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“I would not be surprised to see inflation peak at around the current 8.5% level and begin rolling over in the latter part of the year.” – Ken Melotte, June 2022

There has been a lot of focus on inflation and interest rates lately, understandably. But I’m not sure how well people generally understand the mechanics of what’s happening, why, implications, etc… so figured I’d briefly address it.

The Federal Reserve (“The Fed”) controls/influences a couple critically important things: (1) the price of money and (2) the quantity of money. Continue reading “Inflation, Interest Rates, the Fed…What Does It All Mean?”

My wife, Michelle, and I had a great little weekend getaway this past weekend. I can’t tell you how many years it’s been since we took a weekend just for ourselves. Last thing I can think of was seven years ago for Michelle’s 30th birthday.

It came about because my wife planned a weekend for us at The American Club in Kohler, WI as a Christmas gift, which is not something I’d normally do. It was incredible. We ate and drank well, enjoyed the spa and the beautiful grounds and generally had a very relaxing, luxurious time together.

Most importantly, the trip gave us the opportunity to talk about our lives, our past, our future, and generally strengthen our connection (thank you, Mom, for coming from Indianapolis to watch our three kids and dog this weekend). Continue reading “Why is money important to you? What is it for?”

Executive Summary

Diversification has very little to do with how many stocks, mutual funds and ETFs are in your portfolio. Rather, diversification is about the correlations between assets in your portfolio.

​Common Misconception

I’ve had prospects come in to our intro meeting with statements in hand. Those statements show a plethora of various funds, individual stocks and/or individual bonds…usually with relatively small dollar amounts allocated to each.

Because there are so many securities listed on the statement the potential client thinks the investment strategy provided by their current advisor (or that they’ve built themselves) is complex, sophisticated and diversified.

Most often, the strategy is not sophisticated or diversified but just unnecessarily complex, redundant, expensive and directionless. Continue reading “Brief Public Service Announcement: Common Misconception of Diversification”

In my recent commentary, I showed that if an investor couldn’t handle a 12% drawdown in stocks then they really have no business investing heavily in stocks at all since 12% is quite unremarkable and common for stocks. That was essentially scratching the surface of what I mean by emotional capacity for risk.

I also mentioned that we don’t often know our true risk tolerance until it is tested, which is why I also make sure to identify clients’ financial capacity for risk using stress tests within their financial projections.

So, I wanted to briefly provide a real-world example of this exercise. Continue reading “How Your Financial Plan Drives Investment Strategy”