"It's human nature to find patterns where there are none and to find skill where luck is a more likely explanation (particularly if you're the lucky [mutual fund] manager). Mutual fund manager performance does not persist and the return of stock picking is zero." William Bernstein

In This Edition
2 biggest risks of all, inflation and emotions
Western Washington Presentation on May 29
The Merriman Financial Literacy Program (MFLP)
Truth Teller Comments on Market Losses: "This Is Normal" Success.
Latest Podcast

In an article Rich Buck and I wrote in 2014 we discussed the 2 biggest risks of all, inflation and emotions.

Here is what we had to say about emotional risk

"Nearly every investor at some time or another finds out firsthand how easily emotions — think fear and greed — can get out of hand and start dictating decisions. Greed and fear are the two biggest forces driving Wall Street, and nobody is totally immune to them.

Another form of emotional risk is grandiosity, thinking you know more than you really do and becoming overconfident in your ability to see into the future.

Here's how this peril often plays out: During a bull market, timid investors who are on the sidelines see others making big gains. These investors eventually get so anxious to get some of those gains for themselves that they jump into whatever is "hot" at the moment.

Conversely, in a bear market, resolute investors see their portfolio values dwindling and eventually sell out - often at a loss.

I call this the "I can't stand it any more" market timing system. Very often, it leads people to buy near the peak of a market cycle and to sell near the bottom of a cycle.

If investors could follow the old Wall Street saying, "Buy low and sell high," they would make money. But in both instances, the "I can't stand it anymore" timing system leads them to do the opposite.

To protect yourself from the risk of grandiosity, be brutally honest about the results of the investments you have made. Keep a list, if necessary, of the decisions you made that went wrong. Next time you are sure that you know better than the rest of the market, pull out your list and study it.

The best protection against emotional risk is a disciplined plan for buying and selling. Make sure your portfolio has enough in bond funds that you can sleep at night no matter what the market is doing. And make sure you have some equities so you won't feel totally left out during bull markets.

If you master these three aspects of investment risk, you'll be well on your way to above-average success along with your share of peace of mind. That's a combination that's worth striving for.”

Western Washington Presentation on May 29

In an upcoming presentation to graduating seniors at Western Washington University I will include a handful of guarantees I can easily make. One of those is, if you follow my best advice, I guarantee you will lose money! Of course I’m talking about losses over the short term that are normal. In bear markets those losses average 25% to 30% and sometimes are as much as 50%.

Those losses are wonderful opportunities for these young investors to pick up stocks at bargain prices. Of course for those of us in the distribution time of life, those losses can feel very threatening. I have had many emails from retirees who are reconsidering their commitment to stocks. In most cases these investors have more equity risk exposure than they need so an adjustment to more bonds is not likely creating a risk of running out of money before running out of life.

For those do it yourself investors who are not sure how much they need in equities I highly recommend spending some time with an hourly advisor to take at look at your particular financial situation. Of course we hope you have spent some time with our Fine Tuning Tables, along with the appropriate fixed or variable distribution tables to get ready for that conversation.

The Merriman Financial Literacy Program (MFLP)

Western's Merriman Financial Literacy Program (MFLP), led by faculty and students, is dedicated to improving financial knowledge, decision-making, and outcomes for students, alumni, staff, faculty, and the Western community.

The MFLP is inspired by the award-winning work of WWU alumnus Paul Merriman, who in his so-called retirement has worked tirelessly to improve people's lives through education that furthers their financial literacy and improves their investing and retirement outcomes.

You may access abundant resources at The Merriman Financial Education Foundation website: https://www.paulmerriman.com/

At Western, Paul's efforts have enabled us to establish and expand courses in financial literacy, provide online learning through the IGrad platform, build and grow a financial literacy and wellness peer coaching program, offer a DIY Investing Course, and offer numerous workshops and speaking events to support students, staff, faculty, and community members in their financial journeys.

You can be a part of this crucial journey to make sure our students graduate with all the skills they will need to lead successful careers and personal lives, all starting with financial literacy!

Make your gift today as part of WWU Give Day and support the next generation of money-wise Vikings!

Truth Teller Comments on Market Losses: "This Is Normal"

Here is what Ben Carlson wrote at the beginning of 2022 which was the last bear market investors faced: https://awealthofcommonsense.com/2022/01/this-is-normal/

Latest Podcast- WSCPA- The ultimate buy and hold portfolio

Watch video here⁠

This updated discussion of the Ultimate Buy and Hold Portfolio highlights the advantages of equity asset allocation and worldwide diversification. The presentation was presented to members of the Washington State Society of CPAs.

At the end of the presentation Paul adds his list of 15 million dollar decisions that all investors will make in their lifetime.

WSCPA- The ultimate buy and hold portfolio

Are you ready for a big stock-market drop?

In This Edition 2 biggest risks of all, inflation and emotions Western Washington Presentation on May 29The Merriman Financial Literacy Program (MFLP)Truth Teller Comments on Market Losses: "This Is Normal" Success.Latest Podcast

In This Edition
2 biggest risks of all, inflation and emotions
Western Washington Presentation on May 29
The Merriman Financial Literacy Program (MFLP)
Truth Teller Comments on Market Losses: "This Is Normal" Success.
Latest Podcast