Early on in my career a couple, seeking a financial advisor, came in for a review of their investments. As we discussed their investing experience some deep emotions quickly surfaced. He began by accusing her of being a spendthrift who made it difficult for him to save any money. She responded that he was a selfish tightwad who would never let her spend a dime on anything.
Money can be an emotional topic in a marriage so I already had some experience dealing with these types of situations. This time, my efforts had little effect and before long, the wife stormed out and said she would happily return later without her husband. Lest my readers think coming to my office is hard on a marriage, I am happy to report the wife eventually returned and they remained my clients, and happily married, to the end of their lives.
After that experience I ordered a plaque that reads, “Wyson Family Counseling $350 an hour,” which I still keep in my office drawer. If marital tension creeps into a client meeting, I pull out the plaque. I don’t know if the attitudes change because they find the plaque humorous or they just don’t want to pay the fee, but either way I am pleased to report my family counseling service has been a great success.
Money is a very emotional topic, and in a marriage I suppose that is largely because, financially, there are basically two types of people: Savers and Spenders. Savers have lots of money but often don’t know how to enjoy it. Spenders enjoy money, and as a result, are usually the ones who find it difficult to accumulate much of it. The saver tells their spouse, “If it weren’t for me we wouldn’t have any money.” The spender spouse replies, “What good does it do us if we can’t spend some of it?”
I find that financially healthy marriages often have one of each. The saver sees to it that the family is responsible in their finances and always sets something aside for a rainy day. The spender helps the other spouse recognize that you can’t take it with you, so why not enjoy it just a little bit? Both bring a needed perspective to the financial equation.
Just as wise investors seek balance in their portfolios, they should also seek balance in the way they use those funds to enjoy their life. Investment dollars wont do you much good if all you do is count them. For savers, that number at the bottom of your statement has little value if you leave it all behind. If you are a spender, be thankful for a saver spouse who made it possible for you to have something to spend. Appreciating the value each personality brings to the marriage will make investing, and life, more worthwhile. If you find yourself struggling in this area, feel free to stop by my office. I will gladly pull out my plaque.
Unless you have been living in a cave, you have noticed over the past week the large number of teens, and yes, adults too, walking around town with their iPhones, searching for the mysterious Pokémon creatures.
In one of the first major launches of what is known as “Augmented Reality,” Pokémon Go has taken off at the speed of light. As a youth, I remember Pet rocks, Clackers, and the Rubiks cube. Each in their day became instant and widespread hits but none could compare to the explosion of Pokémon Go, which makes even PacMan jealous.
As quickly as the kids have rushed to search for Pokémon's imaginary creatures, investors have rushed to find the profits they are certain await them. It almost feels like a modern day gold rush with some estimating Pokémon Go will generate over $4 Billion in revenue in one year. To put that into perspective, that is more than double the amount Disneyland will take in from ticket sales during that same time. It is difficult to fathom the power of the internet and its associated technologies, and the stratospheric dollars that potentially can flow from it.
This rush to gold pushed up Nintendo stock 25% on the day the game app was released, and, as of this writing, it continues to climb. Investors are just as frantic as their kids to get in on the action. In the frenzy, many may have overlooked a key issue. Nintendo does not own the game. Though details are still not fully known, apparently Nintendo will receive a licensing fee, but the bulk of the profits will be going elsewhere. Additionally, I wonder if investors are considering the product shelf life. The digital age can make overnight billionaires, but also overnight paupers. Just ask the folks over at Myspace about that.
In economics we have a term known as “substitution.” It refers to how easily one product is replaced with another. Someone who owns a Ford for example might decide next time to buy a Honda. With cars it takes time and effort to replace a product. With a digital app it can literally happen in seconds.
A news article years ago showed a huge pile of rocks outside the Pet Rock company that were destined to spend their lives as mere rocks, since the fad had ended. When I see kids searching for Pokémon today I wonder what they will be searching for tomorrow. Today’s digital consumer has unlimited choices, and very little loyalty. Before you jump on the Pokémon bandwagon, ask yourself a simple question. Is it likely kids will be searching for these things a year from now? Now ask, is it likely kids will still be asking to go to Disneyland a year from now? How about 25 years from now? Be careful where you choose to invest your money, and especially careful if you are looking to catch the next craze. You may do well, or you may be left with a huge pile of worthless rocks.
The number one question I am asked today regards how the election will affect investors. This election cycle has been unpredictable and I suspect more surprises are possible. There are even conceivable scenarios under which the final winner is not even currently running.
Two months ago the Department of Labor prepared to issue its new Fiduciary ruling and the whole investing world was worried about what it might contain. I had the privilege of being with a key industry player the day the rule was issued. I asked him what we would do if it came out negatively. He calmly reminded me that regardless of the ruling, businesses would find a way to work through it and not only survive, but thrive.
“That’s what businesses do,” he said. I could relate to his comments because in my own career, many times I have had to make adjustments to a constantly changing world.
I have personal feelings about who should be our next president. But in the end I do not believe the person who sits in the white house can be shown historically to be a consistent negative or positive to the investing markets, they are just different, and businesses can adjust and make profits, even if things are different.
Bill Clinton likes to remind us that he presided over the economic boom of the late 90’s. Clinton was also president during the horrible stock market crash of 2000. Did he cause that as well? Is it more likely that the boom of the 90’s was artificially created by investor’s “irrational exuberance” in running up stock prices, which same behavior led to the eventual crash? George Bush 43 is criticized for causing the recession of 2008, but for the prior several years our markets and economy were quite strong. Was he the cause of both? Did he personally cause the sub-prime mortgage mess that led to the recession or was it more likely caused by regular Americans borrowing more than they could reasonably pay back? The past seven years have seen remarkable stock market returns for investors. Would someone like to make the case that an admittedly anti-business president Obama has been good for the stock market?
I have invested under six presidents and each has been very different. I have learned that, as an investor, I invest in businesses whose goal is to provide products and services the world will want to buy. Politicians can change the rules and they can even be adversarial, but in the end, businesses find a way to work through it and find a positive outcome. Rather than try to handicap the outcome of the 2016 elections, which I believe is a fool’s errand, focus on investing in businesses and services you believe the world will continue to want, regardless of who sits in the White House.
It is very important who we elect as our president, but from a purely investor point of view, in the current campaign, I am not sure either party is all that much different.
My son Jared flew to Denver this week to do some research on a company. On the always turbulent flight into Denver, Jared noticed that the lady sitting next to him was getting extremely anxious. She would grab the arm rests and plant her feet firmly with every small bump. He commented that the turbulence did not bother him at all, but this lady was deeply fearful of it. Of course, Jared knows quite a bit about flying. Since we usually fear what we do not understand, like this particular passenger, we often fear the wrong things.
We have recently experienced some terrible national tragedies, which will surely result in vacationers to Florida having a heightened perception of the risks involved. In the process they will very likely exaggerate in their mind the likelihood of those risks coming to pass.
Being a pilot, I know something about how people perceive risk. People continually caution me about the risks of flying. Considering the statistics, I wonder why they never warn others in our office about the activities they engage in. This week my daughter and son-in-law were in a wakesurfing competition and I don't remember anyone issuing warnings to them.
According to the NTSB 550 people die in airplane accidents each year in the U.S., but another 650 people die in boating accidents. I think my daughter really needs to be warned about the hazards of her wakesurfing. But then, it is easier to understand boats than airplanes, thus flying is perceived to be riskier.
Investors often fear big world problems that are beyond their control. Like a jumpy passenger, the turbulence of the world makes them anxious, but in my experience, rarely do external events prevent individuals from retiring. Thus, they tend to worry about the wrong things. It is in the management, or mismanagement, of our own individual resources that I believe the greatest risk to retirement success lies.
Let me share just one example. A man came to me asking for help in my Vegas office after he attended some free dinner seminar that resulted in him being sold a 17-year annuity, comprising his entire retirement account. The man is 75 years old, so he likely won't see that money again in his lifetime. I am not sure what big economic matters worried that man in his life, but I bet the last thing he worried about was the REAL cost of that free dinner, yet it became likely his biggest investment mistake.
So every year in America 550 people die in Airplanes. But, every year 5,000 people also die while walking. So statistically, if you really want a truly white knuckled experience, go for a walk. Or worse still, accept an invitation this summer for one of the many free dinner seminars. Now that is a financial event you should truly fear. Fear can be a useful emotion, but only if you are knowledgeable enough to know what you should and should not be fearing.
Hi, I'm Dan. I'm a CFP® Professional.
Securities and advisory services offered through Commonwealth Financial Network®.
Member www.finra.org / www.sipc.org , a Registered Investment Advisor. Wyson Financial, 1173 S. 250 W. Suite 505, St. George, UT 84770.
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