Modern Wealth Management

Fully personalized, tax-smart

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.

Also see our RECENT PRESS page.

Published Articles & Quotes:



 
Today’s high-priced bonds come with significant interest rate risk.
  • The 10-year Treasury bond yields 0.65% today.
  • That’s only $6,500 of income for every $1 million in your portfolio.

The Fed is committed to 2% inflation, and recently announced policy allowing inflation to run “modestly above 2% for some time”.
  • They project 1.7% inflation next year.
  • Every 1% increase in the 10-year yield translates to a ~10% loss of market value.

Meanwhile, in this new era of unconstrained deficit spending, Congress is just getting started.
  • Republican tax reform set a new precedent while at full-employment: $1 trillion budget deficits.
  • Existing Medicare and Social Security commitments require more borrowing.
  • There’s bipartisan support for a major infrastructure bill.
  • And we may be weeks away from a Democratic mandate for additional spending on environmental and social priorities.

If your 60/40 or 40/60 portfolio holds a traditional allocation of longer-term bonds, you are betting against the Fed.


How exposed are you to higher rates?

In our free financial planning app, you can inflation stress-test your portfolio against your retirement goals:

 
“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”.
- Burton Malkiel -
 
  • “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 taxable money -- outside of your IRA/401(k) -- it’s a whole new ball game: taxes matter.
  • Californians can give up, in taxes, a third to half or more 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 (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.


  • Homebuyer? The NASDAQ is the leading indicator to watch.
    • Today, the five largest companies in the world by market capitalization are based in the Bay Area or have a major presence here.
    • Of the 12 largest companies listed on the NASDAQ, all but two, Comcast and Pepsi, are Bay Area companies
    • And all ten use equity as a meaningful component of compensation
    • New all-time highs, +58% since the start of 2017
  • There is no scarcity of additional homebuying pressure over the next several years:
    • Sideline cash
    • Record corporate profitability
    • Tax reform is monumental
  • If you are waiting for other homebuyers to put down their guns, you could be waiting a long time — especially in the San Francisco Bay Area.

Medium, Aug. 28, 2018


 
  • 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.


 
  • “We’re buying stocks this morning.”
  • “…considerably more attractive than fixed income securities”
  • “…stocks generally — they’re businesses; they’re American businesses: $30 trillion worth of ’em — and they look cheaper than…generally, real estate”

Tax Planning for Professionals


Jason gives an overview of the tax considerations professionals should consider and what can be done to help.

MIT Sloan School of Management, Dec. 2018

CNBC video: Warren Buffett

on the markets, valuation of stocks vs. bonds and corona virus




Skip ahead to 1:50:00 for our question to Warren Buffett

CNBC, Feb. 2020
 
  • 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: TaxImpacts.com
 
  • 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:   TaxImpacts.com
 
  • 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.

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