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The Friday Brief

Start Paying Attention

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A few years back I read a great article by personal finance writer and artist Carl Richards. He was lamenting how all the budgeting strategies he’s tried over the years have failed. He’s cut credit cards, only used cash, and tried all sorts of other stuff to better control his spending. But, nothing changed until he tried something altogether different. Here’s what he had to say: I love the No. 9 Unwich (it’s a wrap with lettuce instead of bread). Over the last few years, I’ve probably ordered it for lunch more than 50 times. One day, I realized that

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Now is the Time

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People often ask us what we do with our client portfolios during a market downturn.  (For the record, we invest our own money the exact same way.) Evidence shows that making investment decisions during periods of high market volatility is the wrong thing to do and usually leads to poor results.  So our short answer is “hopefully nothing.”  But before you go off and do nothing, it’s important to note that that answer is predicated on the assumption that you’ve done the leg work ahead of time to ensure that your portfolio is invested properly. In other words, that it’s

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Exception and Nuance: The King and Queen of Finance

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My son Miles and I went to breakfast this morning before I dropped him off at preschool. We got a bacon, egg, and cheese biscuit for each of us and a donut to share, plus milk for him and coffee for me. I don’t know of a better way to start a Friday. At any rate, we were at a place near my in-laws’ old house in Raleigh, and I suggested to Miles that we drive by and see where they used to live. He sat there for a second and then asked, “Dad, why did they tear down their

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How To Make Your Financial Information More Secure

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If you can remember the passwords you use to secure your most sensitive financial information, if you use the same ones for multiple sites, or if you’ve written them down and stored them somewhere ‘safe’ (like the key under the mat), your data is at risk. According to Centrify, a leader in cyber-security, 81% of computer data breaches come through hacked passwords. “Cyber criminals find the path of least resistance to their target, and today that path leads straight from users with self-managed ‘simple factor’ passwords. Simple passwords used to be acceptable security in the early days of the Internet,

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Good Comes from Market Corrections

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We are nearing the 10-year anniversary of the stock market’s incredible recovery following the Great Recession which saw stocks lose 50% or more of their value. Since March 9th, the S&P and Dow are up nearly 300% while the US Total Market index is up 400%, not counting dividends. During this time, there have been six corrections in which markets have fallen more than 10% from earlier peaks.    While no one who owns stocks particularly enjoys market corrections, they are not only inevitable, they are valuable for free markets in that they ‘correct’ abuses and excesses. Continually rising stock

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Gerald Should Have Shared His Password

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You remember Bitcoin, right? The flashy cryptocurrency that no one understood but everyone was talking about in 2017? It hasn’t been making as much noise lately, mostly due to the fact that the price has fallen from a high of nearly $20,000 per bitcoin to less than $3,500 over the past 14 months. Well, it’s back in the news again, but this time it has nothing to do with price, investment potential or an opportunity for the average person to actually make use of it. On January 15th, it was revealed that a gentleman named Gerald Cotten passed away on

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Market Volatility Down For Now

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Remember that awful market drop starting in mid-September of last year? A strong market rally in January, the strongest in 30 years, is two thirds the way toward erasing it. The Fed pausing their rate increases for a while, China coming to the bargaining table in earnest, thousands of new private sector jobs created suggesting businesses largely ignored the government shutdown and bad weather, and 71% of S&P 500 companies reporting positive earnings surprises have all combined to restore confidence in the US economy among investors. The Federal Reserve likely deserves a large share of the credit for both the

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How to Lose 2,000% (Don’t Forget About Everyone Else)

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In 1994, three of the brightest, most successful and fiercely calculating minds in finance formed a hedge fund called Long-Term Capital Management (LTCM). John W. Meriwether, former head of bond trading at Salomon Brothers, was joined by Myron S. Scholes and Robert C. Merton. The latter two would share the Nobel Prize in Economic Sciences three years later. Prior to opening, they raised just over $1B. For awhile, the fund, which employed various and complex bond trading strategies, enjoyed some success, as you can see from the chart to the right. But then, in early 1998, it blew up. With

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The Success Mechanism Within You

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“It may seem strange, but it is nevertheless true, that up until [1950], scientists had no idea of just how the human brain and nervous system worked ‘purposely’ to achieve a goal”  Dr. Maxwell Maltz Through his phenomenally successful 1960 book Psycho Cybernetics, Dr. Maxwell Maltz changed the way psychologists, self-help authorities, athletic trainers, behavioral experts and the rest of us understand how the Success Mechanism in each of us works to achieve goals, large and small. As the computer took center stage in the late 50’s as mankind’s latest marvel of human invention, Dr. Maltz asked the question: “Could it

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Who Can Sell Stocks Better Than a Monkey?

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We have talked a lot–generally, and in the specific context of the last few months of market volatility–about the importance of an investment process that isn’t based on words like “hope” or “proprietary model” or even “I just have a good feeling about this.” This is so because we believe that markets are pretty darn efficient, and while that doesn’t always mean the price of any given stock or any basket of stocks is “right”–there’s no such thing–it does mean that markets are good at including available information of a staggering scale into the pricing of assets. That’s not to

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