We look forward to sharing our investment philosophy and current market outlook with you when we meet. In the meantime, here is a look at what we've published in the past.
“People that think they can predict the short-term movement of the stock market — or listen to other people who talk about (timing the market) — they are making a big mistake”
- Warren Buffett -
Sitting in cash can be, essentially, market-timing.
Market-timing, as an investment strategy, is a very difficult one to defend -- for both amateur and professional investors alike.
“Trying to time the market” is the #1 mistake to avoid.
“I have never known anyone who could consistently time the market. And in fact I've never known anyone who knows anyone, who was able to consistently time the market”.
“Most investors believe there is a trade-off between one’s values and one’s investment returns. This is left over from the days of overpriced investment products”
“Historically, on average, socially selective funds underperformed the market for the same reason other name-brand, actively managed funds did: high fund expenses,” said Jason R. Escamilla, CEO of Impact Labs in San Francisco
Socially selective funds were a niche market that required a marketing & sales budget to attract investors, he explained.
10-year Treasuries are a bad investment right now.
You can expect to lose value over time, after taxes and inflation.
Taxes matter; inflation matters.
A well-constructed investment portfolio needs to take into account current expected real returns and not robotically follow outdated, and thus unrealistic, portfolio allocation assumptions from a different era.
Jason Escamilla, CEO of ImpactAdvisor, uses ETFs, closed-end funds and mutual funds for part of his business, but his firm specializes in direct indexing.
There are two benefits to direct indexing, he notes: better customization and even greater tax efficiency.
In a high-tax state such as California, direct indexing makes a big difference, Escamilla adds.
The tax benefit of direct indexing is that the software allows for greater ease of rebalancing and tax-loss harvesting, along with minimizing tracking error. But it’s not for all clients.
There are times when ETFs make more sense than direct indexing, such as for younger clients who are just starting to build wealth, or for those clients whose holdings reside mostly in IRAs
“Historical valuation fundamentals are less important than the basic laws of supply and demand, which always prevail, however volatile along the way,” says Jason Escamilla, CFA, CEO at ImpactAdvisor, an advisory in San Francisco.
He points out that cash on the sidelines is at all-time highs, as everyone else waits for the dip, too, indicating that investors have been waiting for the pullback for some time. That strategy of waiting, too, may be a crowded trade that ends up offering investors only modest returns.
Jason Escamilla, CEO of Impact Labs, said “municipal bond funds in a high-tax state like California are relatively more desirable after tax reform. This is because marginal tax rates can be higher and fewer people get hit with AMT after tax reform.”
He cited this example: “Married, two kids; $430,000 of income, no deductions and (after taxes)
“And don’t forget about the Fed’s 2% inflation target over time: expect a 2% inflation hit,” he said.
“A higher-yielding 2.5% money market fund rate does not even beat inflation once you get into a meaningful tax rate, e.g., making enough to cover the cost of a family today. Even in an IRA, you will eventually have to pay the tax man in nearly all scenarios.”
“When you’re looking to park taxable cash, there are smarter places than a money market fund,” he said, noting how meaningful it was to avoid standard interest tax rates in California and other high-tax states.
“...you can stack the deck in your favor for retirement by having time on your side ,” says Jason Escamilla, chief investment officer of ImpactAdvisor in San Francisco.
“...putting a long time horizon on your investment planning.”
Jason Escamilla, Chief Investment Officer with San Francisco based ImpactAdvisor, says, “With Apple, you have a well-run growth company with extraordinary profit margins at a reasonable valuation.”
“As a long-term investment, it is further de-risked when you consider the company's demonstrated preference for buying back shares over pursuing low-margin and higher-risk growth.”
Apple has repurchased nearly $73 billion of its own stock over the past four quarters.
Since 2009 "the S&P 500 has roughly quadrupled, while the MSCI All Country World ex-US, measuring international markets, has only doubled, he noted.”
“Meanwhile, the strength of the US dollar this year has been painful for US investors who allocated overseas,” Escamilla said.
"More accommodating monetary policy and lower valuations in the international markets present an attractive opportunity” -Jason R. Escamilla, CEO of ImpactAdvisor
Jason Escamilla, CEO and Chief Investment Officer of ImpactAdvisor, said.
It’s everything that the industry wants: they all want something shiny, something interesting to sell, and this is a cost-efficient way to do it that also works well with the ETF structure.”
Bisnow interview -- ten years after Lehman's collapse:
“No doubt (in 2008) I was very bearish on the market, launching a short-fund most of 2008.”
"Today, our economy and corporations are among the most efficient in the world. The number of blatant signs of excess pales by comparison with 10 years ago.”
"Meanwhile, the social effects from 10 years ago cannot be underestimated… Lehman and Bernie Madoff left individual investors highly skeptical."
"The new visceral skepticism today helps keep the industry in check."
As with Freestyle Chess, the superior model in High-Performance Wealth Management is 'human + machine'.
"Human advisors have a good sense of the value of their client's time and when to make the call," says Jason R. Escamilla, CFA, CEO and chief investment officer at ImpactAdvisor in San Francisco.
"When tax reform passed last year, days before the year's end, we were able to save our clients thousands of dollars each with tax-smart, last-minute action items. There was no iPhone app making those phone calls."
For Jason Escamilla, CEO of ImpactAdvisor, a wealth management firm that focuses on values-based investments, emotions and money are inextricably linked, as values-based investments are often driven by emotional responses to causes.
For example, an investor may choose not to invest in companies that he or she sees engages in practices detrimental to the environment.
But "…Being emotional is not an edge in investing," he said.
Mainstream philanthropists and non-profit organizations drew the short straw.
If you regularly make an impact with philanthropy, but otherwise, you have few deductions, you may have lost your tax deduction from donating, especially if you are married.
If you are married, in 2018 you get a $24K standard deduction just for breathing.
The unleashing of professional sales & marketing for crypto-based investment products over the next few months will make 2018 The Year of the Crypto Asset Class.
It’s anyone’s guess when and at what level this bubble in bitcoin will burst.
The last thing I’d want to be right now is short bitcoin.
With a good sales & marketing team just about anything can and will be sold; especially a sexy new asset class.
Nonetheless, with respect to bitcoin, I still believe, as quoted in Forbes this month: “The price level and energy usage are unsustainable. There is far better technology emerging to meet the same needs.”
"But it is anybody’s guess what inning. It looks to me like we’re well ahead of the 7th-inning stretch,” said Jason R. Escamilla, CEO of ImpactAdvisor, an investment advisory firm in San Francisco.
“The price level and energy usage are unsustainable. There is far better technology emerging to meet the same needs.”
In fact, "very few investment professionals understand the risks over time, let alone retail investors and people in the media," says Jason R. Escamilla, CEO of ImpactAdvisor. These risky investments don't work the same way as typical funds and magnify losses exponentially.
When you understand the math, leveraged ETFs (e.g +/- 3x) generally perform as expected. The main problem lies in how poorly understood leveraged ETFs can be, relative to properly executing one’s long-term investment strategy.
The #1 reason these are generally poor long-term investment products is that their daily rebalancing can cause a lot of “buy-high, sell-low”. Over time they will tend to lose the battle against volatility.
"We view crypto-investing as driven by the greater fool theory of investing or speculation, and we genuinely mean that in a bullish way for now," says Jason R. Escamilla, CEO of ImpactAdvisor, a wealth management firm in San Francisco
IMPACT ADVISOR LLC ("ImpactAdvisor") is an investment advisor registered in California. This website should not be construed as a solicitation or offer to sell investment advisory services or as an offer or recommendation to trade in any security. Financial services are only provided to investors who become ImpactAdvisor clients after entering into a written agreement.
Past performance does not guarantee future results. Investment products are not FDIC insured, are not bank guaranteed and may lose value.
