Investment Philosophy
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.
Published Articles & Quotes:
- “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.
Using investments to make a difference
Mass Mutual, July 2018
- Cash levels in the U.S. are extraordinarily high -- still!
- Just focus on the 'cash' buildup and where it is likely to go next.
- Interest on cash deposits: CDs, money market, etc. does not even keep up with inflation -- still!
- You, quite possibly, could miss the next big run for U.S. stocks as that cash gets invested.
- This unprecedented level of dry powder can help absorb the inevitable shocks to stocks, potentially providing downside protection.
- When you graduate to investing money held outside of your IRA/401(k), it’s a whole new ball game — taxes matter.
- Californians give up, in taxes, as much as 1/3 to 1/2 of each year’s interest, realized stock and bond gains, etc.: 'short-term investment income'.
- Only France and Denmark have a higher long-term capital gains tax than California’s 33%+ (of the 35 OECD nations).
- Most investment strategies are optimized on something other than after-tax profit…the same about most investment products on the market.
- You can build wealth faster and with less risk by being tax-smart.
- Sitting in cash is essentially market-timing when done outside of a proper long-term financial strategy.
- 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.
“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 -
“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”.
- Burton Malkiel -
- 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.
Treasury Bond ETFs are still in the red since this article: iShares 7-10 year Treasury ETF chart
- 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.
- If single: $12K.
NOTE: Tap here for the fastest marginal tax calculator on the Internet. Within seconds you can estimate your tax benefit from charitable gifting in 2018: TaxTips.app
- At ImpactAdvisor, we’ve been busy all week with tax-optimization.
- The #1 action item: topping up your estimated state income taxes before year-end.
- Our clients who took this advice expect to save thousands of dollars, each.
- In some extreme cases, if you underpay $10,000 in state income taxes before 2018, you will have missed out on $3900+ in federal tax savings.
NOTE: Tap here to fastest marginal tax calculator on the Internet. Within seconds you can estimate what Tax Reform did to your estimated 2018 tax bill: TaxTips.app
- 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) you keep less than 48 cents on the dollar in money market interest/dividends.”
- “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.
Municipal bonds: The antidote for those retail investors on a low-SALT diet
The Bond Buyer, March 2019
- 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
IndexIQ launches international ETF, eyes smart-beta ETF expansion in 2019
Fund Intelligence, Dec. 13, 2018
- 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.”
WisdomTree hires Vanguard’s quant PM to lead active multifactor ETFs
Fund Intelligence, Nov. 15, 2018
- 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."
A Decade After Lehman's Collapse, Some Say It Can Happen Again
Bisnow, Sept. 11, 2018
- "As an investor, you have to ask yourself, if you are getting into bitcoin today: what's your edge over the person selling to you?" Escamilla says.
- "Simply looking at a chart showing the price rise is not enough,"
- For bitcoin or any competitively traded second-hand asset like shares of publicly traded companies.
Should I Invest in Bitcoin and Blockchain Technology?
U.S News, Nov. 13, 2017 (~$6K/BTC)
- It's not a question of 'human vs. machine'.
- 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."
How AI Will Change Investing
U.S News, Oct. 16, 2018
- 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.
Leveraged ETFs Are a Loser's Game
U.S News, April 18, 2018
- "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
Should I Invest in Bitcoin and Blockchain Technology?
U.S News, Nov. 13, 2017 (~$6K/BTC)
- 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 Newest Metric for Financial Success: Customers’ Emotions
Tearsheet, August 2017
- "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.”
Beware Of The Bitcoin Bubble: Investment and Financial Advisors Warn
Forbes, Nov. 4, 2017 (~$7K/BTC)
- 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.”
NOTE: 2.5 weeks later BTC had doubled to more than $19,000/BTC before trading below $7,000/BTC 2.5 months later.
