Tag: horses

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.

A Day At The Races

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I spent last Sunday at the races with my mom and daughter. We had a great time despite the cold and drizzly weather. We arrived early, stayed late, and bet often.

I grew up near the Santa Anita racetrack. My high school was across the street, so I was a frequent visitor. In addition, my daughter has been riding horses since she was five, so it’s a sport we bond over.  

After downloading the daily racing forum, we examined each horse’s sires and dams and spent the evening handicapping the horses. We reviewed their previous workouts, race performances, owners, and trainers. At the racetrack, we got the official daily racing program that includes some data on the horses and riders. We were ready.

On race day, we bet on our selected horses. Our strategy and system worked well as we finished in the money for seven of the nine races. We hit an exacta in the eighth race and missed another by a nose in the sixth.

We bet conservatively for most races, but when we felt convicted, we upped the ante and pressed our bets. We felt confident in our system because we spent time doing our homework. If we only relied on the official program, we would have performed poorly. It would have been a guessing game, picking horses based on the jockey’s colors or some other random item.

At times it appears people pick investments based on random facts or data points that won’t move a stock’s price. Rather than doing their research, they choose investments from a tweet, text, or tik-tok video. If you hear about a stock on CNBC, it must be a good investment. Right?

Don’t leave your financial future to chance. Instead, take time to learn something about your investments. Here are a few tips you can use to increase your odds of success.

  • If you’re buying a stock, review the company’s mission statement, financials, price charts, and competition. Yahoo! Finance is an excellent data source. Digging into a company’s financial history can give you an idea of its future.
  • If you’re buying a mutual fund or ETF, review the fund’s objectives, managers, expense ratios, holdings, and the other funds in the category.
  • How much can you invest? Do you want to own several stocks, or do you want to place your bets on a few long-shots? If you have buckets of money, you can own many companies. However, if your resources are limited, owning a mutual fund is more prudent.
  • What is your risk management strategy? Will you let your winners run? Will you sell your losers? Will you buy the dip? Create a plan and follow it. Don’t let your emotions ruin your portfolio.
  • Review your trades, especially if you lost money. Why did your investment fail? What happened? How can you improve your trading based on your experiences? For example, in the sixth race, we lost an exacta because our horse came in third, not second. After the race was over, I reviewed our process to see if we missed anything. We didn’t. Our horse was solid; it just got beat.
  • Celebrate your success. If you made money on a trade, take a few chips off the table and celebrate your win. It’s okay to spend your winnings on things you enjoy.

If you’re inclined to work harder than the next person, you can win at the races, in the markets, and life. Unfortunately, few people are willing to go the extra mile, but I know you can do it. I’m betting on you to win!

And away they go!

A good rider can hear her horse speak to her. A great rider can hear her horse whisper. ~ Anonymous.

“Do you give the horse its strength or clothe its neck with a flowing mane?Do you make it leap like a locust, striking terror with its proud snorting?It paws fiercely, rejoicing in its strength, and charges into the fray.It laughs at fear, afraid of nothing; it does not shy away from the sword. The quiver rattles against its side, along with the flashing spear and lance. In frenzied excitement it eats up the ground; it cannot stand still when the trumpet sounds. At the blast of the trumpet it snorts, ‘Aha!’ It catches the scent of battle from afar, the shout of commanders and the battle cry.” ~ Job 39:19-25

May 19, 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.

Diversification

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A young ruler owned several racehorses. His stable was full of powerful thoroughbreds, but one yearling stood out from the others – a beautiful chestnut with a wide blaze. It had an easy gait and ran like the wind while galloping. The young ruler was mesmerized.

One day, while watching his young horse trot, he ordered the trainer to sell all the horses in his barn except for the yearling. The trainer pleaded with him not to do this, and he reminded the ruler that the other horses were champions, and they had won many races. It would be foolish to concentrate your bets on one horse that has yet to run a sanctioned race. The ruler ignored the trainer’s advice and demanded he move the horses today.  The trainer acted on the command.

The yearling continued to progress as the young ruler projected. The horse looked more majestic with each passing day.

Since the ruler sold the other horses, his stable was not generating any income, so he borrowed money to keep his property afloat.

After several months of training, he entered his horse in its first race. It won by four lengths, pulling away at the finish. His horse continued winning, and the ruler had dreams of great wealth. In addition to the winnings, he planned on retiring his horse to stud to generate more income.

At three-years-old, the horse was undefeated. The ruler enjoyed the winnings, but he continued to borrow money. The race of the year was on the horizon, and his horse was the favorite. After the race, he planned to cash in his winnings, pay off his debts, and start the stud operation.

His horse sprang from the gate cleanly and roared to the front of the pack. The horse continued to separate itself from the field, soaring down the backstretch. At the top of the stretch, the horse tumbled and threw its rider. The crowd fell silent as the ruler and the medical team sprinted to the track. The horse popped up, but it was clear it had a broken leg. They put the horse down.

The young ruler sold his farm to pay off his debts, and he lost everything.

The moral of the story? Diversify your assets.

The future is always coming up with surprises for us, and the best way to insulate yourself from these surprises is to diversify. ~ Robert J. Shiller

November 24, 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.

And Down The Stretch They Come!

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Dave Johnson is known for this call, “And down the stretch they come!” Mr. Johnson has been calling horse races since the early 1970s, including the Kentucky Derby, Preakness, and Belmont Stakes. There are few things more exciting in sports than watching horses make the final turn towards the finish line – the stretch run.

We’re entering the fourth quarter, and 2021 is less than 100 days away – thankfully. We are in the stretch run. When horses enter the starting gate, the optimism is high; each horse has a chance to win. As the race progresses, the fastest horse separates itself from the field, and jockeys need to adjust their strategy to catch the leader. This year started with much hope, especially after a stellar 2019. The Dow Jones was up  3% through February before the world imploded with the Coronavirus. As the pandemic spread, the market fell 37%. For the past six months, we had to adapt to a new normal – masks, social distancing, self-quarantines, Zoom Calls, hand sanitizer, and a shortage of toilet paper. Hopefully, we finish the year on a positive note with strong momentum for 2021.

As we approach the end of the year, what can you do to enhance your investment portfolio for 2021 and beyond? Here are a few suggestions.

  • Let your winners run. A jockey who is riding a winning horse needs to hold on to finish the race as Ronney Turcotte did when he rode Secretariat during the home stretch of the Belmont Stakes in 1973. If you’re sitting on winning stocks, hold them until next year before realizing your gains.
  • Sell your losers. If you own a stable of losing stocks, sell them to realize your losses for this year. You can offset your gains dollar for dollar, and if you don’t have any profits, you can carry your losses forward forever. Hall of Fame pitcher Don Drysdale sold his racehorses because he said the slow ones eat as much as the fast ones.
  • Diversify your holdings.  Owners and trainers race several horses during a season – some win, some lose. A globally diversified portfolio of stocks, bonds, and cash will allow you to finish in the money more often than not. Spread your bets across several sectors.
  • Review your accounts. What worked and what didn’t? Analyzing your results is vital for investment success. Are you still on pace to achieve your financial goals? If you’re not sure, give us a call. We can help.
  • Adjust. What changes do you need to make for 2021? Is your portfolio sturdy enough to weather all types of market conditions? What changes can you make today to better position your investments for a profitable run next year?
  • Look for long shots. The technology sector will likely lead wire to wire this year, but sectors like energy and financials were left stuck in the mud. Look for investments that may rebound next year.
  • Celebrate your success. Are your investments on pace to finish the year in positive territory? Will you be in the winner’s circle at the end of the year? If you were financially successful, consider sharing your winnings with those in need. Donating money to a non-profit will benefit others and help you reduce your taxes – a win, win.

This year has been brutal, and it can’t end fast enough. We are in the stretch run, so use these next few months to get your house (barn) in order. I know you can do it. I’m betting on you to win big next year.

Riders up.

Do you give the horse its strength or clothe its neck with a flowing mane? Do you make it leap like a locust, striking terror with its proud snorting? It paws fiercely, rejoicing in its strength, and charges into the fray. It laughs at fear, afraid of nothing;  it does not shy away from the sword. The quiver rattles against its side, along with the flashing spear and lance. In frenzied excitement it eats up the ground;  it cannot stand still when the trumpet sounds. At the blast of the trumpet it snorts, ‘Aha!’ It catches the scent of battle from afar, the shout of commanders and the battle cry. ~ Job 39:19-25

September 23, 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.

My Daughter

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Do you give the horse its strength or clothe its neck with a flowing mane? Do you make it leap like a locust, striking terror with its proud snorting? It paws fiercely, rejoicing in its strength, and charges into the fray. It laughs at fear, afraid of nothing; it does not shy away from the sword. ~ Job 39:19-22.

My daughter left home today for her summer job as a wrangler on a Christian dude ranch. The ranch is a slice of Heaven, snuggled between several mountain peaks in Estes Park, Colorado.

My daughter started riding horses before she learned to ride a bike. My uncle, who spent his entire life working with horses, encouraged me to introduce her to another activity besides horseback riding. He was concerned about the cost and he knew it was going to be a lifelong commitment. He was right on both fronts but I’m glad I didn’t take his advice because horses have been instrumental in building her character. The confidence she earned while riding horses has been priceless. When she’s on the back of a horse she shows no fear and rides like the wind.

Ranch life is back-breaking work where wranglers rise early and stay up late. They do a thousand little things every day to make sure the horses and riders are safe. They run about 100 horses from the pasture to the barn before the sun rises.  At the barn the horses are cleaned from hoof to head and then saddled for their daily rides around the ranch or into the Rocky Mountain National Park. The horses are then moved back to the pasture after their day is done.  Moving horses between the pasture and the barn is called jingling and it’s quite a sight to see hundreds of horses running as one. Afterwards the wranglers return to the barn to put away saddles and make any necessary repairs to the property or equipment. It’s a long day, but their love of horses keeps them going.  Wranglers always finish what they start, and they take pride in their work.[1]

During the day the wranglers manage both horse and human. Each guest is assigned a horse for the week based on their ability and experience. Skill levels vary. Most riders are city slickers who might touch a horse once or twice a year. Wranglers do a great job of matching horse to rider. Horses are big animals and they must be respected. A wrong move by an inexperienced rider can bring harm to both horse and rider. Listening and watching the wranglers is important for the campers if they want to have an enjoyable vacation.

I spent many hours with my daughter at various barns mucking stalls, tacking horses, setting up barrels, moving cross rails, and tossing hay. I learned a lot about horses by watching her work. She took her time grooming her horse and planning her day before she led it into the ring. It was worth the wait as I watched her gallop on a thoroughbred as the sun was settling in for the day. She’d spend all day at the barn if I let her.

Investors can learn several things from wranglers.

Respect. The markets, like horses, are unpredictable and can change course quickly, often without notice. If you’re going to invest your life savings in the stock market, you need to pay attention to the details. It’s paramount to understand the innerworkings of the market or hire someone who does.  At one of her first horse shows, her horse got spooked and reared up. It scared me to death, but she remained poised and was able to calm her horse down. Markets will get spooked, so it is important to stay calm during the turmoil.

Plan. Wranglers plan each day. They choose the horses to ride and which trails to traverse. The weather report plays a significant part in their planning and saddle bags are packed accordingly. Before the wranglers let riders hop in the saddle, they have a long list of items that need to be completed. Before you invest, I recommend completing a plan. Which financial routes do you want to follow? What resources will you use to reach your financial goals? A financial plan can help you improve your investment experience.

Communicate. The wranglers are equipped with radios so they can communicate with each other about trail conditions, weather, riders, etc. By staying in constant contact they’re able to stay informed. Talking with your advisor on a regular basis is recommended. Communication is the key to a successful advisor-client relationship.

Adjust. Riders come in different shapes and sizes, so saddles and tack constantly need adjusting. Mountain conditions change quickly, so wranglers and riders need to be flexible. Investors need to be flexible as well and adjust their portfolios as needed. Markets are not static. Adjust accordingly. On one Sunday my daughter was riding bareback. I was sitting in a lawn chair reading a book. When the horse trotted around the turn near where I was sitting my daughter wasn’t on it. I jumped up to see her lying face down on the other side of the ring. I ran to see if she was okay. She turned over with a face full of sand and a big smile. She said, “He saw a squirrel and jumped.” She dusted herself off and got back on the horse. When the market corrects, dust yourself off and get back in the game.

Patience. Working with horses and riders requires patience. Horses have a mind of their own and, as you know, you can lead one to water, but you can’t make it drink. Dealing with inexperienced riders probably requires more patience than working with the horses. Investing for the long haul also involves patience. Creating long-term wealth takes time. Saving money monthly while reducing your expenses doesn’t create overnight riches, but it will build your net worth over time.

Courage. Wranglers are tough. It takes courage to deal with hundreds of horses, especially when the weather turns for the worst. Guiding young riders on a mountain trail in the Rockies is not for the faint of heart either. In addition, they encounter several types of wildlife – snakes, bears, or elk. Investors need courage as well, especially when stocks are falling. It’s difficult to stay focused on your investment goals when the market drops, but it’s necessary to stay the course for you to obtain your financial goals.

My daughter is a tough kid with a warm heart. A wrangler to the core. I love her dearly.

Giddy up!

There is something about the outside of a horse that is good for the inside of a (wo)man. ~ Winston Churchill

May 16, 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] Cowboy Ethics, James P. Owen, The Code of the West

Are You Diversified?

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Diversification is a blessing and a curse.  Diversification is a great way to manage risk in your portfolio without trying to time the market.  It will also keep you invested during good times and bad.  In a truly diversified portfolio you’ll own a mixture of investments with some up and some down.  If all your investments are up or down, your portfolio isn’t diversified.

It’s human nature to want to own a portfolio of investment winners.  Investors are quick to sell losing positions to chase the winners, a classic strategy of buying high and selling low.  The Denmark stock market rose 23% in 2015 leading all developed markets.  The Canadian stock market fell 24% in 2015 and was the worst performing global stock market.   What do you think happened in 2016?  In 2016, Canada was the best market by gaining 24% and Denmark was the worst by losing 15%.  These two global markets exchanged places from 2015 to 2016.

This year emerging markets are leading the way while small cap stocks are turning in a sub-par performance and international stocks are outperforming U.S. stocks.  Last year, the opposite occurred with U.S. stocks and small caps outperforming international investments.

Trying to identify the best investment from year to year is challenging, like trying to pick the best horse in a field of race horses.  Sham was a great race horse in the 1970s finishing in the money 85% of the time but had the unfortunate event of being born in the same year as Secretariat.[1]   In thirteen starts, Sham finished first, second or third eleven times.   Secretariat beat Sham in each of the Triple Crown races and won the Belmont Stakes by 31 lengths.    To win in the long term, bet on more than one horse.

Here a few hot tips for your diversified portfolio.

  • Own large and small U.S. companies. Since 1926, large stocks have generated an average annual return of 10% and small stocks have averaged over 12%.
  • Own growth and value companies. Growth companies typically have stronger earnings and higher valuations than value companies.  Growth and value companies will zig and zag depending on economic conditions.  In the early stages of an economic recovery, value stocks will outperform but will lose momentum to growth stocks as the economy matures.[2]
  • Invest internationally.  International markets make up 46% of the global market and often outperform the U.S. market.
  • Invest in developed and emerging markets. Develop markets include the United States, Canada, Great Britain, Germany, Australia and Japan.   Emerging markets include countries like Brazil, Russia, India and China.
  • Buy Bonds. Bonds will generate income and provide a blanket of safety for your account.  For example, when the stock market fell 37% in 2008, long-term government bonds rose 25%.  The gain from bonds helped cushion the blow from falling stocks.
  • Add alternatives. Adding a pinch of alternative investments will help diversify your portfolio.  Alternative investments can include real estate, gold or oil.
  • Hold cash. A cash holding will allow you to take advantage of emergencies and opportunities.
  • Rebalance. Rebalancing your portfolio annually will reduce your risk and retain your asset allocation.

Here is a sample asset allocation for a portfolio consisting of 60% stocks and 40% bonds.  Your 60/40 portfolio can have the following asset allocation.

  • Large U.S. Companies = 25%.
  • Small U.S. Companies = 10%.
  • International Developed Markets = 15%.
  • Emerging Markets = 5%.
  • Alternative Investments = 5%.
  • Bonds = 35%.
  • Cash = 5%.

A diversified portfolio will keep you in the winner’s circle by giving you exposure to thousands of investments from around the globe so stay diversified my friends.

Don’t gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it.  If it don’t go up, don’t buy it.  ~  Will Rogers.

Bill Parrott is the President and CEO of Parrott Wealth Management.  For more information on financial planning and investment management, please visit www.parrottwealth.com.

August 16, 2017

 

[1] http://www.pedigreequery.com/sham

[2] https://www.merrilledge.com/article/growth-vs-value-investing-two-approaches-to-stocks