Which Market?

The NASDAQ is soaring this year despite the political turmoil, racial tensions, and a global pandemic. It has risen 18% so far, and it’s not showing any signs of slowing down as it climbs a wall of worry. A few media outlets and financial experts are referring to the rise as a bubble. Market Watch had this to say about the stock market, “If you still do old-fashioned, cold analytical analysis based on numbers, you’ll see that the stock market is significantly above the mother of support zones. It is now a bubble.”[1]

When individual investors refer to the market, it is the Dow Jones Industrial Average. Is it up? Is it down? Will it keep rising, or will it crash? If the Dow falls more than 250 points, it’s considered breaking news even though it’s less than a 1 percent decline. The Dow Jones gets all the attention, but what about other markets? Is it fair to lump all markets together? What about the other indices?

Morningstar tracks more than 84,000 indices or markets, so when someone asks what I think about the market, I wonder which one they’re referencing. If you own a diversified portfolio of funds, you probably have exposure to dozens of markets.

To find out if the market is overvalued, let’s dissect a traditional 60/40 portfolio – 60% stocks, 40% bonds.

Large-Cap Growth Stocks. This sector has been red hot for more than a decade. The primary fund for this asset class is the Invesco QQQ Trust – The Qs! Stocks in this index include Apple, Microsoft, Amazon, Facebook, Alphabet, Tesla, NVIDIA, and Netflix. This star-studded index is up more than 490% for the past ten years, and it is up 24% on the year. If stocks are in a bubble, it’s this sector.

Large-Cap Value Stocks. Value stocks have trailed growth stocks by a wide margin for the past few decades, and this year is no different. The Vanguard Value ETF is down 16% for the year and up 115% for the past ten. Companies in this index include Johnson & Johnson, Berkshire Hathaway, Exxon Mobil, Pepsi, and Amgen.

International Developed Markets. International stocks have barely budged for the past ten years, rising a paltry 24%. The MSCI EAFE Index (EFA) is down 10.2% for the year, hardly a bubble. Companies in this sector include Nestle, Novartis, Toyota, and Unilever.

International Emerging Markets. This sector is one of the worst-performing asset classes over the past decade. It has risen 6.4% – total, not per year. A $10,000 investment a decade ago is now worth $10,640. Popular stocks in this category include Alibaba, Tencent, JD.com, and Baidu.

Small-Cap Growth. This sector is showing some life this year because it invests in growth stocks. It is up 2.25% for the year, and it has risen 233% for the past decade. Stocks in this index include DocuSign, Moderna, Teledoc, The Trade Desk, and Pool Corp.

Small-Cap Value. As far as US stocks go, few have fared worse than this sector, falling more than 23%. In the past ten years, it has generated an 87% total return. Small-cap and value have been a disastrous combination this year. Companies in this index include PerkinElmer, Allegion, Gaming and Leisure Properties, and ON Semiconductor.

Mid-Cap Index. Mid-Cap stocks are down 6.6% for the year. Over the past ten years, they’re up 171%. This sector includes companies like Lululemon, Splunk, Chipotle, and Clorox.

International Small-Cap. This international sector is down 12.4% for the year, but up 57% over the past ten years. Companies in this index include Rightmove, Bechtle, and Avast.

Real Estate. Working from home (WFH) is taking a toll on real estate stocks. Malls, shopping centers, office buildings, and senior living centers are not doing well in the COVID-19 environment. Does it make sense to allocate money to this sector with all the negative headwinds? I believe it does because real estate stocks will also give you exposure to data centers, cell towers, storage units, and timber. Real estate stocks are down 16% for the year and up 63% for the past decade.

Short-Term Bonds. Short-term US government bonds are the safest investment in the world. They have risen .42% for the past decade, and they’re up .32% on the year. Treasury bills are shelter investments, providing you with liquidity and safety.

High-Yield (Junk) Bonds. Lower rated bonds, known as high-yield or junk bonds, trade more like stocks than bonds, especially when stocks fall. Junk bonds have lost money for the past ten years, falling 12%, and they’re down 6.75% in 2020. A few names in this sector include Ford, American Airlines, and Netflix.

Corporate Bonds. Corporate bonds are having a good year, rising 6.2%. They have risen 26% for the past decade. Companies in this category typically have strong balance sheets. A few quality names in this sector include Anheuser-Busch, Microsoft, Apple, and Oracle.

Gold. Gold typically does well when investors or scared or there is a hint of inflation. This year gold has risen 18%, and over the past decade, it has risen 42%.

Commodities. A commodity index includes gold, oil, sugar, soybeans, corn, copper, zinc, silver, etc. It has been a challenging decade for commodities, losing 14%. This year it is up 7% rising on the strength of gold, silver, and copper.

Your portfolio may include some of these components. At the start of this year, it would have made sense to allocate 100% of your assets to large-cap growth companies, but it’s not possible to know, in advance, which sector will outperform the others. For example, from 2000 to 2010, the large-cap growth index lost 49%, while emerging markets rose 102%.

So, is the market in a bubble? It depends on the market, of course. One of the best ways to protect your assets is to own a diversified portfolio of low-cost funds and rebalance them as needed. Rebalancing your accounts will keep your asset allocation and risk level intact.

Rather than worrying if we’re in a bubble and trying to time your buys and sells, focus on your goals, think long-term, and let the stock market help you create generational wealth.

History shows us, over and over, that bull markets can go well beyond rational valuation levels as long the outlook for the future earnings is positive.” ~ Peter Bernstein

July 11, 2020

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.

The data source for the investment categories, names, and returns come from YCharts.

[1] https://www.marketwatch.com/story/the-latest-sign-of-a-stock-market-bubble-small-companies-claiming-to-disrupt-large-industries-2020-07-06, by Nigam Arora, July 7, 2020

What if?

If you have children, you probably answered a million what-if questions. What if the sky falls? What if dogs talked? What if I wear my clothes backward? What if I eat my soup with a fork? What if I become a horse?

What if?

Investors are asking quite a few what-if questions because of the current economic environment and the healthcare crisis — questions with few answers.

Let’s explore some what-if questions.

What if stocks crash? Stocks crash often. According to J.P. Morgan Asset Management, there have been several significant market declines. Stocks fell 86% during the Great Depression. They fell 49% during the tech-wreck in 2000. The S&P 500 fell 53% from 2007 to 2009, and most recently, it fell 34% because of COVID-19. J.P. Morgan highlighted 13 bear markets in their Guide to the Markets® third-quarter outlook. The average drop was 42%, and the downturns lasted for 22 months.[1] From March 2009 to July 2020, the S&P 500 Index has risen 366%, but it closed in negative territory 42% of the time. During this bull-market run, the index dropped more than 10% on several occasions. It fell 16% in 2011, 11% in 2016, 17.5% in 2018, and 34% in March 2020.[2]

What if there is a recession? Since 1900 the U.S. has weathered twenty-four recessions or about once every five years.[3]

What if interest rates rise? The Federal Funds rate jumped from 4.24% in 1970 to more than 20% in 1981. Interest rates climbed to 6.5% in 2000, and from 2000 to 2007, they soared from 1% to 5.25%.[4]

What if there is inflation? The inflation rate in 1920 peaked at 23.5%. After WWII, it touched 19%. In 1980 it spiked to 14%. The 106-year inflation rate has averaged 3.23%.[5]

What if stocks don’t rise? Stocks go nowhere often. During the Great Depression, stocks eked out an average annual return of 1.7% for fifteen years from 1929 to 1944. Stocks produced an average yearly return of .9% from 1973 to 1978. From 2000 to 2012, the market generated an average annual return of 1.7% during the Great Recession.[6]

What if there is a war? The United States has been involved in several wars or conflicts: WWI, WWII, Korea, Vietnam, Iraq, and Afghanistan, to name a few.

What if there is another pandemic? In addition to COVID-19, there have been several global epidemics – the bubonic plague, typhoid, yellow fever, Spanish flu, pneumonic plague, cholera, smallpox, HIV/AIDS, Ebola, MERS, SARS, measles, H1N1, mumps, the flu, and so on.[7]

What if a Republican wins the election? The average annual return with a Republican president in the White House has been 8.6%.[8]

What if a Democrat wins the election? The average annual return with a Democrat president in the White House has been 8.8%.[9]

Despite crashes, recessions, depressions, wars, pandemics, rising interest rates, inflation, and elections, the stock market marches higher. In June 1920, the Dow Jones Industrial Average closed at 90.76. Today, it is 25,832 – a gain of 28,361 percent! The 100-year average annual return for stocks is 10%.

It’s possible to ask more what-if questions about investing, but what’s the point? It’s impossible to know what’s going to happen tomorrow, so don’t try to outsmart the market. It’s a waste of time, energy, and resources. Instead, focus on what you can control, like your spending and your savings.  A financial plan can help you focus and prioritize your goals. It will help you determine your investment allocation and other important decisions. Once your plan is completed, invest in a diversified portfolio of low-cost index funds, and hold them forever.

“Life can only be understood backwards; but it must be lived forwards.” ~ Søren Kierkegaard

July 3, 2020

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.

[1] J.P.Morgan Asset Management Guide to the Markets® U.S.|3Q 2020|As of June 30, 2020.

[2] YCharts

[3] J.P.Morgan Asset Management Guide to the Markets® U.S.|3Q 2020|As of June 30, 2020.

[4] https://www.macrotrends.net/2015/fed-funds-rate-historical-chart, website accessed July 2, 2020

[5] YCharts

[6] Dimensional Fund Advisors 2019 Matrix Book

[7] https://en.wikipedia.org/wiki/List_of_epidemics

[8] https://www.fidelity.com/learning-center/trading-investing/markets-sectors/stock-returns-and-elections

[9] Ibid

I’m Afraid to Invest

It is a tough time to be an investor. The political, social, and racial environment is troubling.  Despite the stellar long-term performance of the stock market, investors are nervous about committing capital to stocks. If you’re frightened to invest, consider a monthly dollar-cost averaging program.

Let’s assume you can invest $120,000 today, but you’re not ready to push all your chips to the center of the table. In this case, invest $1,000 per month for ten years in Vanguard’s 500 Index Fund. Did this strategy work? After ten years, your $120,000 is now worth $219,537 – generating an average annual return of 11.8%.

If you expand your time horizon to twenty years, your $1,000 monthly investment is now worth $651,021, earning 9.1% per year.

How about thirty years? After thirty years, your automated monthly investment program of $1,000 is now worth $1.72 million, averaging 9% per year.

What about a forty-year timeline? After forty years, your investment is now worth $6.16 million, producing an average annual return of 10.4%.

Let’s look at a fifty-year time horizon. We now will invest $1,000 per month into the Investment Company of America mutual fund because the Vanguard 500 Index fund is not available. Your investment is now worth $57.76 million. The average annual return was 10.9%.

After sixty years, your dollar-cost averaging program has turned your $1,000 monthly investment into $195 million! The average annual return was 11.2%.

After fifty or sixty years, the numbers are ridiculous and probably not obtainable for most investors. I doubt many, if any, people can commit to investing monthly for sixty years. However, if you’re skittish, starting a monthly investment program could be your ticket to better returns.

Times are hard, but probably no worse than they have been over the past sixty years. Despite challenging times, the stock market has always marched higher. The key to long-term investment success is to follow your plan, save your money, and invest often. Do not let short-term market moves, or the media, derail your financial plans.

Be not afraid of growing slowly; be afraid only of standing still. ~ Chinese Proverb

June 29, 2020

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.

Investment source: Morningstar Hypothetical, returns are pre-tax, net of fees.

How Can You Help?

It has been a brutal, exhausting year, and people are hurting. COVID-19 and the racial tension has cast a pall on 2020, and people are living with heavy hearts. As a result of the economic, political, and social turmoil, small charities are in a pinch. Local nonprofits are on the ground in your community doing work few people are willing to do, and they need your assistance. What kind of help do they need? Financial support. These vital organizations rely on donations to keep their doors open, and the recent economic trouble is leaving their coffers empty.

Small nonprofits are the original first responders. Local nonprofits know what they are doing because they have spent years cultivating relationships. In a recent Wall Street Journal article about small charities, they wrote, “The coronavirus pandemic has highlighted the importance and the agility of small community-based charities, especially in a crisis. Often these groups don’t get much attention. They are overshadowed and out-funded by big better-known nonprofits like the American Red Cross and the Salvation Army.” They added, “Local charities also often know who most need help.”[1]

If you decide to give, give only your resources, and leave your opinions at home. Nonprofits don’t need your advice on how to improve their organization. Also, don’t tell the organization how to best spend your donation. If you don’t trust them to handle your gift correctly, give it to someone else.

How can you help? Here are a few ideas on how to donate to nonprofits.

  1. Cash. Cash is easy to give away – quick and efficient. The IRS generally allows you to deduct 50 percent of your adjusted gross income (AGI) for tax purposes. If you give more than 50 percent of your AGI, the IRS allows you to carry your donation forward for up to five years.
  2. Appreciated Securities. If you own stock with a considerable capital gain, consider donating it to your favorite charity. When you gift your shares directly to your charity, you will avoid paying a capital gains tax, and you can deduct the fair market value of your gift. The charity will sell the stock to receive the cash, and they, too, will avoid a capital gains tax.  For example, if you purchased 100 shares of Amazon ten years ago for $110, you have an unrealized gain of $2,582 per share based on a closing price of $2,692. By donating your shares, you avoid the capital gains tax of $51,640 on your gain of $258,200. The charity receives $269,200.
  3. Qualified Charitable Distribution. The IRS allows you to satisfy your required minimum distribution by donating your money directly to a charity from your IRA. You can donate up to $100,000 with a qualified charitable distribution (QCD). You can avoid paying taxes (legally) with a QCD distribution, and it will satisfy your required minimum distribution for the year.
  4. Donor-Advised Fund. If you want to support several charities, but you’re not sure how much to give, or when to give it away, then consider a donor-advised fund (DAF). You can contribute cash or securities to a donor-advised fund, receive a charitable deduction, and then payout your donation over several years. Once you fund your DAF, you can take your time to decide how much money to give to your charities. You can also sell your assets inside the DAF and reinvest the proceeds into a diversified portfolio of stocks, bonds, or funds.
  5. Charitable Remainder Trust. If you own appreciated stock, land, or some other asset, you can transfer it to a Charitable Remainder Trust (CRT) to generate income. After you transfer the investment to your trust, you can sell it to avoid the capital gains tax. You can deduct your donation from your taxes and reinvest the proceeds. The CRT allows you to withdraw 5% to 8% of your account balance each year. At your death, the assets in the trust will transfer to your charitable beneficiary. The CRT is a great way to avoid a capital gains tax, diversify your portfolio, and benefit your favorite charity.  Your gift to a charitable remainder trust is irrevocable.
  6. Charitable Lead Trust. A Charitable Lead Trust (CLT) is the opposite of a Charitable Remainder Trust in that your charity of choice will receive the income from the trust, and your beneficiary will inherit the asset on your death. If you want to transfer assets to your children, the CLT is an excellent choice because it removes the asset and growth from your estate. The CLT is a limited-term trust, and it is irrevocable.
  7. Private Annuity. A private annuity works well with colleges, universities, and nonprofits. You can donate stock, land, or any asset to your charity, and they can establish a private annuity for you so that you can receive income for life. Your charity can sell your asset tax-free and use the proceeds to fund their operations. They will create an annuity for you and your family based on the size of your gift. You will receive a monthly, quarterly, or annual check for ten or fifteen years along with a tax deduction.
  8. Private Foundation. You can establish your own nonprofit to benefit other nonprofits to create perpetual gifts. Donations to your foundations are limited to a 30 percent deduction for cash and 20 percent for appreciated securities. A private foundation is expensive to maintain, and you will need to create a board of directors.

If you don’t have financial resources to give, donate your time. Small nonprofits are in dire need of helping hands to assist them with a variety of tasks. A Google search for nonprofits in your neighborhood will yield plenty of fruit and give you several choices of groups to serve

Our church serving model is FUN: F stands for flexibility, U stands for useful, and N stands for not about you. When you’re ready to give or serve, don’t forget to have some fun!

When someone has been given much, much will be required in return; and when someone has been entrusted with much, even more, will be required. ~ Luke 12:48

June 27, 2020

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.

 

[1] https://www.wsj.com/articles/how-a-small-charity-pivoted-to-get-food-to-those-hit-by-covid-shutdowns-11593010891?mod=itp_wsj&ru=yahoo, Betsy Morris, June 24, 2020

Three Point Five Percent

Less than three and a half percent of Certified Financial Planners™ are African American or Latinos. I was shocked, but not surprised, by the data as I read the 2017 Racial Diversity in Financial Planning report from the Center for Financial Planning.[1] At the time of the report, there were 80,000 CFP® professionals, so less than 3,000 of our members were African American or Latinx. Our Financial Planning Association chapter in Austin likely has similar percentages – unfortunately. On a recent Zoom call with chapter leaders from around the country for the Financial Planning Association, I don’t recall seeing one person of color among the forty or fifty participants.

There are many reasons why the percentages of financial planners for African Americans and Latinos are low. The report cited three reasons: a lack of industry awareness, few mentors, and escalating costs. Most minorities aren’t aware of financial planning as a profession until after they graduate from college and start working in a different industry.[2]

The recent racial events have once again raised the awareness of a lack of diversity in the financial planning sector. In an industry dominated by older white males, of which I am one, something needs to change, and soon.

As a white male over fifty, I’ve never experienced oppression or hatred. I’ve been bullied at times but never oppressed, but my grandfather had. He was born Asuncion Jimenez to Braulio and Victoria – Tata and Nana. His parents were born in Jalostotitlan, Jalisco, Mexico, and they migrated to Los Angeles in the early 1900s – a journey of about 1,600 miles.

My grandfather never discussed racism, so I asked my mom and aunts if they heard him talk about being ostracized. As one story goes, when he registered for high school, he was assigned to the trade school classes because of his name, so a few days later, he changed it to James and re-enrolled in school to take college prep courses. After a few weeks passed, the school called his mom to find out what happened to Asuncion because he hadn’t shown up for school. My grandfather told his mom, and the school, he changed his name so he could register in different classes. However, his battle wasn’t over. Because he was a Mexican, he could not take AP courses, but after hearing an argument in the hall, the principal allowed him to enroll. His high school principal was Ethel Percy Andrus, who founded AARP.  (Sidebar: Ms. Andrus was the first woman high school principal in California and my wife obtained her Ph.D. from The Ethel Percy Andrus Gerontology Center at USC). My grandfather graduated as the Valedictorian from his high school with a scholarship to Stanford, but he couldn’t attend because of the depression. His parents needed his help in raising his nine siblings.

Because he was Mexican, the kids made fun of him by calling him “Mex.” He was hard of hearing, so he thought they were calling him “Mix” after the famous cowboy actor Tom Mix. The kids eventually left him alone because he was unfazed by their insults, according to my aunt.

My grandfather, ever the optimist, never complained about anything. When he went to the movies as a kid, he was forced to sit in the balcony, which he preferred. At church, he had to sit in the back pews due to his race.

He also faced opposition from his future in-laws. My grandmother’s maiden name was Hamilton, and her family migrated from England. Her parents were not in favor of their marriage, so they eloped.

My grandfather was a financial success after starting two businesses. If you ever ripped open a bag of chips, enjoyed a hot tortilla, or eaten in a restaurant, you benefited from his handy work. He was inducted into the Tortilla Hall of Fame, and several of his inventions are still visible in the restaurant industry.

At his death, most of his estate was donated to U.C. Santa Barbara and Occidental College to provide scholarships to first-generation college students. His lasting gift will provide academic preparation for K-12 students in Fillmore, California, where he owned two ranches.[3] My grandfather was a doer, a man of action.

So, now what? As president of the Austin Financial Planning Association, I have been talking almost daily to last year’s president, and the president-elect about making diversity and inclusion a priority. We contacted two Historically Black Colleges and Universities in the Austin area to provide awareness, mentors, and scholarships to students interested in financial services. Our goal is to offer semester internships, monthly in-person meetings, and weekly check-ins for the students. We will also provide them with a one-year student membership to our financial planning chapter so they can attend our meetings. Our goal is to increase industry awareness and financial literacy for those interested. If we’re successful at the college level, I hope we can deliver our model to high school students.

I’m just one person, so I need your help. If we all did our part, we could make a huge difference. In your market, look for opportunities to hire, mentor, educate, or inform individuals about the need to increase awareness and expand diversity and inclusion in all industries. It’s time.

But let justice roll down like waters and righteousness like an ever-flowing stream. ~ Amos 5:24

June 18, 2020

 

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.

[1] https://www.cfp.net/knowledge/reports-and-statistics/diversity-and-womens-research/racial-diversity-in-financial-planning-where-we-are-and-where-we-must-go

[2] Ibid

[3] https://www.news.ucsb.edu/2006/012089/food-industry-leader-makes-major-gift-ucsb-help-more-fillmore-students-go-college

I’m the Captain Now

A high-profile internet celebrity is leading a legion of day-traders with his antics. He recently said, “I’m the captain now,” and referred to Warren Buffett as an idiot.[1] Yesterday on CNBC, he said he had generated returns of 400% after “catching on” to trading.[2] Day traders have moved from gambling on sports to trading in bankrupt companies like Hertz and Chesapeake Energy.  Should you follow this Pied Piper?

Day trading is complicated. If it were easy, everybody would be doing it. It’s my understanding that “the captain” is worth more than $115 million, and he is trading with about $3 million, or 2.6% of his net worth, so he can afford to lose 100% of his capital. He can afford to swim in the deep end of the pool without fear. Several years ago, a client was investing in trust deeds by lending money to people who couldn’t borrow from traditional resources like banks or credit unions. He was a multi-millionaire, and he could afford to lose a few thousand dollars if his borrowers defaulted on their loans. A relative of his wanted to follow his investment strategy, but she couldn’t afford to lose any money. Her net worth was in the low thousands, so if she lost a portion of her assets, it would be catastrophic.

Despite the worst economic data since the Great Depression, day traders are partying like it’s 1999. They appear to be making a killing by trading stocks and ETFs like Hertz, American Airlines, Luckin Coffee, and the JETS ETF. Their portal of choice is Robinhood, where traders can execute their orders sans commissions.

Here are a few tips if you want to start day trading.

  • Have a plan. Work on your entry and exit points. Know what you’re going to do before you start trading. Identify a few stocks and get to know their trading patterns – as best you can.
  • Only invest with money you can afford to lose. If you can lose 100% of your trading capital, and still support yourself and your family, then give it a shot. Limit your speculative trading to 3% to 5% of your investment capital.
  • Only trade in your taxable investment account so you can write off your losses. Do not day trade in your retirement accounts.
  • Do not borrow money to trade. Avoid margin. Leverage is your friend when stocks rise; it is the enemy when they fall. Your account can go negative if you employ too much margin – meaning if you borrow money and you lose it all, you may owe your brokerage account money because of your deficit.
  • Take your gains. If you’re successful, ring the register to lock in your profits. Yes, you should let your winners run, but if you’re trading in bankrupt securities and you make 20%, 50%, 100%, or more, take your profits off the table.
  • Cut your losses. If you’re losing money, cut your losses and sell your stocks so you can live to see another day. Try to limit your downside to 7% to 10% per trade.
  • Inform your spouse, loved one, or significant other that you’re about to embark on a trading journey. Let them know you will be speculating with a portion of their treasure. It’s better to inform them from the beginning that you may lose significant amounts of money. In this case, it is better to ask for permission than it is to beg for forgiveness.

In 1999, the NASDAQ soared 85%; by October 2002, it fell 77%, and it would take seventeen years for the index to reclaim its previous high. The severity of the drop and the prolonged drifting in the market wiped out a generation of day traders. As one speculator said, “I never did make any money out of that,” he admits. “I’m just not able to make it work. It’s harder than it looks.”[3]

Captain Phillips is a movie about a small group of Somali pirates who hijack the Maersk Alabama. When the lead pirate makes his way to the bridge, he looks Captain Phillips in the eye and says, “I’m the captain now.” As the movie ends, “the captain” was arrested by the US Navy, and the Seal snipers eliminated his associates. It didn’t work out for the pirates because they bit off more than they could chew, and they didn’t have a plan.

I’m sure there are successful day traders, but they almost certainly do it for a living, it’s their 9 to 5 job. And, if they have figured out day trading, they’re probably living on a private island somewhere in the pacific.

Happy Trading

“In the short run, the market is a voting machine, but in the long run, it is a weighing machine.” ~ Benjamin Graham

June 16, 2020

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and are not suitable for every investor.

 

 

 

[1] https://www.thewealthadvisor.com/article/warren-buffett-idiot-says-investor-who-claims-daytrading-easiest-game-ive-ever-played, The Wealth Advisor, June 10, 2020

[2] https://www.youtube.com/watch?v=Q0t_7R2sv4w, website accessed

[3] https://money.cnn.com/2000/08/09/investing/q_daytradewhere/, August 9, 2000

Bearing Fruit

Growing up in Southern California, fruit trees were everywhere. It seemed like orange, lemon, and avocado trees were on every corner. My backyard had two huge trees – one orange and one lemon that repeatedly produced fruit. My grandfather owned a citrus ranch with thousands of trees.

Fruit trees can live for 30 years or more. Apple and apricot trees can live for 40 years; persimmons can thrive for more than 50 years.[1]  A fruit tree takes about four to six years to grow before it starts to bear fruit.[2] Once trees begin bearing fruit, they can deliver bushels for decades. An Apple tree can produce about six to ten bushels with each harvest, approximately 750 to 1,250 apples.[3] How about them apples?

To diversify your orchard, plant several types of trees like apple, avocado, pear, cherry, pomegranate, orange, or grapefruit, to name a few. Your farm will produce fruit at various times and in contrasting quantities, giving you an abundance of choices at harvest time.

Moving from a small seed to a thriving orchard requires time, patience, and effort. Planting an apple tree today will not produce results tomorrow. It will need several years before the roots take hold and grow. If you continually rip the tree out of the ground to see how the roots are growing, it will never grow. Once your trees start producing fruit, you must tend to their upkeep by watering and pruning them regularly. If a tree dies, remove it and plant a new one, and manage your healthy trees so that they can grow and flourish.

Your trees will grow at different intervals, some fast, others slow. At times it will appear as if your trees aren’t growing, but they are.

Dividend-paying stocks are like fruit trees; they can produce results for years in the form of dividends.  Standard & Poor’s has a list of dividend aristocrats – companies that have paid dividends for more than twenty-five years. Currently, there are 64 companies on the list.[4] Here are a few names from this outstanding list: Coca-Cola, Pepsi, Procter & Gamble, Walmart, Walgreens, 3M, Abbot Laboratories, Medtronic, McDonald’s, Chevron, and At&T.[5]

The yield on the S&P 500 Index is 1.8%,  and more than 1,000 companies yield 2% or higher. Beware of companies with extremely high dividend yields. If a company has a dividend yield of 10%, 15%, or more, it can be a trap, and they probably have a weak balance sheet. More important than a high yield, is a company that regularly raises its dividend. Intel’s dividend in 2000 was .003 cents per share (per quarter). It is now .33 cents per share, an increase of 10,900%.

At times, a stock experiences stunted growth. Microsoft traded flat from January 2000 to July 2016, the price of Microsoft did not budge for sixteen years. It dropped to a low of $16.25 in March 2009 after peaking at $55.75 nine years prior. In 2003 they initiated a dividend of 8 cents per share, and today it is 51 cents, an increase of 537%. In addition to their regular payout, Microsoft paid a special dividend of $3.00 per share in 2004. A patient shareholder enjoyed a steady stream of rising income while waiting for Microsoft to recover. Microsoft is trading for $195 per share today.[6]

In a low-interest-rate world, a portfolio of dividend-paying companies is attractive. The yield on the U.S. Thirty-Year Treasury has been falling for decades. In 1980 the bond paid more than 15%. Today it’s yielding 1.5%, a drop of 90%.[7] If you are relying on government bonds for retirement income, you’re in trouble. McDonald’s dividend in 1980, as a comparison, was .004 cents per share (per quarter) or .4%. It’s now $1.25 per share, and it’s yielding 2.51%. McDonald’s dividend increased by 31,150% since 1980!

Get started today by investing in several dividend-paying companies that will bear fruit for generations. If you’re not sure which dividend stock to buy, you can purchase an exchange-traded fund like ProShares S&P 500 Dividend Aristocrats (NOBL) or Vanguard’s Dividend Appreciation ETF (VIG). These two ETFs will own high-quality, dividend-paying companies.

Happy planting!

He replied, “Because you have so little faith. Truly I tell you, if you have faith as small as a mustard seed, you can say to this mountain, ‘Move from here to there,’ and it will move. Nothing will be impossible for you.” ~ Matthew 17:20

June 10, 2020

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and are not suitable for every investor.

 

 

 

 

[1] https://www.davewilson.com/question/how-long-do-fruit-trees-live, Website accessed June 8, 2020

[2] https://homeguides.sfgate.com/long-apple-trees-mature-produce-fruit-56479.html#:~:text=Standard%20Rootstock,years%20after%20you%20plant%20it. Ruth de Jauregui, November 28, 2018

[3] https://extension2.missouri.edu/g6021#:~:text=A%20semidwarf%20tree%20will%20produce,fruit%20in%20a%20home%20refrigerator., Michele Warmund, website accessed June 10, 2020

[4] https://www.investopedia.com/terms/d/dividend-aristocrat.asp, James Chen, May 17, 2020.

[5] https://www.suredividend.com/dividend-aristocrats-list/?gclid=Cj0KCQjwiYL3BRDVARIsAF9E4Ge-N32o40_3DQ2Q28gaRUNsKD57lI78dfYLoa0EQwYMyL-z4PA1asUaAhD8EALw_wcB, website accessed June 10, 2020

[6] YCharts

[7] https://www.macrotrends.net/2521/30-year-treasury-bond-rate-yield-chart, Website accessed June 10, 2020

What I Miss?

The NASDAQ, Dow Jones, and S&P 500 are posting positive returns over the past year, and the NASDAQ is up more than 9% for the year. These leading indices were down more than 30% less than three months ago as investors reacted to the COVID-19 virus. Since the virus outbreak, our country has experienced depression-era economic data and witnessed civil unrest. Investors have been scratching their heads to try and reconcile the performance in the stock market with the reality on the streets.

The stock market is up more than 40% from the March 23 low, and it has turned in the best 50-day performance in history. It’s hard to fathom a stock market trading at all-time highs while our economy and cities struggle. We have experienced the worst pandemic in more than 100 years, the bleakest economy since the depression, and, according to some, racial tensions not seen since 1968. However, the market is forward-looking and data-driven, and it’s anticipating our country will realize better days ahead.

In March, investors, and a few financial professionals, panicked. One prominent investment firm in Texas sold their client’s entire stock holdings in early March to ride out the storm. I believe his clients are still in cash.  A renowned hedge fund manager said, “Hell is coming.”[1] Another stated, “I would say it’s one of the most overvalued, maybe the second-most overvalued I’ve seen.”[2] Sometimes the safest investment strategy is to do nothing. And trying to time the market is a fool’s errand

With hindsight, market timing appears easy, but it’s not. It’s impossible. Boeing is now trading above $200, so buying it in March at $95 seemed like a no brainer. But, at the time, airline capacity had fallen by 95%, and Boeing was battling the government to obtain certification for its 737 Max. There are twenty-two analysts that follow Boeing, and their average price target is $157, or 26% below its current price.[3] Despite Boeing’s recent performance, it is still down 47% from its high.

After more than thirty years in the investment business, I’m still looking for a better strategy than buy and hold. Owning a globally diversified portfolio of low-cost funds is still hard to beat. During the first few weeks of the market rout, bonds performed well. They provided safety and support.  As the market recovered, the baton was passed to different asset classes like growth stocks, value stocks, international companies, emerging markets, real estate, and small-cap stocks. Each sector performed well at one time or another. Each category contributed to the performance of the portfolio.

Our investment models were active during the market correction. They are designed to keep our client’s asset allocation and risk tolerance in check. Initially, we were selling bonds to buy stocks, and then as the market rebounded significantly, we sold stocks to buy bonds. At one point, our models were allocating money to real estate funds, despite being down more than 40%. I was hyperventilating as our software allocated funds to this asset class. The real-estate allocation has been a stellar performing asset class over the past couple of months, outperforming most of our other asset classes. Our models are now in positive territory for the past year.

A globally diversified portfolio of mutual funds is not sexy. While some funds are rising, others are falling. It seems I’m forever apologizing for an underperforming asset class. Investors, apparently, only want to own funds that grow in value, but the funds are always changing leadership positions, which is the root of diversification.

What is the best way to find a portfolio that is the right fit for you? A financial plan is a powerful tool to help you define and refine your goals. Your advisor will use the data to align your investments with your objectives. If your finances are in sync with your aspirations, you’re more likely to stay invested through thick and thin. As the markets fell, we were regularly stress-testing our client’s financial plans, and the drop impacted not one. Despite the rout, our client’s financial plans remained intact. If your strategy is working and you’re on track to reach your goals, do not make any changes, and dare to stay invested.

Most experts do not know what’s going to happen tomorrow, and the stock market has been tormenting professionals for centuries. Do not let the opinions of others derail your dreams. Instead, focus on your goals, think long-term, pay attention to your plan, and hold onto your investments.

“Sometimes, the most important thing to do is to do nothing.” ~  Debasish Mridha

June 5, 2020

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and are not suitable for every investor.

 

 

 

 

[1] https://www.theguardian.com/business/2020/mar/27/hell-is-coming-how-bill-ackmans-tv-interview-tanked-the-markets-and-made-him-26bn, Rubert Neate, March 27, 2020.

[2] https://www.marketwatch.com/story/this-is-second-most-overvalued-stock-market-that-billionaire-investor-david-tepper-has-ever-seen-2020-05-13, William Watts, May 14, 2020.

[3] https://money.cnn.com/quote/forecast/forecast.html?symb=ba#:~:text=Boeing%20Co%20(NYSE%3ABA)&text=The%2022%20analysts%20offering%2012,the%20last%20price%20of%20184.30., website accessed June 5, 2020

All That Jazz

Jerry Sloan, the legendary coach of the Utah Jazz, recently passed away. Mr. Sloan had a stellar career as a player and a coach. As a player, he was twice an all-star, and his number was retired by the Chicago Bulls.  In 2009, he was enshrined in the NBA hall of fame for his coaching ability. He coached the Utah Jazz for more than 20 years, “the longest coaching tenure with the same team in professional sports,” and retired as the 4th winningest coach in NBA history.[1] Mr. Sloan was consistent and respected.

Coach Sloan led the Utah Jazz to their first NBA finals in 1997 with players Karl Malone and John Stockton. The Utah Jazz teams under Sloan weren’t flashy like the Lakers, nor did they have the pedigree of the Celtics, and they weren’t as coarse as the Pistons, but they were fundamentally sound, and nice – like most people in Utah.

If Coach Sloan were an investment professional, he probably would have been a fan of dollar-cost averaging, a consistent strategy that relies on fundamentals and patience. The dollar-cost averaging strategy lacks the flair of private equity, liquid alts, futures trading, IPOs, or option collars. Still, it is stable and reliable, and for most investors, it delivers results.

How does dollar-cost averaging work? This strategy requires you to invest a fixed dollar amount each month into a mutual fund or several funds. Let’s look at an example. You decide to invest $500 per month in Vanguard’s 500 Index Fund (VFINX) over several years.

  • One Year: After one year, your investment is worth $5,950, and it generated a loss of 1.83%.
  • Five Years: After five years, your investment is worth $37,298. It generated an average annual return of 8.92% and produced a gain of $7,298.
  • Ten Years: After ten years, your investment is worth $105,927. It generated an average annual return of 11.11% and produced a gain of $45,927.
  • Twenty Years: After twenty years, your account is worth $310,255. The 20-year average annual return was 8.74%, and it produced a gain of $190,255.
  • Thirty Years: After thirty years, your account is worth $818,929. The 30-year average annual return was 8.79%, and it produced a gain of $638,929.
  • Forty Years: After forty years, your account is worth $2.97 million. The 40-year average annual return was 10.24%, and it produced a gain of $2.73 million.

For the dollar-cost averaging strategy to reward shareholders over time a down market is needed, and the lower, the better. If you’re investing for the long haul, a down market will allow you to accumulate shares at lower prices. Your share accumulation will pay dividends when the stock market recovers because you will own more shares at higher prices. If you participate in a 401(k) plan, you likely witnessed this happening in your account.

If you’re looking for an easy way to accumulate wealth, look no further than the dollar-cost averaging strategy. A calculated, consistent investment strategy over time is a winning formula. This strategy is easy to institute, and you can do it with an IRA, 401(k), 403(b), 529 Plan, or taxable brokerage account, and you can start it with any dollar amount.

Courage is the most important of all the virtues because, without courage, you can’t practice any other virtue consistently.” ~ Maya Angelou

May 30, 2020

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and are not suitable for every investor.

 

[1] https://www.hoophall.com/hall-of-famers/jerry-sloan, website accessed May 29, 2020.

 

Planning with Uncertainty

Zero Dark Thirty is a thriller about the global pursuit of Osama Bin Laden. A CIA operative determines he is living in a compound in Pakistan, but few believe her analysis, until the meeting scene. During this scene, the power players assess the likelihood that Bin Laden is living at the compound. One associate tells the group, “We don’t deal in certainty, we deal in probability.”[1] The members are approximately 60% positive that he is living at the site until they ask Maya what she thinks. She says, “A 100% he’s there. Okay, fine, 95% because I know certainty freaks you guys out, but it’s a hundred.”[2]

Financial planning is clothed in uncertainty – a combination of math, assumptions, predictions, and guesses. Most financial planning models rely on intuitions about the future, and financial planners are aiming at moving targets. A change to one metric will reverberate through the plan. If I modify the rate of return by 1%, it can have life-altering consequences for a client. Despite the uncertainty, a written plan is still recommended for all investors, because as John Maynard Keynes said, “It is better to be roughly right than precisely wrong.”

Regardless of the environment, uncertainty is ever-present even in the best of times. Last year the stock market and economy were humming. The future was bright, investors were confident, but then the Coronavirus arrived, and uncertainty escalated quickly.

To learn more about planning with uncertainty, I contacted Captain Lawrence G. Getz III, Commander of the University of Michigan’s Navy ROTC program. Captain Getz is a Navy helicopter pilot who has flown more than 2,500 hours, including 500 combat hours in the SH-60 Seahawk helicopter. He was also the Executive and Commanding Officer of the USS Kearsarge. For his service, Captain Getz has earned the Defense Superior Service Medal, Legion of Merit, and two Meritorious Service Medals, to name a few. Captain Getz knows plenty about planning with uncertainty, and he has learned a thing or two during his twenty-nine years in the Navy.

Before each mission, he and his team would script out their pre-planned responses (PPR). Captain Getz said, “It‘s like Tom Brady throwing to different receivers. If one is covered, he looks for the next receiver, and so on until he finds an open one.” He added, “Tom Brady and his teammates practice the routes, they are pre-planned.” Part of his planning is to make smart decisions every day and take precautions. “The smart decisions you make today will make you better years, and decades from now,” he added.

“No plan survives the first contact, but the training and trust will get you through the bad days,” said Captain Getz. I asked him how he dealt with his emotions while flying. He said, “Compartmentalize your emotions, put them in a box, and execute your plan. Being afraid is normal, but do not make emotional decisions in highly volatile times. Do not make decisions in fear.” He added, “We are always dealing with VUCA – volatile, uncertain, complex, and ambiguous situations.”

Emotions play a significant role for investors. If you let them manipulate you, it can have negative consequences on your financial future. I asked Captain Getz how individuals should deal with fear, and he said, “Look to historical spikes. Individuals had the same concerns and fears ten or twenty years ago as people do today, but we (Americans) made it through. We are resilient. We put our head down and make it out.” He talked about people’s reaction to New Orleans after Katrina ripped through The Big Easy. He said, “People did not want to rebuild the city; they wanted to tear it down. But that’s not what we do; we make it better.”

In a recent report from Morningstar: A Behavioral Guide to Market Volatility, they note that “volatile times can also make us more prone to behavioral mistakes.” They added, “When we predict what’s going to happen in the future, our minds naturally reach for what happened most recently.”[3] We believe current events will last forever.

Captain Getz relies on his team through pre-planned responses and constant communication. How does he know when it is time to waive off a mission? When is it time to get out of a bad situation? He said, “His team talks before each mission.” For example, he tells them, “If he is on final approach, and he is taking enemy fire they should remind him to waive off.” Communication and planning are paramount.

Reviewing each mission is critical to his team’s success, and they will evaluate each one when they return to base. He said, “You have to check your ego at the door and have the conversation about the mission. Was it clear? What did you think? We must communicate to work better.”

Captain Getz flew with a Smart Pack strapped to his knee – a 5×7 card, a checklist for each mission. The card included details about the mission, navigation, code words, etc. He said, “If I forgot my name, I could look down at the card and follow the plan.”

Building and developing a team to deal with uncertainty is also important to Captain Getz. He relied on his team frequently, and he spent considerable time hanging out with his crew. His team would work out, walk, eat, read, and drink together. The camaraderie “made them better teammates.”

I asked Captain Getz how he celebrated his victories. He said, “Celebrate humbly, take pride in your work, take pride in working well together.” He added, “I look to provide meaning, and I know we are serving something bigger than ourselves.”

As an investor, how can you incorporate Captain Getz’s wisdom? Here are a few suggestions.

  • Develop a written plan for your pre-planned responses (PPR). Your written plan will help you navigate your financial future. Decide beforehand how you will react to a falling market, a shifting economic environment, or a change to your employment status.
  • Build a team. In addition to your financial planner, incorporate your CPA, attorney, insurance agent, mortgage banker, and other professionals to assist you with your planning needs. Your team can guide you through challenging times; they are your financial support group.
  • Communicate with your team and loved ones. Let those most important to you know about your financial intentions. Inform them of your plans and show them where you keep your relevant documents like wills and trusts. If your situation changes, let them know as soon as possible.
  • Make smart, short-term decisions every day. Your daily decisions will have generational consequences.
  • Control your emotions. Avoid all financial decisions if you’re afraid or fearful. Talk to your team or reference your plan before you proceed. If you’re emotionally paralyzed, wait 24 hours before making any adjustments. As an investor, you can only control how much you save and how much you spend; everything else is beyond your grasp, so let it go.
  • Do not wait for perfection. If you’re waiting for 100% certainty before proceeding, you’ll never execute your plan. By the time the all-clear signal is given, it’s too late to act. Make the best decision you can with the information you have and advance accordingly.
  • Review your plan. Review your plan regularly to ensure your goals are still intact. Do not revise it if you are on target to achieve your goals. If your plan has been dislocated due to the recent market turmoil or some other factor, adjust it as needed. I recommend reviewing your plan quarterly.
  • Celebrate your victories. It’s okay to enjoy the fruits of your labor and celebrate your wins. If you have reached your goals, rejoice in your success.
  • Serve others. Serving others with your time, talent or treasure is humbling, especially if you’re helping those who can’t pay you back. It’s hard to worry about yourself or feel discouraged when you’re lending a hand to someone in need. During this economic downturn, look for opportunities to do some good.

We are in uncertain times, but we will prevail. Our country has faced many challenges, but we’re still standing. We are still fighting.

Fair winds and following seas.

“A good Navy is not a provocation to war. It is the surest guaranty of peace.” ~ Theodore Roosevelt

May 18, 2020

 

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and are not suitable for every investor.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[1] https://www.youtube.com/watch?v=irG0wGzw7Ok, Website accessed May 17, 2020

[2] Ibid

[3] A Behavioral Guide to Market Volatility: How Behavioral Science Can Help Advisors During Market Turmoil. Morningstar Research by Samantha Lamas, Behavioral Researcher and Steve Wendel, Head of Behavioral Science