My Gym

I work out at my local gym twice per week, mostly to lift weights. The amount I lift today is a fraction of what I used to lift while playing football in college, but it keeps me in shape.

My gym is a cross-section of men, women, young, old, fit, and almost fit. During the football offseason, members of the local high school team use our gym to supplement their school workouts. These young men are full of energy and bravado, and they have no coordinated plan for their workout regime. They lift, look in the mirror, look at their phone, talk to their friends, and repeat this process until they leave. They also say “bro” – a lot! I was probably that way in high school, too, except I didn’t have a cell phone. I know if they followed a routine, they’d see better results.

While playing football at the University of San Diego, we had two weightlifting coaches, one a former Navy Seal. They joined our program after my sophomore year and put our team on a weightlifting schedule for the entire year, including football season. I noticed a substantial improvement in my strength and endurance while following their plan.

Now that I’m older and, hopefully, wiser, I still follow their plan because it works. The formula is simple and easy to follow. It was because of their strategy and coaching that allowed me to experience better results.

A plan makes all the difference in the world for almost everything, notably investing. A financial plan can help investors improve their results by giving them a guide on how to achieve their goals. It addresses several issues, including investments, insurance, education, retirement, budgets, debt management, Social Security analysis, to name a few.

Like weightlifting, you won’t see results in a day from your financial plan. It may take months or years before your plan starts to bear fruit. And, like exercise, there will be up days followed by down days requiring you to be patient. During the down days or setbacks, it’s imperative to keep moving forward, regardless of your short-term results. If you completed your plan in October 2007, you were met with a wicked bear market where stocks fell more than 50%. I’m sure you didn’t expect to lose half your investment value within a few months, but if you followed your plan and stayed committed to it, you were able to enjoy a substantial rebound in the stock market from the lows of the Great Recession.

Exercising and investing require regular check-ups to measure your progress. Weightlifters constantly adjust their workouts depending on several factors, investors should do the same. Reviewing your strategy often is recommended based on your circumstances. At our firm, we offer quarterly reviews for our clients to make sure their plan and investments are meeting their needs. I also encourage clients to contact us during a life change – marriage, death, the birth of a child, a job promotion, retirement, etc. It’s easier to tweak your portfolio periodically than it is to do a significant restructuring.

Your plan desires action. If I have a written program for lifting weights, but I don’t follow it, I’m never going to get in shape. After you finish your written financial plan, you need to follow through with the recommendations of your advisor, don’t put it on your shelf to collect dust. Several years ago, I was working with a client who finished setting up a living trust for his family, but he didn’t transfer any assets into the trust. I told him he needed to follow through on his attorney’s recommendations to re-title his assets. He assumed, incorrectly, that since he finished the trust document, he did not need to do anything else. He needed to act on the plan.

Exercising is a lifelong pursuit, as is investing. A consistent, well thought out plan will deliver reliable results over time. Write down your goals, follow your dreams, work with a professional, and good things can happen.

What makes a weightlifting program successful? Your hard work and dedication. ~ Greg Everett

January 28, 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.





You’re Huge, Bro!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

November 1, 2017

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


[1] Dimensional Fund Advisors 2017 Matrix Book.

[2] Ibid.

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

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

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