Stability Breeds Instability

Posted on January 19, 2011 by

Playing at the sand and water table

Two summers ago, Justin’s oldest daughter, three year-old Grayson, discovered the Fisher Price Sand and Water Table and life hasn’t looked the same since. This little 2′ x 4′ table, as the name implies, has sand on one side and water on the other (though usually not for very long) and has been the source of hours upon hours of delight. She pours, she digs, she builds, she tears down, she repeats. In this commentary, we explore how three physicists at a computerized version of a sand and water table have informed the way we think about complacency, market stability, and the road ahead.

In Ubiquity, Why Catastrophes Happen, Mark Buchanan wrote that in trying to discover the underlying cause of a vast range of tumultuous events, no better archetype of simplicity stands out than that of the sandpile game[1]. “Imagine dropping grains of sand one by one onto a table and watching the pile grow. A grain falls accidentally here or there, and then in time the pile grows over it, freezing it in place . . . And so it was in 1987 when physicists Per Bak, Chao Tang and Kurt Wiesenfeld began playing [a computerized version of] this sandpile game in an office at Brookhaven National Laboratory, in New York…The researchers ran a huge number of tests, counting the grains in millions of avalanches in thousands of sandpiles, looking for the typical number involved. There was no typical number. Some involved a single grain; others, ten, a hundred or a thousand. Still others were pile-wide cataclysms involving millions that brought nearly the whole mountain down. At any time, literally anything, it seemed, might be just about to occur.”

Grayson unknowingly creating "Fingers of Instability."

So, the three physicists tweaked their computer program to show the sandpiles colored according to their steepness. Steeply piled “ready to topple over” sand grains were colored red, and stable, flat grains of sand were colored green. At the outset, of course, everything was green, but flip the switch and let the randomized sand sprinkling begin, and green sand piling up became red. They peered closer. One red pile threaded itself through sandy green plains to another red pile, and another, and another. These networks, later known as “Fingers of Instability”, seemed to map themselves effortlessly and complacently into place. If the next avalanche-inducing grain fell onto a red pile sparsely connected to other red piles, the damage was minimal and contained. However, if the next avalanche-inducing grain fell onto a red pile connected by dense networks to other red piles, it could set off a chain reaction, flattening the entire sand pile.

In other words . . . actually in the words of Economics Nobel Laureate Hyman Minsky, “stability breeds instability.” What we call complacency, Minsky called his Financial Instability Hypothesis, which goes something like this: when times are good, investors take on risk. The longer times stay good, the more risk they take on, until they’ve taken on too much and reach a point where the cash generated by their assets is insufficient to payoff the mountains of debt they took on to acquire them in the first place. Losses on such speculative assets prompt lenders to call in their loans. Cash strapped investors sell off even their less-speculative holdings to make good on their loans, leading to a wholesale collapse of asset values. And to think that Minsky (1919-1996) died 11 years before the real estate bubble.

Stability Breeds Instability

In real life, sand piles don’t change color to highlight areas of instability. No, from the outside, the pile of sand on my table probably looks the same as the pile on yours. It’s only in computerized models that the lights start flashing red and green. The following are some of the “red sands” (or the “stability that breeds instability”) that we see piling up. They might not seem to spell trouble; but that’s exactly Minsky’s point.

  • Investor Sentiment Positive and Increasing – The American Association of Individual Investors’ (AAII) bullish investor sentiment (a survey of the optimism of individual investors) has been this high only 17 weeks out of 1232 weeks (1.38% of the time). Also AAII’s bearish investor sentiment (a survey of the pessimism of individual investors) has been this low only 76 weeks out of 1232 weeks (6.17% of the time).
  • Market Pessimism and Volatility Low and Falling – Our own pessimism and volatility indexes have returned to the lows of 2004-mid 2007 and of April 2010, times that preceded market swoons.
  • Personal Hedging Activity Absent, Commercial Hedging Present – Patrick J. O’Hare, Briefing’s Chief Market Analyst, notes that the currently low CBOE Put/Call ratio is a sign of complacency (there’s little need to buy insurance). Conversely, he notes that the Commitment of Traders report shows commercial hedgers have a large net short position, which frequently precedes a dramatic shift in the current trend.
  • Riskier Assets Outperforming – Obviously stocks have outperformed bonds, and high yield bonds have outperformed high quality bonds, but more subtly, Morningstar’s “high uncertainty” risk universe has outperformed the “low uncertainty” risk universe since the July 2010 lows by a margin of 2.3.
  • “Smart Money/Dumb Money” Confidence Spread Falling – Sentiment Trader’s ratio of “smart money”indicators (indicators which typically “correctly” predict the market movements) to “dumb money” indicators (those that tend to get it wrong) is 0.458, markedly outside the normal range.
  • Mutual Fund Flows Shifting – Following 24 months of steady inflows to bond funds, retail investors have started pulling money out of bond funds and begun buying stock funds.
  • Drought of “Worst Days” Getting Longer – We keep a running list of the market’s 150 worst days since 1928. For some context, we had 13 in 2008 and 4 in 2009, but it’s been nearly two years since we’ve had a “worst” day. Unfortunately, we think investors have forgotten what those “worst days” really feel like.

Living in Red Sandville

Grayson "rebalancing" Her Cups

In spite of the above, we think fundamental reasons for owning high quality stocks in balanced portfolios remain: shares of low uncertainty risk, wide-moat, dividend paying companies are available at prices below fair value. Our emphasis on companies that pay rising and sustainable cash dividends makes accepting a world of uncertainties tolerable. However, a stock market up 16% since the end of August 2010, with red grains piling up on the sand and water table, raises the likelihood for an unexpected market setback of some degree and requires a plan.

Since each of our clients and their situations is unique, we think and behave in Red Sandville in different ways for each of them. For some, in addition to our shift to quality, we’re tackling it with minor rebalancing out of overrun assets into better valued assets. For others, we’re accumulating a much larger than normal cash position. This is where knowing the amount of risk that our clients’ stomachs and wallets can bear is so important. While our timing won’t be perfect and we might not experience a sand avalanche for some time, we are not going to forget the words of fellow advisor Charles Knott, “[Investment] opportunities come again and again, but our clients’ principal comes but once.”

Jonathan Smith
Managing Partner

BACK TO POST [1]We’d like to thank John Mauldin for helping us connect the dots between Minsky, Sand Piles, and Fingers of Instability in his weekly newsletter “Thoughts from the Frontline”, which can be found at www.johnmauldin.com.

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What Investors Really Want

Posted on January 3, 2011 by

Jonathan here.

“What led you to write this book,” I asked Meir Statman,

Glenn Klimek Professor of Finance at the Leavey School of Business, Santa Clara University and Visiting Professor at Tilburg University in the Netherlands, referring to his gem of a book, What Investors Really Want.   Professor Statman, who learned resilience as a child raised by “holocaust survivors who persevered to make a life for themselves and their three children,” shared his thoughts about this and other questions.   Our conversation of December 10, 2010 follows:

JS: What Investors Really Want is a fascinating and powerful book; after reading it, I want to change the name of my company from Jonathan Smith & Co. Investment Counsel to Jonathan Smith & Co. Investor Counsel. What led you to write this book?

MS: I wanted to share my knowledge with investors. I serve as a lab of myself and gain many insights by introspection. Some aspects of my behavior make little sense, and I ask myself whether my behavior is unique to me or common to all people. For example, am I unique in finding it difficult to manage my spending and saving such that I don’t overdo either of them? This introspection leads me to studies of self-control in saving and spending and to the conclusion that financial advisors must manage the behavior of their clients as much as they manage their investments.   There is no shame in our need to be guided, taught, and managed.

JS: It’s very interesting that you mentioned no shame. We want, as you wrote, to nurture hope for riches and banish fear of poverty. How can we balance the two?

MS: It is difficult to find the right balance between desire for protection from poverty and hope for riches. Today fear prompts us to focus on the desire not to be poor as we see portfolios that have shriveled and an economy in great trouble. We have lost much hope. We say “I would rather keep what I have rather than aspire to more.” So we pile into bonds or they pile into gold, as they perceive a world that is collapsing. This is where science comes in, where knowledge of the behavior of markets and our own behavior is especially important. We know from science that fear is causing us to see moderately sized risk as giant risk, and so we become more risk averse. Knowing the effect of misleading emotions on us is the first line of defense against them. I say to myself, “I know that I’m scared, and I know how fear affects me.” I can then apply reason to moderate the effect of fear. I say to myself: “The world is not coming to an end. Stocks go down, and stocks go up. I shouldn’t overload my portfolio with stocks and I shouldn’t leverage them, but I also shouldn’t hide my entire portfolio in gold and bonds.

JS:  The marriage of science and finance can be enormously helpful.  You’ve written, and rightly so, “We want three kinds of benefits from our investments: Utilitarian, expressive, and emotional.”  We want our cake and eat it too.  We also want, I think, three other kinds of benefits from our investments, I believe, and from our cars, from our plumbers, and from anything else our money can buy: we want speed, price, and quality.  We want all three, but in reality, we get to choose any two out of three.  Only on rare occasions can we have all three.  In your opinion, is it possible to have full buckets of utilitarian, expressive, and emotional benefits from our investments or will we have to settle for two out of the three?

MS: We cannot have it all in life or investments. We always face trade-offs between utilitarian, expressive and emotional benefits. But we should not deny that investors care about benefits beyond the utilitarian benefits of investment returns. Yes, investors who trade often sacrifice some returns, but they enjoy the expressive and emotional benefits of trading in the same way that we enjoy video games. Trade if you enjoy it, as long as trading does not undermine important goals such as retirement income and savings for your children.

JS: You’ve said, “We do not have computers for brains and we want benefits computers cannot even comprehend.”

MS: Sometimes we describe people who do not have computers for brains as irrational. By that definition, I’m irrational and I imagine you’re irrational too.  We pay extra for a Lexus when a Toyota does the same utilitarian job of getting us from home to work and back. But it doesn’t mean that everyone who buys a Lexus is an idiot.  We want cars that are beautiful in our eyes; we want cars that show that we are rich enough to afford them.  We should be tolerant of one another and allow for differences in taste rather than say that people who have different tastes from us are idiots.

JS: We have become intolerant, it’s so true.  “We want profits higher than risks, we have thoughts some erroneous, we have emotions some misleading.”  The Web is creating a constant and heightened awareness of our holdings, how they make us feel, and what they say to others and ourselves about us, to say nothing about what the Web is doing to raise our awareness to an increasingly unstable world and time, for millions of investors, is running out, precisely when our earning potential and our intellect might have peaked.  As an advisor, I worry that investors and advisors are caving in, calming investors’ fears instead of rebalancing their portfolios and buying lower yielding, and lower yielding investments, leaving us exposed to inflation and increasing dependence on a paternalistic government, exposing us to the threat of higher taxes.  How can we possibly turn this around?

MS:  Advisors should know financial markets and human nature if they are to guide clients. A 40-year old client might say, “I’m going to put my entire portfolio in bonds.” You, as an advisor, can point out to them that if indeed they put it all in bonds they are likely to live on very little in retirement, a sure little, but still very little. All of life involves risks, and we are foolish to try to avoid all of them. Think about the risk in getting married. If you want more risk, have children. We take risk when we choose a profession. We take risk when we move from one place to another. The risk in our portfolios is just one of many risks in life. Yes, a portfolio containing some stocks is likely to bite you hard from time to time, but it might give you a better chance to reach your goals than a portfolio that is entirely in Treasury bills.

JS: I think advisors need to learn how to step up, and to be respectfully tolerant with their clients and, as you say, to lead and guide them, perhaps by their own examples, as you’ve done, into understanding the trade-offs.

MS: I think that advisors should think of themselves as financial physicians, knowing and applying the science of investments and the science of human behavior. Too often financial advisors think about themselves as investment managers and display no patience as clients describe family quarrels and jealousies. Good advisors place themselves in their clients’ shoes. An advisor might think that leaving money to the kids is fine only if clients have portfolios fat enough for ample retirement income. But some clients consider leaving money for their kids more important than ample retirement income. Good advisors listen to what clients want and help them make the distinction between what they want that is reasonable and what they want that is not. This is very hard work for advisors. But this is the great value they provide.

JS: Meir, I will take that as a call to arms from you.  Thank you.  Decades ago, when your father asked to tap his pension fund to build an extra room to his home for his growing family, the managers of the fund turned him down, and at the time he was sad, but he was grateful for them in retirement.  Today we live in a society that is highly skilled in acquisitive ways, if someone tells us “no” we’ll keep on trying until we get a “yes.” How do we learn to say no to ourselves and accept that no?

MS: Being able to say “no” to ourselves is part of growing up. Toddlers aren’t very good at saying no to themselves, so you can see them scream in supermarkets aisles because they want the candy on the shelf. They need their moms to say, “No, you cannot have it.” But as we grow up, we hear our parents’ voices inside us. There is still the voice of a child in us who says, “I want that candy, I want that new car, I want to build this extra room,” and there is the voice of the parent in us who says, “no you cannot buy that car now because if you do you will not have enough for retirement.” Sometimes we need the help of others, such as financial advisors, to do what is right. My Dad understood years later that the pension managers who denied his request for money were smarter than he was, or at least more cool-headed.  They considered the trade-off between spending now and having enough in retirement, and they’ve done him a favor by denying him the money.

JS: your Blog tour is a wonderful concept and I’m sure it’s stretched you in many ways. Is there a question along the way that you had hoped you’d be asked but that you haven’t been?

MS: The issues of values did not come up as much as I hoped and issues of children did not come up as much as I hoped. These are central for advisors because they answer the question “What is the money for?” Sometimes advisors speak about clients as if clients are kind of machines that accumulate money for ourselves during working years and spend it on ourselves in retirement. But what about families? What about children? Some children are disabled. Some children need help beyond age 21 or 22.  We have to answer the question of “what is the money for” because money is only a vehicle for happiness. Financial advisors have a very important role in guiding clients away from decisions such as leaving money to one kid but not to another, which might feel right at the moment but destroy families later.

JS: I have a friend, 30 years old who has a note written on a sticky pad that he has placed on the dashboard of his car, which reads. “Comparison is the thief of all joy,”

MS: That is right. I think that it is very important to restrain our competitive instinct and direct it well. The competitive instinct was immensely important for our ancestors in the African Savannah when there was not enough food for everyone, and it’s still important for us today, because competition and ambition promote achievement. But if we let our ambitions run way ahead of us, we will always be frustrated.  It is sad when we are unhappy with $50 million because Joe has $75 million.  Learning to say “enough” is a banal lesson, but it is a true and useful lesson.

JS: I am profoundly grateful for your time and your thoughts today, for your book, and for your commitment to investors worldwide, and to the investment profession.

MS: Thank you Jonathan, it was a pleasure to speak with you.

Endnote: If investing for you feels like a losing game of Whack-A-Banker, put down that hammer, get a copy of Meir’s What Investors Really Want, and learn how asking yourself some new and different questions could make a difference in your investing.

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The great lane change-up

Posted on December 7, 2010 by

(Originally published October 15, 2010)

One Friday in October, I drove down to Charlotte with Anne and a dear friend to attend a black tie dinner celebrating the 25th anniversary of the Western Carolina Chapter of the Alzheimer’s Association. Having seen my mother and a number of our clients’ lives devastated by the disease, I have volunteered to chair Greensboro’s 2011 Memory Walk and the dinner only cemented my commitment to the cause. (If you’d like to help fight this disease, you know how to find me.) The highlight of the evening was getting to meet Vera Guise, the woman from Cullowhee, NC, who 25 years ago, while caring for two Alzheimer’s afflicted parents, single-handedly founded the chapter that today provides help and hope to 50,000 families in 49 counties in western North Carolina.

The only ‘lowlight’ of the rather memorable evening was the ride down. After twenty minutes of smooth sailing, we met screeching stops, bad-tempered drivers, and hyped up kamikaze motorcycles weaving through traffic at speeds approaching the sound barrier. What should have been a pleasant hour-and-a-half trip turned into a three-hour trek. Had it not been for the good traveling company, it would have been unbearable. The interesting thing about being in a traffic jam is that there is always a tendency to pick the lane that seems to be traveling the fastest. Sometimes you’ll luck out and move along better, but more often than not, you aren’t the only driver to have that brilliant idea and the fast lane quickly grinds to a halt.

Somewhere between Salisbury and Kannapolis, I realized that the financial markets are much like a never-ending traffic jam. While one asset class moves along, others stand still. At times, all lanes move along at breakneck speed and at other times, an overturned tractor-trailer stretches across all five lanes. In the last 21 months, we’ve seen unprecedented cash flow into bond mutual funds and out of stock mutual funds. While we’ve seen plenty of lane-shifting in the past (into technology in the 90’s and real estate in the 00’s), much of that shifting was out of one fast-moving lane into another even faster lane.

The thing that makes today’s “Great Lane Change” into bonds unique is that we’re seeing “drivers” move from both the slow lane (Money Markets) and the fast lane (Stocks) into the middle lane of Bonds. The investors in Money Markets and CDs are fed up with near-zero returns and the investors in Stocks are happily taking money off the table that has seen a nice return over the last 18 months. Combine this with the great past returns of bonds (that are still, as the saying goes, no sign of future returns) and you can see the traffic patterns pretty easily.

The problem we see with continuing to add to bond positions (even, and especially, in the “safest” of these, the U.S. Treasury) is three-fold: the retail investor is rarely right, the bond lane seems to have a flashing “Road Work Ahead” sign squarely in the road, and we think high-quality dividend-paying stocks have many bond-like qualities without the same interest rate risk.

The Investor is Rarely Right

These flows show, for the most part, the decisions of retail mutual fund investors, who have been known, as a group, to buy and sell the wrong things at the wrong times. A recent study from DALBAR shows that for the last 20 years, equity returns for the S&P 500 index have been 8.35% annualized versus just 1.87% for the average investor. On the bond side, the results have been much the same; Barclay’s Bond Index rose 7.43% annually versus the average bond investor’s return of 0.77%. In other words, Joe and Jan Investor’s timing has been far from impeccable and this “Great Lane Shift” makes us suspicious.

Source: Riverfront Investment Group

Road Work Ahead

The chart above shows 10-year U.S. bond yields since 1798. Note that in only two other periods in our country’s history have we experienced yields this low (once in a lifetime!) It is important to remember that in the seesaw bond world, rising yields result in falling prices. If U.S. bond yields revert to 4% (where they were just 6 short months ago in April 2010!), bonds could lose nearly 10% in price, the equivalent of the next four years’ interest payments. Investors’ thirst for high quality bonds could turn out to be a very expensive form of insurance just to hedge the pain of prolonged uncertainty.

Bond-like Stocks

So, if the bond lane looks congested with Road Work Ahead, is there an alternate route? Let’s look at an example. Today, we can buy a Johnson & Johnson (JNJ) 10-year bond paying 2.83% yield to maturity and whose bond payments are guaranteed to grow 0% over that time. Alternatively, we could own JNJ common stock, whose latest quarterly dividend of 54 cents per share equals a 3.4% annualized yield. If the company continues to raise the dividend at just half the rate we expect, the “rent” will likely more than outpace inflation.

And while we know as well as anyone that stocks like JNJ can (and will) go down sometime in the future, we’re at a point where buying bonds at today’s prices carries near-equal risk with nowhere-near the incremental return. If inflation and interest rates revert to trend levels, an investment in JNJ bonds could impair our capital and result in diminished future purchasing power (that 10% drop mentioned above) while the stock dividends could have growth potential.

Meflation is What Matters

Last month, The Wall Street Journal’s Jason Zweig penned a piece about “Meflation”. He noted that investors put so much effort into figuring out whether we’ll see inflation or deflation and picking the right course based on the research. His thoughts were refreshing: don’t invest according to what you think will happen, rather invest according to what will affect you personally (“me”). This is the same approach we take with Bonds versus Stocks. While we’ve laid out reasons to think about not swerving broadside into the bond lane, it doesn’t mean we are avoiding the tangible safety and predictable returns of bonds. The trick is to make a sound judgment about the trip ahead and then chart an appropriate course.

The most important thing about our drive to Charlotte last Friday was not that our trip was pleasant or that we arrived before anyone else. Rather, the most important thing was that we got there safely, and after experiencing a wonderful evening, we arrived safely back home. Some terrified drivers pulled over and waited for traffic to clear. Others took the first available exit off the interstate or made a u-turn, causing us to wonder if they knew where they were going. And some switched lanes incessantly, unaware they lost about a car length with every change. Our Suburban held it in the road, adjusted to changing conditions, and we did our best to enjoy the ride.

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QE2

Posted on December 1, 2010 by

NPR’s Adam Davidson and Alex Blumberg put the cookies on the bottom shelf in their demystification of Quantitative Easing, “really one of the more impressive financial phrases out there, impressive for the distance between how boring it sounds and how dramatic it actually is.”

http://www.npr.org/v2/?i=130408926&m=130409247&t=audio

The right question to ask, in my view, isn’t whether QE2 will work or won’t work, the right question to ask is, “are the assets I own priced correctly, given the full range of possible outcomes?” The right asset, but at the wrong price, will eventually deliver its consequences. If you’re going to consider anything, you have to consider everything.

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Why Three Top Bond Managers Like Equities

Posted on November 23, 2010 by

Why Three Top Bond Managers Like Equities.

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“Investors Think Insurance Agents, Brokers are Fiduciaries”

Posted on September 16, 2010 by

I read an interesting article from rep.com this morning (full article here).  In case you wondered, other people who are not fiduciaries include, but are not limited to: my dentist, my plumber, and the drive-thru worker who asks if I want to supersize my combo meal. It doesn’t mean they are bad people (in fact, I’m more than happy with their service), they just aren’t required to put my interests first. Excerpt below:

But there is still a lot of confusion about who is actually held to a fiduciary standard, the survey found. Three out of five U.S. investors think insurance agents do. Two out of three U.S. investors think stockbrokers do. And 76 percent of investors think that all financial advisors (a term used to describe brokerage firm salespeople) do. Meanwhile, 75 percent think that financial planners are held to a fiduciary standard and 77 percent say investment advisers are.

Only 29% understand that the primary function of stockbrokers is to buy and sell investments to clients, and only present limited advice.

So, here are some questions to ask an advisor, insurance agent, dentist, or drive-thru worker (in that order): How and what are you paid in our relationship? Are you required by law or oath to put my interests first? Do I really need a tooth-colored crown on a tooth that only my spouse will see? Take a look at me, do you really think I should supersize my combo?

Posted in broker, Fiduciary, insurance, investment management, SEC, standard operating procedure, unitended consequences, What's the Worst That Could Happen? | Leave a comment

Opportunity Arriving Daily

Posted on August 18, 2010 by
Sir John Templeton, Jonathan Smith, and William H. Barnhardt
Douglas Airport, Charlotte, NC sometime in August 1987
Photographer: J. David Barnhardt

During the 1980’s, I had the unalloyed privilege of managing some money for the late Sir John Templeton. Every now and again, I pause to consider that one of the world’s wisest investors mentored me, with his money and on his dime, and I am profoundly grateful.

His wisdom was vast, his insights were unconventional, and his generosity knew no bounds. Sir John was always a learner and never a knower. Learners keep flexible and open-minded; knowers are brittle. When naysayers challenged his view that life continually offered wonderful opportunities, he countered that opportunities were not all gone, what was missing was preparation. Wisdom like this takes years to sink in. Some do not ever get it.

This summer, a Chattanooga friend who knows Lauren Templeton, the founder of the investment firm bearing her name, told her that years ago I managed some money for Sir John. Lauren is the wife of Scott Phillips, a principal and portfolio manager at Lauren Templeton Capital Management, LLC and the great-niece of Sir John Templeton. We three connected and talked for over an hour, a joy that reminded me of many conversations with John Templeton himself. This week, I shared my recollection of Sir John’s views on opportunity and preparation with Scott. He reminded me that Sir John once said that the very reason he went to the trouble to save half of his income was so he would have the necessary funds ready to take advantage of future opportunities, since opportunities often appear when least expected. This Scott knows, as is evidenced throughout his latest book, Buying at the Point of Maximum Pessimism, Six Value Trends From China to Oil to Agriculture.

At Jonathan Smith & Co., Investment Counsel, we recognize volatility in financial markets is high and is likely to remain high. Our experience is that volatility can be unbearably unsettling to investors, leading them to sell good companies for wrong reasons. Volatility can also paralyze investors, preventing them from taking steps that historically, over the long haul, have been in their best interests: buying quality investments whose margins of safety are high. Investors are not the only ones who must manage volatility successfully if they want to survive; read how hard pilots have it when their outlooks are horribly pessimistic:

“There’s an exercise that some pilots go through late in their flight training. The student pilot gets the plane airborne, at cruising altitude. Then the instructor places a loose-fitting, thick-woven sack over the student’s head, so the student can see nothing. The instructor takes the controls and starts stunt-piloting. He loops the loop. He pushes the plane, Turkish-headache-style, skyward, then flips belly-up and swoops earthward. He rollicks and spirals, careens and nosedives, tailspins and wing-tilts. He gets the student utter discombobulated. Then he puts the plane in a suicide dive, plucks the bag off the student’s head, and hands him the controls. His job: to get the plane back under control.” (Mark Buchanan, The Rest of God, Restoring your Soul by Restoring Sabbath, page 37)

Getting investors’ “financial planes” back under control is the JSCO Way, yet so many investors are still utterly discombobulated, their planes in suicide dives. If the instructor has plucked the bag off your head, handed you the controls, and if it feels like you are approaching earth at 17,333 feet per second, give us a call, we can put your nosedive on hold for as long as it takes to have a conversation about getting your financial plane back under control.  And if you do not want to, we will hand you back the controls while our parachutes still have time to open.

Posted in getting your financial plane under control, knowers, learners, opportunity, preparation, saving half your income, Sir John Templeton, spirals and nosedives, tailspins, volatility, wing-tilts | Leave a comment