“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investment portfolio needs to take into account current expected real returns and not robotically follow outdated, and thus unrealistic, portfolio allocation assumptions from a different era.
“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.
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.
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.”
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
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