Stock Market Losing Strategies and Today

“Empirical evidence and practical experience demonstrate that investment strategies based on market-timing and performance-chasing (or momentum) rarely deliver long-term success.”   Vanguard ”Market-Timing and Performance-Chasing are Losing Strategies”1

“Past performance is not indicative of future results.” – Standard investment disclosure that everyone should hear but frequently chooses to ignore!

“It seems to me that many of the current disputes with regard to both economic theory and economic policy have their common origin in a misconception about the nature of the economic problem of society. This misconception in turn is due to an erroneous transfer to social phenomena of the habits of thought we have developed in dealing with the phenomena of nature.” – Friedrich HayekThe Use of Knowledge in Society2

I wish there was an easier way to hold your wealth.  Unfortunately, every investment that makes claims to make it easy has strings and drawbacks.  Many cost too much. Many offer limited liquidity.  Many fail to perform.  Many will get eaten up by inflation. I have been to seminars, read brochures, studied books, sat down with gurus and any number of opportunities to work the system.  I know my industry.

Do you know what I return to when I am working on a person’s financial plan and things look uncertain?  I return to the basics of philosophy of economic thinking.  I think about my undergraduate work as a student at George Mason University – listening, challenging ideas, and learning.  It calms me and helps me seek clarity when empathizing with clients’ fears.

There are few greater passions than love and money.  I work with the money side of the equation.  On our last large stock market movement a few years ago, I made some changes in my practice.  I insisted that every client must adopt formal individual planning.  Most of them followed my request.

Why insist on planning?

  • We can control our planning process.
  • Clients who have formal planning better know what to expect with their investments and the possible movements they may experience.
  • Clients have options – like save less, reduce risk, hasten a goal, etc…
  • We have great tools to help give objective feedback to make better decisions.
  • My clients are generally happier and have greater confidence.

My practice changed ten years ago as I became an independent financial advisor.  I met David Loeper.  Loeper’s work took my years of economic training and made it useful for the client through his inventions.  He developed models that use our goals as a measuring tool.  We model a plan to take into account the changes that may be required occasionally in response to market events in this process. The plan may need to change in respect to the client’s goals,  the client’s risk acceptance or the ranges of returns on investments.  We look forward.

Our process is easy for the client to understand, it is objective, and, most importantly, it increases clients’ confidence.  I should point out that I now work with David Loeper’s company.

Am I advertising?  Yes, a little.  I want you to know there are other ways to look at your reality and help your family live with greater confidence.  Turn off the investment television news that is a microscopic, and often overly-hyped, look at what happened today or right now and cannot be changed.  Focus on your business (something you can control), your family (something you love) and your passions (something worth living for).

Stock markets go up and down.  Your life only happens once.  Make the most of it.

1 Source of Quote  https://global.vanguard.com/international/common/pdf/webelieve8_042006.pdf)

2 Source of Quote: http://www.econlib.org/library/Essays/hykKnw1.html

A COPY OF WEALTHCARE CAPITAL MANAGEMENT’S FORM ADV PART 2A IS AVAILABLE UPON REQUEST OR CAN BE FOUND AT www.wealthcarecapital.com/ruminations/WCMADVII.pdf.  PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS.

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About Christopher Hessenflow

Christopher Hessenflow is a financial planner in the Chicago area. He works with all sorts of people who are much more interesting than he is. He enjoys his career which lends him time to think and, sometimes, be creative. Chip was born bald.
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