re speculating that the end is near.

Of course, no one knows when or how the stock market’s run will end.  The fans who attended the Red Sox v. Red Wings baseball game thought they’d see a 9-inning game not knowing it would continue for another 24 innings!  Those who stayed for the entire game endured the equivalent of 3 ½ games.

Stocks can continue to rise despite what people think about the duration of the bull market or their current valuation.  What should you do if you’re concerned about an overvalued market? Here are few suggestions.

  • Asset Allocation. The current rise in the stock market may have pushed your asset allocation beyond your risk level.  Let’s say you purchased an equal amount of the DFA Core Equity I Fund (DFEOX) and the DFA Intermediate Government Fund (DFIGX) Fund on March 1, 2009.   At the end of October your mix is now 77% stocks and 23% bonds.  This is a wide deviation from your original 50%/50% portfolio.  In this case you need to rebalance your portfolio back to your beginning asset allocation.[2]
  • Bonds. Adding bonds to your portfolio will reduce the risk in your portfolio. During the Great Recession the S&P 500 fell 53%.  A portfolio with 50% stocks and 50% bonds fell 26%.[3]   The bonds reduced the risk by about 50%.
  • International. The international markets have done well in 2017 and their current valuations are still attractive.  The capitalization of the United States stock market is about 54% of the world markets with the remainder of the global markets accounting for 46%.   Buying stocks from the U.K., China, Japan, Australia and other countries will diversify your portfolio.[4]   From 1997 to 2016 the U.S. stock market finished in the top spot only once, in 2014.
  • Alternatives. Real estate, gold, and currencies may make sense for a portion of your account.  A weighting of 3% to 5% is recommended.  Alternatives and commodities may offer account protection and an inflation hedge.
  • Cash. Cash is good short-term investment if you’re concerned about a dip in the market.  It will help cushion your account if stocks should fall.  It will also allow you to buy stocks at a lower price.  Long-term, however, cash will lose value because of taxes and inflation.

Baseball is a meandering game with no time clock.  The stock market has no time clock either and it can continue to run indefinitely.  Grab a hot dog, a bag of peanuts, and a drink and enjoy the long-term trend of the stock market.  Play ball!

But do not overlook this one fact, beloved, that with the Lord one day is as a thousand years, and a thousand years as one day. ~ 2 Peter 3:8

Bill Parrott is the President and CEO of Parrott Wealth Management an independent, fee-only, fiduciary financial planning and investment management firm in Austin, TX.  For more information please visit www.parrottwealth.com.

November 28, 2017

Note:  Past performance is not a guarantee of future returns.  Your returns may differ than those posted in this blog.  Investments are not guaranteed.

 

[1] https://www.beyondtheboxscore.com/2017/8/5/16093390/extra-innings-time-how-long-how-many-average-rule-change, Devan Fink, August 5, 2017.

[2] Morningstar Office Hypothetical Tool.

[3] Riskalyze.

[4] Dimensional Funds 2017 Matrix Book.

Give.

Thanksgiving marks the beginning of the giving season.  From now until the end of the year charities and non-profits will receive much needed dollars to help fund their good works.   For several organizations the money they receive in the next few weeks will be the bulk of their annual budget.  Individuals typically wait until the end of the year to give because they want to know what their tax situation will be before they donate their money.  Some people give from their wallet, but most give from their heart.

For where your treasure is, there your heart will be also. ~ Matthew 6:21.

During the financial planning discovery phase I ask people if they have a charitable gift giving strategy or if they donate money to charities on a regular basis.  I’m happy to report most people are charitable.  I once worked with a young pilot from Fed-Ex who didn’t believe in giving money away while he was living.  He wanted to donate all his money at his death through his estate.   I told him part of the joy of giving money away while you’re living is you get to see your gift bear fruit.  I didn’t tell him that people who don’t give today won’t give tomorrow.

Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver. ~ 2 Corinthians 9:7.

Here are few ideas and strategies to help you with your charitable donations.

  1. Appreciated Securities. The stock market has produced stellar results in 2017 so you may have a stock or two that has performed well.  When you give appreciated securities to a charity, you get the deduction, avoid a capital gains tax, and your charity receives the money.   Let’s say you purchased Maui, Land & Pineapple in January at $7.15 and today it’s selling for $17.40 for an unrealized gain of $10.25 or 143%.    You can gift your shares directly to your charity and avoid paying taxes on the $10.25 gain.  The charity will sell the stock on the open market to receive the cash and they, too, will avoid the capital gains tax.  You must donate your securities to a 501c3 organization to receive a deduction.  It would be nice to donate your appreciated stock to your Aunt Martha, but the IRS says no go to that idea.
  2. Qualified Charitable Distribution. The IRS will let you satisfy your required minimum distribution by donating your money directly to a charity from your IRA.   This distribution is referred to as a qualified charitable distribution and you’re allowed to give up to $100,000.   The advantage to the QCD is you get to avoid paying taxes on your IRA distribution and it will satisfy your required minimum distribution for the year so consider a QCD over an RMD.
  3. Donor Advised Fund. If you have too much money, too many charities, but not enough time, consider establishing a donor advised fund.   You can establish a DAF by year end to receive your charitable deduction.   Once your DAF is funded you can spend time on deciding how much money to give to your charities and when they should receive your gift.  One attraction of the DAF is you get the deduction for this calendar year, but you don’t have to give the money away until later years.  The money in your DAF can be distributed over several years to numerous charities.  You can also manage and invest the money inside your DAF.
  4. Cash. Cash is king and it’s easy to give away.  An envelope of cash is a welcomed gift to many.   The IRS allows you to give a way $14,000 per person, per year without having to pay taxes on your gift.   However, you won’t receive a tax deduction.  For example, if you have four children and ten grand-children, you can give away $196,000.  You can also give $14,000 to non-relatives and random strangers.   The IRS allows you to deduct up to 50% of your adjusted gross income for tax purposes if you donate your money to a recognized charity.  If you give more than 50%, the IRS lets you carry your donation forward for up to five years.

The end of the year is a great time to give money to those in need and there’s always a right time to help others.  However, an annual charitable giving strategy may be beneficial to your long-term planning and budgeting needs.  A strong charitable and philanthropic plan can pay huge dividends to you and those you support.

Do not withhold good from those to whom it is due, when it is in your power to do it. ~ Proverbs 3:37.

 

Bill Parrott is the President and CEO of Parrott Wealth Management an independent, fee-only, fiduciary financial planning and investment management firm in Austin, TX.  For more information please visit www.parrottwealth.com.

November 26, 2017

Note:  Past performance is not a guarantee of future returns.  Your returns may differ than those posted in this blog.

 

 

 

Lost and Found.

Rummaging through an old file I found a U.S Treasury EE Savings Bond.   The $50 bond was a gift to my wife from her mother in 1987.   My wife redeemed the bond on Tuesday and received $103.68.   The average annual return on her bond was 2.4%.  Inflation averaged 2.6% over this same period so my wife lost .2% per year on an inflation adjusted basis.  However, we’re grateful for the gift and the found money.

The Series EE/E bonds can only be purchased online from TreasuryDirect® at a current rate of .10%.  In addition to the EE/E bonds you can also purchase I bonds, H bonds, bills, notes, bonds and tips.  If you want guarantees, then look no further than investments issued by the U.S. Government.

As we race towards the holiday season you may want to give financial gifts to your family members.  A Series EE/E bond sounds like a good gift idea but are there better alternatives?  Here are few ideas:

  • Stock Mutual Fund. The stock market has averaged 10.2% since 1987 despite drops in 1987, 1990, 2000, 2001, 2002 and 2008.  A $10,000 investment in the Vanguard S&P 500 Index Fund in 1987 is now worth $168,000.[1]   If my wife’s $50 gift had been invested in this fund, it would be worth $980 today.
  • Bond Mutual Fund.  Long-term government bonds averaged 7.9% from 1987.  A $10,000 investment in the Vanguard Total Bond Fund is now worth $59,600.[2]
  • Individual Stocks. Buying stocks in companies your family uses could be a great way to grow wealth and learn about the stock market.  A quick trip around your home could identify hundreds of companies from Apple to Zillow.  Of course, picking the right stock will help.  An investment in Apple, Facebook or Netflix has done well, not so with Blockbuster or Toys ‘R Us.
  • Gold Coins. Gold coins issued by the United States Mint make great stocking stuffers.   Some of the more popular coins are the American Eagle, Walking Liberty, American Buffalo, and the First Ladies of the United States.   President Nixon ended the gold standard in 1971 when gold was priced at $35 per ounce and it’s currently trading for $1,295 per ounce.
  • Cash. Cash is a common gift to give a family member but it’s also the worst especially if you want them to save their money.   Cash can burn a hole in a pocket and most people will probably spend it and not save it.
  • Bitcoin. The investment of the year has been Bitcoin.  It’s currently trading for more than $8,000.  To buy Bitcoin you’ll need to open a Bitcoin Wallet using money from your bank account.  The cryptocurrency can be used just like cash for those outlets who accept Bitcoin.

Stocks are the ultimate gift for the long-term.  The historical performance from stocks has rewarded many shareholders.  In addition to the long-term trend of stocks, several companies pay dividends, so you can have your cake and eat it too!

For it is by grace you have been saved, through faith—and this is not from yourselves, it is the gift of God—  not by works, so that no one can boast.  For we are God’s handiwork, created in Christ Jesus to do good works, which God prepared in advance for us to do. ~ Ephesians 2:8-10.

Bill Parrott is the President and CEO of Parrott Wealth Management an independent, fee-only, fiduciary financial planning and investment management firm in Austin, TX.  For more information please visit www.parrottwealth.com.

November 23, 2017

Note:  Past performance is not a guarantee of future returns.  Your returns may differ than those posted in this blog.

 

 

 

 

[1] Morningstar Office Hypothetical Tool.

[2] Ibid.

A Tale of Two Companies.

It was the best of times, it was the worst of times for two companies, Qualcomm and GE.   These two companies have had a challenging year, and both were following a similar path until the first week of November.  On November 1st, Qualcomm closed at $53.46, down 15.7% for the year.  GE was selling for $20.02, down 35.15% for the year.

During the first week of November Qualcomm’s situation improved greatly and GE’s turned for the worse.  Broadcom announced a takeover for Qualcomm at $70 per share on November 6th.   At the time of the announcement Qualcomm was trading for $52 per share so the buyout price was a 25.71% premium to the current price.  The announcement was welcomed news for shareholders of Qualcomm.  Qualcomm has since rejected the overture and it’s currently selling for $66.

A few days later GE delivered horrific news to its shareholders.  They announced a major restructuring, lowered their earnings guidance for 2018, and reduced their dividend 50%.  The news caught most investors flat footed as the shares fell 15% over two days.

An investor who purchased Qualcomm and GE on November 1st saw their Qualcomm shares rise 23.4% and their GE shares fall 13%.

GE is down 41% for 2017.  GE is 125 years old, founded by Thomas Edison, and it has morphed multiple times so I’m pretty sure it will recover; however, it will take time.   Since 1962 GE has finished a calendar year with double digit losses ten times.  It dropped 47% in 1974, 37% in 2002, and 54% in 2008.[1]

These two companies share some similar metrics (see chart below).   Both companies held a Morningstar Fair Value rating of four (one being overvalued, five being undervalued) as of November 1st.  The largest shareholder for both companies is Vanguard.  The S&P rating for Qualcomm is A while GE’s is AA-.  The yield for Qualcomm was 4.62% and GE’s was 3.91%. The historical PE ratio for Qualcomm is 16 and GE’s is 15.

In 2015 Qualcomm had free cash flow of $4.5 billion, GE’s was $12.5 billion.   Today the free cash flow for Qualcomm is $4 billion and GE’s has gone negative. The debit level for Qualcomm is 36%, GE’s is 46%.  Institutions own 79% of Qualcomm and 61% of GE.

Of course, no one can predict the price movement for stocks so what can investor do when stocks start to diverge from your price target?

  • Diversify. Diversifying your investment holdings may help you increase your odds of finding winners while potentially limiting your losses from the losers.  To be diversified you should own at least 30 companies with some studies suggesting a minimum of 1,000![2]   My recommendation is to limit each stock holding to 1% to 3% of your total investable assets.
  • Plan. A trading plan will help you deal with the ups and downs of your investment portfolio. Setting a price target before you buy a stock can remove the emotions when it rises or falls to your predetermined sell level.
  • Buy Funds. A better alternative for most investors is to purchase mutual funds or exchange traded funds (ETFs).  These funds will own hundreds, if not thousands, of companies and give you instant diversification.  For example, the Dimensional Core Equity I Fund owns over 2,600 companies.
  • Review.  I recommend reviewing your stock holdings quarterly to make sure you still want to own the company.  If the answer is yes, let it ride.   If no, sell it and move the money into a new investment.

Here is a side by side comparison of Qualcomm and GE as of November 1, 2017.

Category Qualcomm GE
Morningstar Fair Value Ranking 4 (1 is lowest, 5 is highest) 4 (1 is lowest, 5 is highest)
Average PE Ratio 16 15
Fair Value Price Target $68 $26
EPS Projection $3.40 $1.75
Average Dividend Yield 3% 3.5%
Current Price $53.46 $20.02
Current Dividend Yield 4.49% 4.80%
S&P Rating A AA-
Debt Level 36% 46%
Institutional Ownership 79.32% 61.17%
Largest Shareholder Vanguard Vanguard
Price Target (PE x EPS) $54.40 $26.25
Price Target (Dividend/Yield) $80 $27.42
Free Cash Flow – 2015 $4.53 Billion $12.5 Billion
Price on 11/15/2017 $66 $18.25

As you build your investment portfolio focus on your plan and diversification.  Reviewing your plan and investment strategy on a regular basis is wise counsel and it may require you to be patient at times.

Rejoice in hope, be patient in tribulation, be constant in prayer. ~ Romans 12:12

Bill Parrott is the President and CEO of Parrott Wealth Management an independent, fee-only, fiduciary financial planning and investment management firm.  For more information please visit www.parrottwealth.com.

November 15, 2017

Note:  Past performance is not a guarantee of future returns.  Your returns may differ than those posted in this blog.

Data:  Morningstar, Value Line & Fast Graphs.

 

 

[1] Morningstar Office Hypothetical Tool, GE stock return – 1962 – 2017.

[2] https://www.investopedia.com/articles/stocks/11/illusion-of-diversification.asp, By Jason Whitby, website accessed 11/15/2017.

10 Things to Crash the Stock Market.

The U.S. stock market continues its historic run with no signs of slowing down.  Since March of 2009 the Dow Jones Industrial Average has soared 262%.  As the market ticks higher, investors are looking for the top so they can sell their stock holdings before the market crashes.

Timing the stock market is futile because no one knows when the market will fall nor, do they know what will drive it lower but here are a few culprits that may bring the stock market down.

  1. Rising interest rates. A rise in interest rates will eventually become a threat to stock prices.  If investors can receive a 6% to 7% risk free rate of return, then money will leave stocks and move to bonds.  We’re a long way from bonds yielding 6% or more.  The current U.S. Ten Year Treasury Note is yielding 2.4% and the historical rate has been 4%.
  2. Inflation. Inflation and interest rates are linked and the two will rise together.   Inflation is the increase in prices for goods and services meaning a dollar today with be worth less tomorrow.  The U.S. postage stamp is a great example of price inflation.  In 1974 the price of a postage stamp was $.10 and today stamps costs $.49, an average annual increase of 3.74%.   Over the past 12 months, the Consumer Price Index has increased 2.24% and the Gross Domestic Product has risen 2.3%.
  3. Valuation. The current price to earnings ratio for the Dow Jones Industrial average is 20.4 and the Shiller CAPE ratio is 31.51.  The CAPE ratio is a cyclically adjusted PE ratio and it’s based on the inflation adjusted earnings from the previous 10 years.[1]  The peak for the ratio was 44.19 in December of 1999.  The lowest level for the CAPE was in 1920 at 4.74.  In 1929 it peaked at 30.[2]
  4. Washington D.C. A failure for our government to pass a tax bill will be problematic.  In addition to the tax bill, the government is working on a new health care bill and an infrastructure spending package.  The government needs to pass these items for the market to continue rising.
  5. North Korea. If North Korea launches a missile and it lands in a populated area, the stock market will sell off.
  6. Bitcoin. Bitcoin by itself is not a threat to the market but the behavior to buy Bitcoin may be a problem.  As speculators chase the price of Bitcoin they sell stocks and other assets to fund their purchases.  If the price of Bitcoin corrects, this may bring down the price of the other assets.
  7. Debt. The public debt as a percentage of GDP is currently 103%.   By comparison, the debt level in 2007 was 62%.[3]   A high debt level protrudes trouble because it eventually must be paid off and investors may sell assets to cover these debt payments.
  8. Failed Merger. In 1989 the failed acquisition of United Airlines sent the Dow Jones down by 190 points, the largest drop since the 1987 correction.[4]   There are a few high-profile mergers in the works and the failure to get these done could send the market down.
  9. Time. The current bull-market is 8 ½ years old.  The average bull market typically lasts about 3 to 5 years.  However, bull markets rarely die of old age.
  10. Other. The next bear market will be triggered by some other event as no two corrections are the same.  The next correction will come out of left field and catch investors off guard.  Hindsight and a 20/20 review will seem obvious to those who study market corrections but we won’t know about it until after the fact.

It’s extremely difficult to try and time the market and sell before a correction arrives.  Market timing works both ways.  If you’re lucky enough to sell your stocks before a fall, when do you decide to buy back into the market?  Buying stocks at a market bottom is much harder than selling stocks at a market top.

An investor who purchased an S&P 500 index fund in October of 2007 endured a drop of 41.5% in 2008, however, if they held on through last month they would’ve more than doubled their money.  The average annual return for the S&P 500 since October of 2007 has been 7.35%.

If you’re concerned about a stock market correction, my recommendation is to diversify your holdings across cash, bonds, small stocks, large stocks, international stocks, real estate, and other asset classes.

There is a time for everything, and a season for every activity under the heavens… ~ Ecclesiastes 3:1

Bill Parrott is the President and CEO of Parrott Wealth Management an independent, fee-only, fiduciary financial planning and investment management firm.  For more information please visit www.parrottwealth.com.

November 11, 2017

Note:  Past performance is not a guarantee of future returns.  Your returns may be more or less than those posted in this blog.

[1] http://www.multpl.com/shiller-pe/, website accessed 11/11/17

[2] Ibid.

[3] https://fred.stlouisfed.org/series/GFDEGDQ188S, website accessed 11/10/2017.

[4] http://articles.latimes.com/1989-10-15/news/mn-225_1_stock-market, 10/15/1989, Associated Press.

Houston, We Don’t Have a Problem!

The Houston Astros recently won the World Series in an epic battle with the Los Angeles Dodgers.  The Astros have a young, exciting team led by Jose Altuve, Carlos Correa and George Springer.   These three have been the spark for the Astros all season long.

Sports Illustrated predicted an Astros World Series victory in 2014 with a cover shot of George Springer and the title, “Your 2017 World Champs.”   To add to this great prophecy, Springer was named the World Series MVP.   Collectors are now trying to cash in on this classic cover with prices ranging from the mid $200s to over a thousand dollars.  It takes time to create a winning team and the foundation for this Astros team was laid three to four years ago.

The Astros joined Major League Baseball as the Colt .45s in 1962 and they changed their name to the Astros in 1964.  My memories of the Astros were their bright orange and yellow striped uniforms and, of course, the Astrodome.  The World Series victory was 55 years in the making.

The City of Houston has had a tough year after getting hammered by Hurricane Harvey.  It was a terrible storm that displaced thousands of families and destroyed numerous properties.  The City of Houston, the Astros and JJ Watt rallied the city behind the Houston Strong motto.  #houstonstrong   The World Series win was a big one for the people of Houston.  The City of Houston needed good news and the Astros delivered.

Creating your own team will help you increase your odds of success.  Who should be on your winning team?

  • Financial Planner. A financial planner can help you create a winning formula by helping you construct a plan based on your hopes and dreams.  In addition, your planner can assist you with your investment portfolio based on the results of your financial plan.
  • Accountant. A CPA can help you in numerous ways especially if you have a complicated tax situation.   Reducing your taxes and maximizing your take home pay should be high on your list.  In addition to filing your taxes, your CPA should help you with tax planning strategies and projections so you can benefit from our tax code.
  • Attorney. An attorney can set up estate planning documents like a will or trust.  An estate plan is paramount because you want to make sure your assets go to your beneficiaries and not to the IRS.  In addition to traditional planning, your attorney can establish life insurance trusts, special need trusts and health care directives.

Your planner, accountant and attorney should work together as a team to deliver you sound financial guidance and they should make you their MVP!

Plans fail for lack of counsel, but with many advisers they succeed. ~ Proverbs 15:22

Bill Parrott is the President and CEO of Parrott Wealth Management an independent, fee-only, fiduciary financial planning and investment management firm located in Austin, Texas.  For more information on financial planning and investment management, please visit www.parrottwealth.com.

November 4, 2017

You’re Huge, Bro!

During my football playing days in high school and college I spent hours in the gym lifting weights.  My teammates and I lifted weights during the regular and off-season and mostly followed a structured program outlined by our coaches. On occasion we’d go off script to see who could “max-out” on the bench press.  These “max-out’ sessions were highly spirited with lots of yelling and screaming.  A few of my teammates would get so big from lifting weights they’d become less nimble.  Their large size helped in the gym, but it became a hindrance on the football field.

Small things can grow up to become big things.  The mustard seed is the tiniest of seeds, but it becomes a large plant of 9 feet or more.  Small companies can also grow into large companies.  Amazon, Apple, Berkshire Hathaway and Facebook were once small companies.

Investors often focus on large companies when constructing a portfolio and pay little attention to small companies.  Asset allocation models generally recommend investors allocate 30% to 50% of their assets to large-cap companies while committing 5% to 15% of their principal to small companies.

The main reason to allocate a portion of your assets to small-cap stocks is that they’ve outperformed large-cap stocks over time.  The Dimensional Small-Cap Value Index has generated an average annual return of 13.5% since 1928.  A $1 investment in this index was worth $78,639 at the end of 2016.[1]  The Dimensional Large-Cap Value Index returned 11.3% during the same time frame and turned $1 into $13,591.[2]  The small-cap index outperformed the large-cap index by a factor of 5.7 to 1.

What exactly is a small-cap stock?  The definition of a small-cap varies but it mostly includes companies with market caps below $1 billion.  By comparison, the market cap for a mega-cap stock is north of $200 billion.

Small-cap stocks carry more risk than large-cap stocks so pay attention to the amount of money you contribute to this sector.  The standard deviation for small-cap growth stocks is 23.29% and for large-cap growth stocks it is 17.05%.  For example, if the expected return for the small-cap index is 10%, then the range is a positive 33.29% to a negative 13.29%.[3]

A search for small-cap stocks generated a list of over 10,000 names.[4]  Rather than sifting through this long list I’d recommend investing in a small-cap mutual fund or ETF[5].  Here are a few suggestions.

DFSTX – DFA Small Cap Index.  A $10,000 investment in 1992 is now worth $135,435.

DFSCX – DFA Micro Cap Index.  A $10,000 investment in 1981 is now worth $594,395.

DISMX – DFA International Small Cap Index.  A $10,000 investment in 2012 is now worth $17,335.

IJR – iShares S&P 600 Small Cap Index.  A $10,000 investment in 2000 is now worth $57,418.

IWM – iShares Russell 2000 Index. A $10,000 investment in 2000 is now worth $39,268.

VB – Vanguard Small Cap Index.  A $10,000 investment in 2004 is now worth $33,841.

As you pump up your portfolio, don’t ignore the 90-pound weakling because it may grow up to become a big, mighty juggernaut.

And he said, “With what can we compare the kingdom of God, or what parable shall we use for it?  It is like a grain of mustard seed, which, when sown on the ground, is the smallest of all the seeds on earth, yet when it is sown it grows up and becomes larger than all the garden plants and puts out large branches, so that the birds of the air can make nests in its shade.” ~ Mark 4:30-32

Bill Parrott is the President and CEO of Parrott Wealth Management, a fee-only, fiduciary financial planning and investment management firm.  For more information, please visit www.parrottwealth.com.

November 1, 2017

Note: Your returns may differ than those posted in this blog.  Past performance is not a guarantee of future performance.

 

[1] Dimensional Fund Advisors 2017 Matrix Book.

[2] Ibid.

[3] Morningstar Market Assumptions. One Standard Deviation.  (10 + 23.29 = 33.29); (10-23.29 = -13.29)

[4] Fastgraphs.com Charts, website accessed 10/31/2017.

[5] Morningstar Office Hypothetical.  Inception date of the specific fund to September 2017.