Friday, October 28, 2016

Todya's Markets Are a Zoo. Which Exhibits Are Worth Checking Out?

As we discussed last week, writing a relevant eBook, blog or regular column can position you as a thought leader in your niche and garner you national media attention. Last week, our client Blake Christian, CPA, a tax partner of Long Beach, CA-based HCVT was featured in a US News & World Report story How to Create a Foolproof Withdrawal Plan for Retirement Assets.
We typically start our outreach efforts at least three months prior to release date and several of our clients have landed new business just by sending out pre-release chapters to their centers of influence for review.

To that end, my friend Andrew Berkin, Director of Research for Houston-based Bridgeway Capital Management, has received tremendous advance publicity for his now-released book Your Complete Guide to Factor Based Investing that he co-authored with the legendary Larry Swedroe of Buckingham Asset Management (BAM). We didn’t help Andy with this particular book, but we’ve edited many of his articles and we know he always writes with the marketing end goal in mind. Andy’s a “quant” but he has a knack for taking the wonky math, science and jargon out of evidence-based investing and helps everyone from individual stock players to large-scale institutional investors isolate the true factors you need to make intelligent and repeatable investment decisions.

While some advisors tend to have “smartest kid in the class syndrome,” Berkin, Christian and Glomski do the opposite. They work very hard to make difficult concepts simple for clients, prospects (and journalists) to understand—and that’s why they have the following they do.

A zoo of factors

I caught up with Berkin last week and he told me the term “zoo of factors” comes from a speech that University of Chicago’s John Cochrane gave at the American Finance Association. His point: only a small handful of investment factors, from among the mountains of data, are really required to make highly impactful investment decisions and that the rest is just noise.

Berkin said much of the book is based on long-term analysis that he and Swedroe did on a myriad of investment performance factors—both individually and in combination. The key was taking that analysis from “academic research to practical benefits.”

When asked what investors, including professionals and wealth managers still don’t get about today’s markets Berkin said he is still surprised at how many fail to realize that markets go through cycles. “What has worked in the very recent past may continue to work for a while as other investors pile in,” Berkin said. “But, following the latest fad all too often ends badly as folks buy high and subsequently sell low,” he added. Instead, he said you should set a long-term plan and look for factors that are “persistent over long time periods, pervasive across geographies and sectors, robust to various definitions, investable and intuitive.”
Berkin said many investors are worried about uncertainty in what they view as a very volatile and fragile environment. But, he said there will always be uncertainty with investing; “we don’t have laws in investing like we do in science. And that is one way that an evidence-based factor approach to investing proves invaluable.” Berkin added that there are no guarantees, but by applying the scientific method to investing, “we can better understand what drives the returns of securities, how those returns interact, what their likelihood of success will be and how to combine them into an overall portfolio. “

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Advisors seemed to be scared too. Why? “For some advisors,” said Berkin, “there is a feeling that the lowest hanging fruit has been picked. Getting new clients and growing is tougher. There is a need to spend more on everything. And there is pressure on fees. Clients want more for less. It won’t be easy. But keep staying nimble and things will turn up,” he added for good measure.


TAGS: Andrew Berkin, Larry Swedroe, Blake Christian, market factors

Wednesday, October 19, 2016

HB Publishing eBook Authors Gain National Exposure (pre-publish)

As many of you know, we help wealth advisors, estate planners, CPAs and other professionals build their thought leadership status through a variety of channels, including eBooks. Sure, there is some blood, sweat and tears involved in the process, but you don’t have to wait until your book is completed to start building the buzz and reaping the benefits.

Today, Blake Christian, CPA, a tax partner of Long Beach, CA-based HCVT was featured in a US News & World Report story How to Create a Foolproof Withdrawal Plan for Retirement Assets. Earlier this month, another client was featured in a Yahoo Tech story about investing in the app market--also picked up in US News. Our outreach efforts to the national media are working, because journalists know that HB authors (a) know their stuff and (b) come to interviews well-prepared to deliver comments in a concise, media-friendly format. We’re not talking superficial soundbites, but economical, carefully crafted responses that invite future discussion.

Christian’s book, which is focused on helping professional service providers become more entrepreneurial without being reckless is due to be released in January 2017. Another of our clients, who prefers to remain anonymous due to her work with recent widows and divorcees, picked up at least one new client last year (before publication) with each new chapter she sent out to her trusted network for review.


As with investing, past performance does not guarantee future results. But by starting with your end goals in mind, you’ll significantly increase your chances of attracting the right kinds of clients and media exposure—and keep your supply closet free of boxes full of dusty, unread copies of your book.

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Monday, October 10, 2016

Performing Under Pressure.

Lessons from Joe Maddon, Carson Wentz and Christopher Columbus

Last week, we talked about the benefits of worrying productively. Here we’ll talk about preparation and staying cool under pressure. Global explorer Christopher Columbus wasn’t afraid to push the boundaries of what was possible 500 years ago--and he had less navigational technology than you have in your car today. “By prevailing over all obstacles and distractions,” he famously said, “one may unfailingly arrive at his chosen goal or destination.”

Speaking of breaking barriers, we know a number of you on this distribution list hail from Chicago and Philadelphia. Go to any game in those towns—or listen to local talk radio—and you’ll experience both the vitriol and eternal optimism of each city’s diehard sports fans.

Let’s start with the 2016 Chicago Cubs who put together the best regular season record in Major League Baseball this season. They’ve won each of their playoff games so far and have home field advantage throughout the playoffs, putting  them in prime position to win the World Series for the first time in 108 years.

Meanwhile in the National Football League, the surprising Philadelphia Eagles, a long struggling franchise that’s NEVER won the Super Bowl and which was widely expected to go nowhere fast this year, is off to a 3-1 start (one point away from 4-0), led by a brand new head coach, a brand new offensive coordinator and a rookie quarterback out of North Dakota State. That’s right, North Dakota State—not exactly an NFL breeding ground for talent.

What do Chicago and Philly fans have in common? They know not to get their hopes up too high, no matter what the stats, odds makers and TV pundits indicate about the strength of their teams.
Wentz became the only rookie ever to win his first three regular season games without throwing an interception. He finally allowed a pick in his fourth professional game last weekend, but still managed to rally the team from deep deficits several times, before falling short by a point. He has become so popular in the Philadelphia metro area that there is already a clothing brand bearing his name and billboards all over the tri-state area announcing, “Welcome to Wentzylvania!”
Maddon, the bearded, heavily be-speckled 62 year-old manager of the Cubs, is no fluke, either. Earlier in his career he guided the usually woeful Tampa Bay Rays to the 2008 World Series—where they lost to guess who? The Philadelphia Phillies, That right, the Fightin’ Phils, who won only the second world title in their 134 year history.
In Chicago’s Wrigley Field, Maddon placed a sign on the wall between the team’s clubhouse and the dugout that reads—“Don’t let the pressure exceed the pleasure.” Unlike most head coaches, Maddon doesn’t impose dress codes, penalize players for being late or issue military-issue rule books about how to conduct themselves or manage their time—“What can you really be late for in the grand scheme of things” he once famously said. “All that stuff is nonsensical.” As he told The New York Times last weekend, he has only two rules—batters must always run hard to first base and pitchers must do more than simply throw—they need to field their positions too. “The word pressure should be an absolute positive and not a negative.” Why does he say that? “Because if people are throwing that pressure at you, that means there’s really something good attached to whatever you’re trying to accomplish.”

Different approaches; same goal

Maddon’s seemingly laid-back approach to winning disguises his decades of experience and his obsessive attention to the nuances of the game. Wentz is a 23 year-old, whose intelligence and single-minded preparation make him seem abnormally mature for his age. In a
recent interview Wentz said it’s easy to block out all the distractions and media attention because he has to work so hard just to learn the new system. He and his coaches, break Wentz’s day into tiny micro-assignments and tasks, with the single goal of getting ready for just one thing—the next game. “Have a routine, get involved in the process. Commit to the process,” said new offensive coordinator, Frank Reich, who brought in a precise weekly routine to follow in which every scenario is covered separately, in the film room and on the practice field. They even gave Wentz precise times of day for arriving at practice and eating his meals.

Wentz, who didn’t have the same kind of routine in high school or college, welcomed the regimen according to reports. Rather than feeling micromanaged, Wentz believes the regimen helps him avoid feeling overwhelmed, which is what has ruined so many highly drafted college quarterbacks trying to succeed in the high-pressure NFL.

Maddon and Wentz each have different ways of dealing with the relentless pressure of their “win or else” professions. They each have different ways of shouldering the burden of their sports obsessed cities’ hopes and dreams.

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“Pressure lives in the future, not the present tense,” Maddon quipped. “If you can live in the moment, then you can enjoy the pleasure of it.” Wentz said he’s simply too busy preparing to worry about the pressure. It works for them.

Keep that in mind the next time you get ready to deliver a big presentation, speak to the national media or pitch a very large client. It’s far better to try and occasionally fail than to continue down the straight and narrow where your horizon remains perpetually flat.
Happy Columbus Day.


Tuesday, October 04, 2016

Not Worried? Maybe You Should Be

As our firm’s CWO (Chief Worry Officer), I tend to obsess about worst-case scenarios. Will our computer network go down during crunch time? Will we miss our flights? Will a big client merge and drop us? Will our rent go way up when the building renovations are completed? Is Client B having trouble paying its bills? Will a key person leave us to accept a new job?

It might sound like paranoia to some of you, but I’d rather “hope for the best, plan for the worst,” to borrow a maxim from British novelist Lee Child. Based on the number of you scaling back, hunkering down or putting projects on hold before the dark cloud of Presidential election uncertainty is lifted, I’m guessing we’re not alone. A new white paper released by Liberty Mutual Insurance found that two out of five Americans are worried about something every day. Sometimes worrying can help solve your problems — and sometimes it just leads to more worry, researchers concluded.

Or, as former heavyweight boxing champ, Mike Tyson famously said, “Everybody has a plan until they get a punch in the mouth!” If you’re not worried about keeping pace with technology, robo-advisors, new fiduciary rules and relevance with the millennial generation, etc. then maybe you should get fitted for a mouth guard and some 12-oz. gloves. Hopefully, you won’t need ‘em, but why not have them on hand.

“People have a love-hate relationship with worry,” said Michelle Newman, a professor of psychology and psychiatry at Pennsylvania State University, in a recent New York Times interview. “They think at some level that it helps them,” Newman added.

The belief that worrying helps to prevent bad things from happening is more common than you might think. Researchers say this thought process is bolstered by the fact that we tend to worry about rare events, like plane crashes, and are reassured when they don’t happen--but we worry less about common events, like car accidents.

OK. So, is worrying futile? “Some worry is actually good for you,” argued Simon A. Rego, a cognitive behavioral psychologist also interviewed in the aforementioned Times article. Rego, who specializes in anxiety disorders and who has analyzed decades of research on worrying said it’s what we call “productive or instructive worry,” which can help us take steps toward solving a problem.
That kind of proactive approach to worrying is a lot more empowering than simply buying insurance with a “better safe than sorry” attitude.

I help coach one of the best 13-and-under baseball teams in southern New England. We’re not big. We don’t have any future Major Leaguers on this team. But, we’ve got 13 kids who can play a variety of positions, keep their egos in check, their parents in the stands and work together when the pressure is most intense. We’ve won about 120 out of 145 games together and numerous local, state and regional titles. Sunday, we were riding a 17 game win-streak. Our ace pitcher was on the mound, throwing a no-hitter with a 3-run lead in the last inning. Were we packing up the bags ready to go home? Nope! We’ve got two relievers warming up in the bullpen just our stud on the mound got into trouble. I can assure you, our other three coaches make me seem like a laid back hippy by comparison. Turns out we didn’t need the relievers, but if not for a diving catch by the center fielder and a great backup by the shortstop, it could have easily been bases loaded with the cleanup hitter at the plate.

As a former boxer and wrestler, I’d rather have my guard up all the time than take a haymaker to the chin from seemingly out of nowhere. That’s not negativity or pessimism—that’s good old fashioned pragmatism and one of the most important ingredients for business survival.

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Have a Happy New year. Enjoy the MLB playoffs and remember the 3rd week of October is National Estate Planning Awareness Week, courtesy of our good friend Val Sabuco, Executive Director of The Financial Awareness Association.


TAGS:  Productive worry, Lee Child, Michelle Newman, Simon Rego, Mike Tyson