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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:

  • Cash levels in the U.S. are extraordinarily high right now.
  • 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.
  • 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.

2018 Update: Real-time 'cash' as % of GDP -- St. Louis Fed's M2/GDP.

Spoiler Alert: it's just as high still in 2018!
The dry powder/sideline cash is still there, unlike previous market-peaks.
  • 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 Buffet -
“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”.
- Princeton Economist Burton Malkiel -

  • 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.

Know your tax rates. Make better financial decisions:

  • 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.

IEF: iShares 7-10yr Treasury Bond ETF has since lost more than 5% in total return.

As yield goes up; price goes down. The yield on Treasuries hit a post-election low (2.02%) within a few days of this article and since has crossed 3%
  • “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

  • 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.

ImpactAdvisor Unconstrained Portfolio - Performance
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