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The frequency and efficacy of scammers has increased over the years. A report from the FBI says that losses to cybercrime activities is up nearly 200% since 2020.[1] And with the improvements in artificial intelligence, we can expect scamming will only get more devious and lucrative in the years to come.

Education, intelligence, and success in life do not protect someone from being a victim. The best defense is a good offense. And a good offense begins with humility – understanding that anyone at any time can become a victim to a scam, including you and me. The next step is to be familiar with the different types of scams, and their methods, and create defenses to avoid becoming a victim.

Scams Today

There are many ways people are scammed these days. A few include romance scams, tech support scams, password compromise/reset scam, and scam awareness scams (when the scammer claims to be from a reputable company, says you are being scammed, and offers to help you). I cannot list every way in which we can get scammed, but there are a few dependable defenses that will greatly reduce the likelihood that you and I become victims of a scam.

The scam artists today might have a lot of information about you. They may know who you associate with and companies you do business with. Through hacking and spoofing, they can contact you while appearing to be a known contact or business. They often trigger feelings of fear, greed, love, and/or loss to get you motivated. And they may work under the shroud of urgency and secrecy.

Tips to Protect Yourself from Scam Artists

• Never click a link in an email or text, even if it is from someone you know or a company you do business with. If you think it might be legitimate, go to the company’s website by typing the URL into a web browser.
• Never give remote access to your phone or computer. Whether it claims to be IT support or a bank trying to “help” you, giving remote access to your accounts is like giving a thief a key to your home. Double and triple check before giving remote access.
• Look at the email address of the sender, not just their name. Many deceptive emails will come from companies you do business with. By looking at the actual email address of the sender, you can decipher if this could be legit or is a scam.
• Share with a trusted individual. Have someone you trust – a family member, close friend, or myself, to talk to if anything happens out of the ordinary. Scams are often more detectable by 3^rd parties (because emotion is not in play for that person). This is essential if you are told not to tell anyone or are coached on what to say – those are huge red flags!

In financial planning, we often talk about accumulating assets and then using those assets wisely when you retire. We focus our attention on making wise investment decisions and growing your portfolio. But all of that is moot if you become a victim of a scam. Therefore, protecting yourself from becoming a victim to a scam is a new, and essential, part of the financial planning process. And I am here to help you.

– Scott

Tis the season of gratitude! Thanksgiving is perhaps one of the most underappreciated holidays, but most needed. Given the contentious and divisive election season we have endured, and the possibility that the winner is not what you wanted, it may be difficult to be thankful. But it’s worth the effort because gratitude results in greater and more enduring contentment.¹

Contentment is Not Circumstantial

There is no doubt that when things go our way, when we get our desired outcome, it is easy to feel grateful and be content. That’s like riding a bike downhill – it doesn’t take much when things are easy.

But when life doesn’t go our way, we can still be content. And that’s because our contentment has more to do with the focus of our lives than the circumstances of our lives. Granted, this may not be easy. When going through a personal trial it can be like riding a bike uphill – it can take a lot of effort!

The good news is that each one of us is in control of what we focus on, and what we choose to let go.

Reflecting and Expressing Gratitude

While the media reminds us of everything that is wrong in society, we can choose to take time each day (or week) to reflect on the good things in life. That will increase our personal contentment, despite the challenges of life.

And when we include others – when we recognize how others have helped us, and express that gratitude to them, it is a double whammy. Not only is our contentment increased from expressing gratitude, but we help another feel valued, which increases their contentment.

Thank You

I am grateful for you. Thank you for your trust and confidence in me. Thank you for the privilege to know and work with you. Thank you for taking my advice, even when it goes against what may feel right. Thank you for being a patient investor, I know it’s not always easy. And thank you for choosing me as your partner on this journey.

– Scott

1. https://time.com/5026174/health-benefits-of-gratitude/

Investors have many different financial news outlets across various media channels to select from to get their desired news. Most investors want to be informed – and information is usually good, but it depends on what it is informing you of. How do you discern between financial resources that are beneficial for you and those that are best to avoid?

The Bias of News

As I mentioned in last month’s article, the media only survives if they can get eyeballs and clicks. They must attract attention in a very loud and busy world, and then must keep that attention. The best way to do that is to ensure their news is produced in a way that provokes hot emotions such as anger, fear, sensationalism, and hyperbole.

Is a new agency bent on provoking and attending to hot emotions beneficial for you? Those don’t sound like emotions conducive to thoughtful decision-making. Nor are they emotions that identify with a happy and high quality of life.

The Media Often Misleads

News seldom pertains to just facts, especially financial news. Facts are interspersed among personal viewpoints, spurious forecasts, and whatever else they have to say to get you to tune in.

On Sept 5, 2024, Barron’s ran the following headline:

Stock Markets Must Heed Recession Alarm Bells, It’s Not Just a September Scare

This ran on a day the markets hit all-time highs. And those highs continued throughout September. Not only do they sensationalize things; they are often quite wrong. And that’s because their job isn’t to get anything right. It is just to get you to click.

I Am Your Best Financial Resource

The media may be 24/7 and promote many tantalizing headlines, but I am your best and most reliable financial resource. Not only do I understand your unique situation, your goals, your plan – I also have your best interest at heart.

Please reach out with questions about what you read or hear. If the news has you concerned – contact me. I am your best financial resource no matter what is going on. That is an honor and a privilege for which I am very grateful for.

– Scott

Have you noticed that the media tends to have a negative bias to the things they report? Every now and then there is a positive story, but it appears that the vast majority of headlines and stories are negative in nature. There is a reason for this.

The Media’s Goal

We could surmise that the media’s primary function is to inform the public. There is no doubt the media uses information as a deliverable, but the primary goal of the media is to make money. They need to sell ads. And to sell ads, they need eyeballs – your eyeballs.

A study by the NIH found that negative words in headlines increased consumption of content, whereas positive words decreased consumption. The report said, “For a headline of average length, each additional negative word increased the click-through rate by 2.3%.”¹

Oh, The Irony

While negativity has increased in the media over the years, it has occurred at a time of great prosperity and mostly positive economic conditions. It is ironic that the media increased its usage of negative words during a period of significant wealth creation. Markets have soared over 500% in the last 25 years, despite the negativity along the way.

This helps us realize that negative headlines (frequency and intensity) do not reflect reality. They reflect what will give media companies the best bottom line.

What to Expect

Expect such negativity to continue. In the media there is a saying, “If it bleeds, it leads.” Expect to see more blood (negativity) because that’s what generates the clicks.

As we come into the election season, with a very divided nation, it is reasonable to expect the negative headlines to become more frequent and intense. We cannot control the media headlines, but we can control whether we choose to tune in.

And remember, history shows that negative headlines do not reflect what is really going on. If you come across something that concerns you, let’s talk. I am here to help you filter the noise and consider only those things that are pertinent to your plan and desired outcomes.

– Scott

Last month’s global Windows outage, which took many businesses offline, is a great reminder of how sensitive computing and the cloud can be. You would think that something that prevented people from corresponding via email and incapacitated Delta Airlines for days would be a malicious virus. But that was not the case. This was simply a software update containing an incorrect code. Something so simple did so much damage!

The Wisdom of Emergency Funds

I often speak with clients about the wisdom of creating a robust emergency fund. An emergency fund is an account that holds some amount of cash (or cash-like) savings. The idea is that if an unexpected event took place that required a significant cash outlay (new roof, medical bills, unemployment, etc…) you wouldn’t need to sell your investments to take care of yourself.

But after what happened last month, I believe it is also important to establish a “Cash Stash” – physical currency you keep at home that can be accessed at any time.

Creating a “Cash Stash”

Let’s say something like this happened again – whether it was due to a faulty software update or a purposeful cyberattack. What if it affected electronic financial transactions (debit card, credit card, ATM)? In that case, having a few $20 bills at home could be worth much more than $20. The grocery store or gas station may not be able to process a credit card transaction, but they may still be able to transact in cash.

Prudent financial planning is not about trying to control or guarantee outcomes – as much as we wish we could. It is about anticipating what could happen and taking action to ensure that if it were to happen, we would be okay.

In financial planning, just like insurance, we don’t hope negative things will happen. But if and when they do, at least we will be prepared for it and in a better place than if we had buried our head in the sand.

– Scott

I am so grateful to live in a free nation. I am so grateful for the freedom and right to pursue happiness, as established in the Declaration of Independence. Thanks be to many unselfish individuals that sacrificed much, even their own lives, so we can enjoy these freedoms today.

These freedoms don’t guarantee desirable outcomes, but they permit us to have a say over how our lives go…if we choose wisely. I wanted to share some thoughts on how the principle of sacrifice and blessing of freedom can help investors obtain more desirable outcomes.

Worthy Investor Sacrifices

Being an investor in the stock market is not easy, at least not always. We face recessions, bear markets, negative news stories, and the constant presence of uncertainty.

Investing requires investors to sacrifice near-term comfort and certainty for a better potential future. It is not uncommon for investors to experience anxiety, fear, and temptations to make the wrong decision at the wrong time. The sacrifices investors make are not easy, but they are worth it!

Investor Freedoms

Investors are free to make whatever decisions they want, but sometimes those decisions end up being costly. I have contemplated what freedoms can best help us invest well and share with you three freedoms that help investors invest well.

1. Freedom to customize an investment strategy to your preferences and goals
2. Freedom to ignore the media…they use information to get clicks, not help you
3. Freedom to search for additional information, not relying on biased headlines

My primary role is to help my clients reach their goals. This requires wise decision-making across a myriad of market and economic environments.

It is not easy making the requisite sacrifices and using our freedoms to make the best decisions, but that is what I am here for. I can help alleviate the burden of sacrifice and ensure decision-making is in line with your personal plan of success.

– Scott

As summer comes upon us, many people take time off work, travel, and spend time with family and loved ones. The summer provides many opportunities for us to make memories – memories that can last a lifetime and provide years of joy.

But life is complex. We often need to juggle multiple priorities, many of which are good. Yet we have limited time. We choose to focus and spend time on some things at the expense of others…all of which may be good. There are things that are good, things that are better, and things that are best. To make this a great summer, we should identify and choose those things that are best, strategically omitting other things that may be good.

Strategic Omission

We often think achieving greater results such greater happiness, greater meaning, and greater connections requires that we do more of something. But the opposite is actually true. We can enhance our lives and experiences by omitting things that may distract us or “crowd out” things that are better or best.

This can be a difficult endeavor because much of what we do on a daily basis is habitual. We may want to remove an activity from our life but have a hard time because we do it automatically. This is where creating a “Don’t Do List” (instead of a To-Do List) could be helpful. Identify what you will stop doing, write it down, and follow it daily just like you would a to-do list.

What Should I Omit?

As you consider what may be best to omit from your life this summer, the first place to start is on your personal values. Which activities best support your values and the legacy you want to leave?  Which activities do you want to engage in that do not necessarily support your values? And which are negative activities? Make a list and prioritize. Then choose to omit at least one of them from your life this summer – making time for things that are better and best. 

Too many people live with regret – things they wish they would have done differently but cannot go back and change. The summer of 2024 will only happen one time. I encourage you to consider what activities you can stop doing so you can have the best summer possible.

– Scott

The brain has a lot of gray matter but hates gray areas. As a planning machine, the brain needs information that is certain so it can figure out the best course of action. And when we don’t get certain information, we get agitated. Perhaps you have said, “I don’t care if the news is good or bad, just tell me what it is. Not knowing is the worst.”

Probability Problem

Whenever there is uncertainty (almost always) we must rely on probabilities to help us make the best decision. But considering probabilities requires a lot of thought and analysis. It means we have to think statistically, which most of us prefer not to do. Instead, we simplify probabilities whenever possible.

We all want to know what is going to happen in the markets. In the face of uncertainty, we seek out some degree of certainty – even an illusion of certainty. We are attracted to forecasters and market experts who will tell us what is going to happen. And we confuse their popularity and confidence with their ability to predict the future.

Investing Takeaway

The truth is we can think of a lot of things that have occurred that cause investors and “experts” alike to scratch our heads. Surprises and uncertainty are just about the only certainty in the financial markets.

We can’t control the markets or the economy. We can’t rely on expert forecasts, no matter how confident they sound. Even those forecasts with low or high probabilities aren’t sure things – sometimes the unexpected happens.

But we can control how we respond…the choices we make. A Financial Plan provides guidance and structure. It needs to be coupled with a Response Plan – how we will respond to the uncertainties and surprises. That’s what I am here for. Let’s focus our time and energy on those things we can control – our personal financial and response plan.

– Scott

15 years ago the markets began to recover from the most severe economic crisis since the Great Depression. The Global Financial Crisis resulted in many jobs lost, stock markets losing half their value, and the personal and psychological toll was significant.

The GFC was the greatest test of investor fortitude this generation has experienced. Many well-intentioned investors sold stocks as the market went down. Every experience, whether positive or negative, is an opportunity to learn from the past and make better decisions for our future.

How Much Gain Did You Experience?

Since the market hit bottom in March 2009, the S&P 500 Index is up over 800% or 15.9% per year.¹ How much of that gain did you experience? The only way investors didn’t participate in all the gains of the recovery was because they sold when markets went down. In fact, that’s what the average investor did. But we want to be better than average.

Selling during scary and uncertain times usually is referred to as “getting to safety.” While getting to safety provides an immediate psychological benefit, it often results in a very real financial cost. Next time you feel the need to “get to safety” perhaps it can be re-framed as “reducing my future return.” Because no one sells and gets back in at the bottom. The only way to participate in all the gains of the market is to ride out all the temporary losses that come along the way.

Sage Advice for the Future

Howard Marks, a well-respected investor and hedge fund manager, gave great advice to help investors capture market gains. He said,

“Our performance doesn’t come from what we buy or sell. It comes from what we hold. So the main activity is holding, not buying and selling.”

When markets are scary, uncertain, and the outlook is dire, the natural reaction is to sell. But the best response and main activity for long-term investors is to hold. That won’t be easy, but that is why you have me! Our focus, energy, and efforts are in holding through the inevitable and occasional difficult economic periods so we can participate in the wealth-creating power of the stock markets.

– Scott

Nick Saban, recently retired football coach of the Alabama Crimson Tide said, “If you want to be good you don’t really have a lot of choices.” He was referring to the choice to either be disciplined (or not) to a specific process that would lead to success.

No one is born an athlete. We are all human with similar preferences: sleep/rest over working out, eating the donut rather than broccoli, and having fun instead of working.

Athletes are created through dedication to a routine or process that will help them become an athlete. They show up at the gym, they follow a nutrition plan, and they endure in their routines even when they don’t feel like it or want to. Persistent discipline to that routine is what makes them an athlete.

A Solid Investment Process

The “secret” to becoming a great investor is no different. It requires discipline to a process or routine. Not just any routine, but the right one. Watching the stock market is a routine, but it doesn’t develop a successful investor. So, what routines or process can investors take that will help them become great?

1. Ignore Economic and Market Predictions. Our desire for future certainty puts us at risk to fall for the illusion of certainty – which is the only certainty the experts offer.
2. Focus on Fundamentals, not Price Movement. Daily stock price movements seldom represent the true value of the company at any given time. Earnings and cash flow deserve your attention, not the price movement of the stock.
3. Have a Reaction Plan. A reaction plan is a process itself of what you will do when the inevitable surprising events occur. Will you respond immediately? Will you take your cues from the media? Will you talk it over with me? I suggest the latter.

The Process and You

Defining your investment process is important and practiced by many investors. But the maintaining discipline to that process is what separates the average investor from the most successful investors. Discipline is what makes athletes, athletes. And it is what can help you achieve your financial goals. I am here to help you along the way.

– Scott