Tag: Hiking

My Week at a Dude Ranch

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Over the years, my family and I vacationed at Wind River Ranch – a Christian dude ranch in Estes Park, Colorado. Wind River Ranch rests in a valley between Longs Peak and Twin Sisters, a magical place. I rode horses, hiked, and fished while acting like a cowboy. Giddy up!

While riding horses in the Rocky Mountain National Park, getting lost in my thoughts was easy as I meandered along the trails. I had to remind myself I was sitting on a thousand-pound animal on a narrow path and had to remain focused on where I was leading the horse. I looked forward so I wouldn’t run into a tree or fall off a ledge. Riding a horse while looking over your shoulder doesn’t do much, and horses aren’t fond of walking backward. So, too, with investing. It is imperative to keep progressing toward your financial goals. Looking back and thinking about what could have happened is a waste of time. Instead, keep advancing and adjust your goals as needed.

Hiking in the Rocky Mountain National Park is breathtaking. A favorite hike is Mills Lake, a beautiful climb along Glacier Creek, and the lake looked like a giant swimming pool on a windless day. Another fun one is Twin Sisters. The elevation at the peak is 11,427 feet. It’s not a fourteener, but still challenging. I planned my course for both routes and ensured I had my supplies, especially my bear bell. When investing, it’s essential to prepare for all conditions. A financial plan and investment strategy can help guide you to your financial destination, and a good asset allocation policy can help you weather economic storms. Like hiking, stopping periodically to confirm you’re still moving toward your goals is critical.  

Fly fishing in the Rockies is about as good as it gets. Fishing in the park’s rivers, streams, and lakes is part art and science, and I used several fly patterns, and all worked well at one point or another. However, not every cast caught a trout, and I spent a fair amount of time casting and waiting. Fly fishing demands patience, like investing. Give your investments time to grow or recover, and don’t be in a hurry to make significant changes.

Whether hiking, riding, or fishing, all three require a plan, equipment, and constant monitoring to succeed. Investing also involves these attributes; the more you plan, the better your investment results will be.

Be still, and know that I am God.  ~ Psalm 46:10

April 7, 2023

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management 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 your asset level.

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. Prices and yields are for today only and are subject to change without notice.

An Uncrowded Trade

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My family and I recently returned from a trip to Crested Butte, Colorado. It’s a slice of heaven, and we have visited the little mountain town for years. It was our first family trip since COVID, and we weren’t sure what to expect. What we found were crowds. The airports, restaurants, shops, and streets were teeming with people.  We were shoulder to shoulder almost everywhere we went, except when we went hiking.

Crested Butte is populated with beautiful trails like Oh Be Joyful, Brush Creek, Crystal Mill, Trail 403, and Copper Lake. When we ventured out, we rarely saw another human being. Our favorite hike this past trip was Copper Lake. It’s an eleven-mile out and back trail. We passed Judd Falls, several streams, and meandered through quaking Aspen trees. More importantly, it was uncrowded.

A current uncrowded trade is investing in international stocks, especially in emerging markets. For the past fifty years, the MSCI EAFE International Index has trailed the Dow Jones Industrial Average by 1.28% per year, or 2,000% in total. A $10,000 investment in the Dow Jones on January 1, 1970, is now worth $432,840, whereas the MSCI International Index grew to $233,100, a difference of $199,740. The EAFE index has also trailed the Dow Jones over a 1-, 3-, 5-, and 10- year period.  International stocks are an uncrowded trade because few want to invest in this category. Investors want to own large-cap US growth stocks like Facebook, Alphabet, Apple, Amazon, and Netflix. However, from 1970 to 2011, international stocks outperformed US companies. And from 2003 to 2007, they trounced US stocks.  

Emerging markets are falling because of the Chinese Government’s crackdown on tech and gaming stocks. Over the past six months, the iShares MSCI China ETF (MCHI) is down more than 21%. Chinese stocks like Alibaba, Baidu, and Tencent are down 22.5%, 34.5%, and 40%, respectively, over the past six months. If you want emerging market exposure without Chinese stocks, consider the iShares MSCI Emerging Markets ex-China ETF (EMXC) or the Alpha Architect Freedom 100 Emerging Markets ETF (FRDM).

International stocks make up close to half of the global market capitalization for stocks, so it’s not wise to ignore companies beyond our borders. An allocation between 5% and 25% to international stocks makes sense for most investors. Global stocks are an uncrowded trade, and at some point, they will outperform US stocks, which will make all the difference.

Two roads diverged in a wood, and I – I took the one less traveled by, and that has made all the difference. ~ Robert Frost

August 3, 2021

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management 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.

A Mosquito In Your Tent

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I love the great outdoors. Hiking, fishing, camping are the hobbies I enjoy most. My wife and I spent a few days hiking in the Rocky Mountain National Park this summer, and it was beautiful. Our best vacations tend to be outside enjoying nature. We have visited several national parks over the years, including Yellowstone, Yosemite, and Grand Teton.

Camping in the mountains, on a beach, or near a river is peaceful and serene. The views. The sounds of nature. The clean, crisp air. A robust fire. Sleeping under the stars in a tent is lovely until you hear the buzzing sound of a mosquito, a single mosquito. It’s hard to imagine how much sound a small insect can produce, but it’s enough to keep you awake and annoyed for hours. Trying to locate and kill the mosquito is even more challenging than struggling to fall asleep. Though a mosquito is tiny, it can quickly ruin the joy of spending time outside.

A mosquito is like a bad investment in a diversified portfolio; it’s hard to ignore. If an investor owns ten mutual funds – nine up, one down, they’ll focus on the loser. It’s human nature. An investment down in value can distract you from the positive returns from the rest of your holdings. Several years ago, I was reviewing my parent’s account. It was a good year for returns, and most of their stocks were up except Qualcomm.  My mom wanted to know what was wrong with it, why was it down? There was nothing structurally wrong with Qualcomm; it was just out of favor – a temporary pause in a long-term uptrend. It has since recovered.

The mosquito in the tent this year is small-cap value. Small-cap value stocks are down 11.5%, and investors are losing patience. These stocks are distorting the view of better-performing asset classes like large-cap growth stocks, up 31%.

During my quarterly reviews with clients, all eyes turn to their small-cap holdings. Why do we own these stocks again? Is there anything better? Can we sell these losers? I don’t like losses either, but there will always be an investment out of favor in a diversified portfolio. If all your assets went up or down at the same time, you’re not diversified. Over time, your investment holdings will fluctuate between leading or lagging. Sectors trade in and out of favor often.

It’s hard to imagine today, but small-cap value stocks have outperformed large-cap growth stocks for the past twenty years. A $10,000 investment in the small-cap value index is worth $58,380, whereas the same investment in the large-cap growth index grew to $39,050, a difference of $19,330.[1]

During the early 2000s, investors wanted to ditch large-cap growth stocks. From January 2000 to January 2010, they lost 24%. A $10,000 investment fell to $7,635 during the decade – a huge loser. If you sold them in 2010, you missed a 411% return for the past ten years.

It takes patience to be a successful long-term investor. Peter Lynch, the legendary investor of the Fidelity Magellan Mutual Fund, would typically own a stock for three to five years or more before it showed significant gains.

Here are a few suggestions to help you better manage your investments.

  • Buy and hold a diversified portfolio of stocks, bonds, and cash because you never know when, where, or why investments will decide to take off.
  • Invest early and often.
  • Be a net buyer of stocks. Ignore the market.
  • Rebalance your accounts annually.
  • Be patient; today’s losers can be tomorrow’s winners.
  • Think long-term to create generational wealth.
  • Develop a plan, set goals.
  • Follow your plan.

Happy Camping!

“In the stock market, the most important organ is the stomach. It’s not the brain.” ~ Peter Lynch

October 16, 2020

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management 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] YCharts

7 Things to Do During a Quarantine

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The Coronavirus is spreading. Countries and cities are in lockdown. Our government and businesses are encouraging their employees to work from home, and senior citizens are advised not to leave their houses. It’s a dark and dire time for the global community, so how can you make the best of a bad situation? Here are seven ideas.

  • Go for a hike with your family and enjoy the great outdoors. You can explore new trails in your city while keeping a safe distance from others. My family and I hike our neighborhood trail with our dog Cricket. We put a bear bell on her to let the snakes and other creatures know we’re coming. The bell also helps us locate her because she’s a lab with a mind of her own. After being cooped up in our house, it’s nice to go outside and enjoy Mother Nature.
  • Read a book. It’s an excellent time to turn off your TV because there is nothing but bad news on the airwaves and there are no sports to watch. Here are a few of my favorite books: The Fountain Head, The Hunt for Red October, Jurassic Park, The Old Man and The Sea, Catch-22, American Rust, Atlas Shrugged, The Firm, Treasure Island, Oil!, The Invisible Man, The Adventures of Huckleberry Fin, The Adventures of Tom Sawyer, The Count of Monte Cristo, The Once and Future King, Lone Survivor, Amateur’s, The Worst Hard Time, The Right Stuff, Moneyball, Into Thin Air, The Perfect Storm, The Grapes of Wrath, East of Eden, For Whom the Bell Tolls, To Have and Have Not, and The Hobbit.
  • Play a game. As a family, we’ve played board games for years. When my daughter was younger, most of the games involved horses like Herd Your Horses or Horse Show. We now play Catan, Ticket to Ride, Hive, Monopoly, Uno, or Mexican Train.
  • Learn a new hobby. You can access hundreds of thousands of free platforms online to learn a new language or skill from the comfort of your home. Numerous universities are offering free online courses because of the crisis. I’m learning to play the guitar. I’m horrible, but I’m having fun.
  • Fix up your home. Have you been waiting to paint a room, clean your garage, or wash your windows? With time on your hand, you can now tackle your growing to-do list. My daughter and I are going to build two vegetable boxes and a border for our rose garden.
  • Write a letter to a friend or family member. A handwritten note is a novelty, so spread some cheer with your penmanship.
  • Read the Bible. The Bible has about 365 verses on fear or worry, one for each day. Proverbs is a great place to find wisdom, and it has 31 chapters in Proverbs, one for each day. Psalms, Romans, Hebrews, Galatians, Song of Songs, Ephesians, Matthew, Mark, Luke, John, and the other 56 books are worth a read.

When I was growing up, I played baseball. During one game, while playing left field, a left-handed batter hit a line drive toward me, and because a left-handed batter hit it, it had a wicked slice. It was spinning away from me, and it was too late for me to adjust my path. It got past me and rolled to the fence. We lost the game; I burst into tears, and I thought my life was over. However, it wasn’t the end of the world. My dad, who is left-handed, spent hours hitting me fly balls, and I turned my weakness into a strength.

The world is not going to end tomorrow, and we will live to see another day. Don’t let the weight of the world keep you down. We will defeat the virus. Be strong and keep the faith!

The wolf will live with the lamb, the leopard will lie down with the goat, the calf and the lion and the yearling together; and a little child will lead them. ~ Isaiah 11:6

March 19, 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 Trailhead

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I just returned from Colorado where I spent a week riding horses and hiking in the Rocky Mountain National Park. One of my hikes was to the summit of Estes Cone. It’s considered a strenuous hike with an elevation gain of 1,800 feet or 551 feet per mile.[1]

Most trails are well marked from the beginning including the trail for Estes Cone. The trailhead for our hike was the Longs Peak trailhead. Longs Peak is the ultimate hike in the park and someday I’ll hike it, maybe. Our group was initially stuck at a fork in the road before we referenced our trail map. After a brief detour, we were back on the trail.

The trailhead is often the best place to start when you go hiking.  It would be helpful if there were financial trailheads for individuals who want to save money, create a budget or pay off debt, but there isn’t, at least not one for everybody. Even though there isn’t a single map for financial success, others have left clues and markers to help you reach your financial goals. Here are a few suggestions.

Start. Hikers start at the trailhead because it’s usually the lowest point on the trail. Start by setting a few short-term goals like opening a savings account, paying off a credit card, or creating a budget. It’s okay to start small. A little nudge might be all you need to get moving.

Orient. When hikers reach the trailhead, they orient their compass to the summit and trail map. The map and compass will guide them to their goal. Likewise, your financial goals will help you orient your path. Well defined goals are needed for financial success.

Gear. Hikers love gear – shoes, packs, knives, poles, etc. These items are essential for a successful hike. Investors need quality gear as well. Financial software can make your life easier. Today you can find software for any scenario like financing college, paying off your mortgage, buying life insurance, or leasing a car.  These tools will help you get your financial house in order.

Guide. Our hike was led by one of the ranch hands where we were staying. He knew the trail and led us to a successful hike. We could have hiked without a guide, but it may have taken us longer to reach the top. To increase your chance of obtaining your goals consider hiring a Certified Financial Planner® who can help you guide your financial steps. A CFP® professional is trained to handle a multitude of investment and planning scenarios.

Valleys. Some trails will take you through a valley before you reach the summit. When you enter a valley, it might not feel like you’re going to reach your goal, but if you stay on the trail and follow your map, you’ll reach the summit. Markets will take you deep in the valley at times in the form of corrections or pullbacks. During these down days stay true to your financial path and don’t panic. Market corrections are normal and short-term in nature.

Obstacles. Trails can be besieged with rocks, trees, shrubs or water. If you’re not paying attention to your steps, you can trip and tumble. A hiker in our group referred to this as the “tuck and roll.” Staying focused on your financial goals is paramount so don’t get distracted by taking your eyes off your goal.

Rest. It’s okay to stop on the trail to catch your breath, drink some water, grab a snack and check your bearings. In fact, it’s recommended. It’s also recommended to review your accounts often to make sure they’re performing to your satisfaction. Reviewing your asset allocation, risk level, and performance will help you stay invested for the long haul.  Adjust your portfolio as needed so you can stay focused on your financial goals.

Peaks. The summit is the goal for hikers. The summit for Estes Cone is 11,006 feet. Your summit may be a financial goal you’ve reached. Your peak, or financial goal, will keep you moving forward. If you’ve reached your summit, celebrate.

Hiking is a great activity, particularly in a national park. The challenges of a mountain make for great adventure.

Investing is challenging, but with the right tools and resources you will have an opportunity to reach your financial summit. Climb on!

The mountains are calling, and I must go. ~ John Muir

July 2, 2019

Bill Parrott, CFP®, CKA® 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.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than 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.

 

 

 

[1] http://www.rockymountainhikingtrails.com/estes-cone.htm

Do You Have the Right Map?

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Having the right map is paramount if you want to arrive at your destination. Navigating the high seas and distant lands requires a detailed map, so does driving across town to pick up a gallon of milk. A map of Los Angeles is of little use in New York. A ski map of Crested Butte provides no guidance on Mt. Bachelor. Whether you rely on a printed map or satellite GPS, make sure it’s in sync with your travel plans.

Growing up in Los Angeles I relied on Thomas Brothers Maps to help me get around town. The maps, bound by a spiral spine, were necessities for driving around Los Angeles and the surrounding counties. The maps were detailed, simple to use, and extremely efficient.

When I hike in the mountains, I mostly rely on trail maps from National Geographic. Never would I consider hiking in a national forest without one. Would you?

Nowadays, satellite navigation through phones, watches, and other electronic devices have replaced the need to carry a printed map unless travelling in remote areas with poor reception.

Have you ever been lost? Driven on the wrong road? Hiked on the wrong trail? It’s a scary feeling once you realize you may be lost. Anxiety runs high until you recognize a familiar landmark.

Having the right financial map can help you navigate your investments. Like a GPS, your financial map can guide you to your desired destination. Your map is a financial plan. It will help you identify your goals and direct you to the best path to achieve them. However, most investors don’t follow a plan, or if they do it’s the wrong one.

Here are a few suggestions to help you follow the right financial map.

The right way:

Your map should be a collection of your goals – no one else’s. Committing your financial goals and dreams to paper gives you an excellent chance of making them come true. Your goals, once documented, become a gravitational pull, navigating you to your destination. In addition, after you write down your goals, you can quantify the time and cost it will take to achieve them.

Your map will help you avoid the wrong roads and trails, keeping you focused on your route. A financial plan will help you answer several questions like, “Can I afford to retire?” or “Do I need to be worried about the market volatility?” It may also help you avoid financial landmines like Bitcoin.

Your map should be checked periodically. After you have departed on your financial journey, check in often to make sure you’re still on the right path. I refer to my hiking map often to make sure I’m still on the right trail. If I have deviated from my goal, I must find the fastest, and safest, route to get back on track. Your financial plan will occasionally be knocked off track through markets rising and falling. Adjusting your plan and portfolio is necessary for you to achieve your goals.

The wrong way:

Following someone else’s map will never get you to your financial destination. Trying to keep up with your next-door neighbor is no way to plan for the future. Who cares if they have a bigger boat or a faster car? Are you jealous of their social media posts? Planning through envy is a sure way to end up in the poor house.

Listening to the media. The media’s job is to report on the news and entertain their audience.  They’re not talking directly to you, nor are they giving you specific investment advice. When a reporter says the market is going to rise or fall, they’re making a generalization about its direction.  They don’t know you or your situation. If you listen to the news, do so with a skeptical ear.

Leaving your financial future to hope and chance. Hoping you have enough money to retire someday is no plan. A vague promise of a bright future will insure you won’t have one.

A financial plan will require some time and effort on your part, but the results will be time well spent. Once it’s complete, you’ll be able to refer to it often and adjust it as needed. It will keep you focused on your final financial destination.

Happy trails!

“Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?” ~ Luke 14:28

November 28, 2018

Bill Parrott is the President and CEO of Parrott Wealth Management firm 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.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog.