Investment Newsletter for the end of December, 2016


Everyone’s’ portfolio gains were extraordinarily fat this month and quarter. For the quarter, the Dow was up 7.94%. Small cap was up even more at 8.43%. With only a few exceptions, every one of you has a blend of fixed and equity. The fixed is to reduce risk. On a risk adjusted basis, your portfolios beat all stock indexes. For the two clients who are 100% in equities, your profits even make me feel green with jealousy.

The Danger of Greed

Please be warned about letting emotions take over your decisions. Greed is just as destructive to your portfolio as fear. It seems that everyone is making money right now. As a result, I have had several clients that want to increase their risk. “Let’s be more aggressive.” I have held them off. Eventually, there will be a correction. Maybe small, maybe big.

Remember the Fundamental Rules

  1. The crowd is made up of idiots.
  2. The crowd is usually late to the party.
  3. The crowd listens to the talking heads on TV.
  4. When the crowd rushes in, it’s greed.

The Length of the Real Estate Bubble

Obviously, I do not know how long this bubble will last. It could be a few months or a few years. But I do know, that people think it is easy to make money. It means they do not have a plan or they are not sticking to it. These are the people who lose money on the downturns and then cash out at the bottom out of fear.

Wall Street Journal Article

The Wall Street Journal just ran an article that some professional real estate investors are starting to leave the market. The reason: all the house flippers have arrived. All sorts of non-real estate people have arrived and are speculating on real estate. The professionals also think the crowd is made up of idiots. At least the professionals in the article are counting on it. Again, no one know when the downturn will happen.


Discipline to a plan is the way the game is played. It certainly not very fun but it works. On the “Portfolio Comparative Performance Review” look at the far-right column labeled 4 YRS TOTAL (if you have been with me that long). Look at your time weighted return. That would be your average return per year over the last four years. Depending on how much risk you accepted, the return per year is anywhere from 3% to over 7%. That profit is higher than the stock market indexes. It is the result of sticking to the plan during greed and fear cycles. I have one client up over 9% per year. Over four years, he is up a total of 37%. Over the last four years, there were both downturns and upturns.

Tax Season

On a different note, tax season has begun. I actually had a tax return arrive yesterday (the morning of the 1st) for preparation. I will always be available to you for financial or tax questions no matter how busy I am. Call me at work on week days. I work at home on the weekends. My number at work is 503-363-1550. Home is 503-570-8727. Cell is 503-780-9975.

Thank-you for your business and in many cases your friendship.


Fee Structure

Rate Assets Under Management
1.44% Below $125,000
1.00% Between $125,000 and $750,000
.85% Between $750,000 and $1,250,000
.80% Between $1,250,000 and $1,750,000
.75% Between $1,750,000 and $2,500,000
.70% Between $2,500,000 and $3,250,000
.65% Between $3,250,000 and $4,250,000
.60% Above $4,250,000

A single rate is applied to the entire account. So a person with a $750,000.01 account pays less than a person with a $750,000 account. I will waive personal tax return fees for accounts over $1 million. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. Please contact me if you want me to write about a particular topic. If you would like to submit a post to my blog, please contact me.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

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