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Measuring UP

As a society, we are conditioned to keep score. We like numbers – bigger is usually better - sans waistlines and mortgages. They make comparisons simple – be it our car’s gas mileage, grocery shopping and, certainly, investment performance. In this month’s edition, we’ll compare the two main return calculations: Time Weighted and Internal Weighted Return. So as not to punish our readers, I’ve omitted the mathematical formulas but will still discuss how to accurately relate performance measurement to your individual portfolios. Lastly, we’ll pinpoint some common investor performance pitfalls & how to avoid.

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Dennis Houlihan
Money Misery

Finances, however, are a completely different animal. Many of us feel we have complete command. But this illusion of control is just that – an illusion. Sure, we set our budgets, sock away college funds and dollar cost average into retirement plans. And those are all great habits. But what about forecasting returns? Economic cycles? Geopolitical events? Or pegging our financial longevity? Lot of hairpin turns on that financial highway.

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Dennis Houlihan
Drip Drip Drip

At the risk of sounding like a weird, cat household, my wife, Michelle, has a tender spot for strays. Not only did she shelter Catherine, but she’s fostered a pesky habit of feeding any and all ferals who stumble in our yard.  Now that the word is out, we may see 3 or 4 different ones a day; our pantry has become Petco.  Michelle has developed an exceptional affinity for a distinctive, calico kitten.  She even shared the tidbit that 1 in 3000 calicos is male.  I’m guessing this one is female.  Our blog has hit rock bottom.

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Common People United
The Dreaded S Word

Investing has a funny way of distorting our thought process.  We are constantly bombarded by external hurdles which, in turn, trigger internal conflict.  The buy & sell proposition is the one that elicits the most passion - especially selling.  Our seemingly, emotional connection to investments is fascinating.  Some are treated like a first born.  Why do investors respond like this?  After all, investments are just digital numbers on a statement.  Or are they?  Perhaps there is a lot more to selling.   Maybe we can make some sense of this attachment syndrome (or is it fear of abandonment?).

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Dennis Houlihan
A Christmas Carol

Still reeling from a couple troubling Christmas Spirit visits, I was dreading the concluding pop in.  The first two gave me an approval rating somewhere between Jimmy Carter and Tom Crean.  So, I could only imagine what the Ghost of Christmas Future (GOcF – we’ll call him oddly spelled Goeff) had in store.  Sometime after midnight, Goeff arrived at my basement bar: overgrown beard, ripped jeans and an Ed Sheeran t-shirt.  Rough first impression but we chugged a shot and Ubered off to the early 2020’s.

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Common People United
Tic Toc

My retirement apprehension is shared by many of our clients and friends.  It usually boils down to the same two questions: how much do I need and when can I afford to?  We’ve previously touched on the how much, so we’ll look at part of the when.  A portion of that equation is claiming Social Security.  Let’s review the basics.

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Common People United
Turning the Page: Dealing with Death

Dealing with a messy, complicated and disjointed estate is the last thing heirs want.  Unfortunately, being in the personal financial service profession, we see too much of this.  Let us share our experiences.  There are 2 chapters to death preparation: while living and post mortem.  Let’s consider each.

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Common People United
Crowded Out

In this age of social media and 24/7 news, information gets disseminated quickly.  Unfortunately, it can encourage groupthink and ill-informed echo chambers. It’s human nature to gravitate towards those that think like us and confirm our own beliefs.  We feel safer in numbers. And if I’m wrong, I have plenty of company. Why do most analysts have buy ratings on stocks? Crowds may be comforting to sheep and teenage girls; rarely to good investors.

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Dennis Houlihan
Enough I$ Enough

The historic bull market definitely helps overall wealth effect but it also creates special challenges.   One of which is an outperforming stock becoming an over-weighted portfolio lever. While we admire the courage to let your winners run, there comes a time to ask the question: now what?

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Dennis Houlihan
#MYMONEYTOO

What good is a robust household balance sheet if the marriage is in shambles? Consider that wealth increases an average of 16% each year of marriage and divorcees experience a 77% drop in net worth. Wanna stay wealthy?  Stay happily married.

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Dennis Houlihan
New Year & Old Challenges

I realize December means checklists and Januarys are for resolutions - but I want to flip the script.  My Puritan pledge is usually out the door by MLK Day but scribbling down a few easily attainable tasks may have legs (it allegedly takes 90 repetitions of a behavior to make it a habit).  This year presents an additional wrinkle with the 2018 Tax Reform.

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Common People United