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Jean Wolfe, CFP®, CIMA®, CPWA®

Vice President

PHONE: 952-249-7617

TOLL-FREE: 888-831-6426

FAX: 952-249-7650

ADDRESS:  601 Carlson Pwy, Suite 950, Minnetonka,  MN  55305

Jean's Journal

Jean’s Journal October 11 – 2018 Reflection of Why and Puzzles to Ponder.

I am concerned about the market and many things impacting our economy, our investment in the capital markets, our tax laws as well as the savings/spending goals of my clients—so the reflection of why things connect the way they do is always a puzzle to be solved. Why for example does the good news of the resiliency of the US economy result in a stock market correction?  I just attended another great conference under the Financial Planning Association of Minnesota – nearly 600 financial planners, tax advisors, investment managers and economists met this week to review many of these puzzles. Nearly all of us struggle with the puzzles of investment/insurance/tax/ estate planning strategies – much of which we visited at conference.  But in the midst of learning - someone asked me WHY do I do what I do?

  •  To help people and lower money stress/anxiety.

  • To address human nature ant the behavioral issues that impact financial health. To educate, teach and inform so that irrational fears are lowered and rational solutions can be applied.

  • To improve the lives of my clients and their families or organizations/causes/businesses that are important to them and impacted by the management of their wealth.


Of course to do this – one needs to resolve puzzles to address these. These are my top 10 recent concerns.

1.        Investing is a game of behavior, fundamentals (financial facts), investment decisions on relative returns (i.e. the dividend of the S&P 500 is currently below the rate of interest of short term and long term govt. bonds) and faith/fear of the future.  I’ve commented that investing within the context of personal wealth is a rubric’s cube of many facets that all impact each other.

2.        Concentration of wealth in singular holdings – company stock, or favored sectors or styles and this includes cash. Concentration of stock in GE 20 years ago or Amazon/Apple today can impact your wealth and your risk very significantly. After 10 years of upward US stock market performance – more concentration in many portfolios.

3.        Lack of clarity in the level of your spending/savings; not observing the longevity and inflation impact of spending – nor the compounding benefits over long periods. Balancing spending need with asset funding is the cornerstone of your financial plan. If the spending number is fuzzy – it detracts from the funding calculation and accuracy. Tracking your spending will likely provide a better number than speculation.

4.        Low tolerance for volatility – price movements of last several years may contribute to apathy in attention to investment as well as hyper sensitivity to one day, one week, and one-year volatility in risk assets. Investing is for the long term.

5.        US Stock bias – US Bond bias.  Last time I checked, global GDP and economic growth is not as US dominant – and likely will be less so in the future.  Investment universe is global as is the economics of growth. Consider broadening your review of the markets to include ACWI – All Country World Index versus the Dow Jones Industrial Average o 30 US Stocks.

6.        Behavior overcomes rational in investing nearly all the time.  I’ve seen fad investments rotate from Value to Growth, Sectors such as Finance, Tech, Real Estate, Energy and Consumer Staples.   Herd mentality can overtake fundamentals and rational investment strategy whether investing in the favored stock is GE, Medtronic, 3M, Target or most recently Apple, Amazon, Facebook.

7.        The FIRE movement (financial independent retire early) assumes that we have control over many financial factors in our lives. Creating flexibility with retirement date/age and funding is clearly a goal,  however honestly funding a retirement spending  goal for as many as 50 years may be challenging indeed; 30 years is hard enough.

8.        Risk management is as significant to your financial future as return management.  Risk is beyond volatility of price but enters into every part of our lives. Most investors consider only permanent loss of capital – many should consider loss of purchasing power, identity risk, liability risk, and longevity risk.

9.        Investing with a contrarian viewpoint takes courage and patience. 

10.     Wealth is a means to an end. Make sure your wealth provides the end you desire.  The journey to this end should also be measured and revisited regularly. This doesn’t mean we can find a smooth and guaranteed path every time – bumpiness and changes to the navigation will occur – as long as we are moving forward towards your goals.