Hans Blake, CFA, CPA

The Shrinking Pool of Victims

September 11, 2019 by Hans Blake, CFA, CPA

Reading Time: 2 minutes

On today’s Intelligent Money Minute, we’ll interview Larry Swedroe on how the shrinking pool of victims makes it difficult to outperform. In his book Why Alpha is Becoming More Difficult, this is the second issue. Referencing William Sharpe, Larry notes that if one investor outperforms the market, consequently somebody else has to underperform. Larry points out the high percentage of trading done by individual investors in the 30s, 40s, and 50s. Today, more trading is done by institutional investors, high-frequency traders, etc. Two problems have arisen because of this switch. First, people are abandoning active management due to its bad history. Second, and consequently, those who have underperformed are abandoning active management. Larry states that there’s not enough alpha to go around, and he asks the question, “Who is left to exploit?” As the pool shrinks, it is becoming harder and harder to outperform.

At Intelligent Investing, we believe that no advisor can consistently deliver outperformance. As Nick Murray says in one of his books, “Adam and Eve were goal-focused investors…until the serpent told them they could be–with just a little guidance from him–smart enough to outperform. Remember, outperformance is the apple. Don’t bite into it. To learn more about the other reasons Larry believes the Quest for Alpha is so difficult, visit our blog section.

We’ll be interviewing Larry on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has since authored seven more books.

Larry Swedroe Bio

Since joining the Buckingham Strategic Wealth in 1996, Chief Research Officer Larry Swedroe has spent his time and energy educating investors on the benefits of evidence-based investing.

In his role as chief research officer and as a member of the firm’s Investment Policy Committee and Board of Directors, Larry regularly reviews the findings published in dozens of peer-reviewed financial journals, evaluates the outcomes and uses the result to inform the firm’s formal investment strategy recommendations.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television shows airing on NBC, CNBC, CNN and Bloomberg Personal Finance. Larry is a prolific writer, contributing regularly to multiple outlets, including Advisor Perspectives and ETF.com.

Before joining Buckingham, Larry was vice chairman of Prudential Home Mortgage and senior vice president at Citicorp.

Larry holds an MBA in finance and investment from NYU, and a bachelor’s degree in finance from Baruch College.

The Impact of Investment Expenses

September 4, 2019 by Hans Blake, CFA, CPA

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On today’s Intelligent Money Minute, we’ll interview Rick Ferri on the impact of investment expenses on a portfolio. During this episode, Rick provides insight on fees and how they can affect performance. Also, he explains why an active manager’s fee, while being the most affordable, may not be the best. At Intelligent Investing, we understand that minimizing your fees helps lower your hurdle rate, allowing returns to hopefully compound at a faster rate. Learn more about what makes us different, here.

Check out our previous podcasts with Rick on Dangers on Backtesting & Performance Managers and The Power of Passive Investing. We’ll be interviewing Rick on several podcasts regarding index investing, behavioral finance, and practical tips for retirees, so be sure to subscribe to our Intelligent Money Minute podcasts.

Rick Ferri is a fellow CFA Charterholder, Marine veteran, author, and owner of Ferri Investment Solutions. He continues to write books and articles, provide educational webinars, and teach financial lectures.

Rick Ferri Bio

Rick Ferri earned a B.S. in Business Administration and an M.S. in Finance. He also holds a Chartered Financial Analyst (CFA) charter through the CFA Institute. After college, Rick served as a U.S. Marine Corps officer and fighter pilot for 20 years of active duty and reserve service.

Rick’s investment career spans three decades and offers a history of empowering people to achieve their goals. He landed in the brokerage industry in 1989 where he learned the wrong way to invest. As a result of 10 frustrating years, Rick founded one of the country’s first low-fee investment advisory firms. Rick’s firm grew to a sizable business over the next two decades due to the explosion of interest in low-fee investing. This growth provided good-paying jobs to dozens of people and allowed Rick to take on business partners with whom he generously shared his equity. Rick left the firm a few years ago and is no longer an owner.

Ferri Investment Solutions is Rick’s new firm. This modern concept provides even greater value to investors by “unbundling” adviser services whereby clients pay only for the time it takes to assist them. In addition, Rick’s industry consulting firm helps other advisers build their investment practices, and he has launched Core-4 Portfolios to provide simple model portfolios for use by a wide variety of investors.

Grief: The First Stage Of Widowhood

August 28, 2019 by Hans Blake, CFA, CPA

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On today’s Intelligent Money Minute, we’ll interview Dr. Kathleen Rehl on grief: the first stage of widowhood. In Kathleen’s book, Moving Forward on Your Own: A Financial Guidebook for Widows, three stages of widowhood are mentioned. Due to the countless widows Kathleen has mentored, grief is the first stage discussed in her book. According to Kathleen, the most noteworthy physical effect of widowhood is that of the brain. Because of the effects in decision-making, a widow should not be making irrevocable financial decisions right away. Rather, her immediate needs and those of her new life ahead should be focused on. Widows should be encouraged to take a moment to breathe, not to be pressured to make rash decisions.

If you are a recent widow or know of a widow who is in this first stage of widowhood called Grief, it may be best just to take a moment to breathe as Kathleen suggests. Take your time to slowly process your thoughts and don’t make any rash financial decisions because you are feeling pressure from friends or family. We understand that all widows have a need to feel financially secure. We’ll be interviewing Kathleen on the other two stages of Widowhood- Growth and Grace, so be sure to subscribe by going to investedwithyou.com/podcasts. We’ll also have a link to the PDF she mentions here.

On upcoming podcasts, Kathleen will talk about the three stages of widowhood- Grief, Growth, and Grace, so be sure to subscribe by clicking here.

Kathleen Rehl Bio

Kathleen M. Rehl, Ph.D., CFP®, CeFT® wrote the multi-award-winning book, Moving Forward on Your Own: A Financial Guidebook for Widows. Experiencing widowhood herself, Dr. Rehl empowers widows financially™ and inspires their advisors. Her work has been featured in the New York Times, Wall Street Journal, AARP Bulletin, CNBC, USA Today, U.S. News & World Report, Journal of Financial Service Professionals, Journal of Financial Planning, and other publications. Rehl owned a financial planning firm for 17 years before retiring to her “encore” career. She walks an hour daily, practices yoga, enjoys art and music festivals, writes poetry and makes art, loves her grandsons . . . and continues to evolve on her journey.

Academics Converting Alpha Into Beta

August 21, 2019 by Hans Blake, CFA, CPA

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On today’s Intelligent Money Minute, we’ll interview Larry Swedroe on how academics converting alpha into beta make outperformance difficult. Prior to 1992, only active managers had exposure to market beating stocks. In this episode, Larry details the history of alpha and outperformance and what changed for passive investors. He refers to a white paper titled, The Cross-Section of Expected Stock Returns written by Fama and French. This paper altered the landscape of investing because of it’s 3 factor model. Now passive investors have the ability to gain exposure to the same markets in a much more tax efficient manner.

At Intelligent Investing we believe that Asset Allocation, or the long-term mix of stocks, bonds, and cash is the primary determinant of the variation of returns a client can expect. As a result, we focus on creating an appropriate blend that has a dual focus- maximizing returns and minimizing risk. To learn more about our asset allocation and our other wealth management practices, visit to investedwithyou.com/philosophy.

We’ll be interviewing Larry on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Larry Swedroe Bio

Since joining the Buckingham Strategic Wealth in 1996, Chief Research Officer Larry Swedroe has spent his time and energy educating investors on the benefits of evidence-based investing.

Before joining Buckingham, Larry was vice chairman of Prudential Home Mortgage and senior vice president at Citicorp.

Larry holds an MBA in finance and investment from NYU, and a bachelor’s degree in finance from Baruch College.

Time In Markets Is Important, Not Timing Markets

August 15, 2019 by Hans Blake, CFA, CPA

Reading Time: 2 minutes

Fear is Back

We have recently seen an uptick in volatility and fear. As you can see from this Fear & Greed Index, which represents what emotion is driving the market now, there has been an increase in fear.

Timing Markets

As you can see from the chart below from J.P. Morgan, time in the markets is what matters. On the left, you will see what most investors focus on…the short term. Going back to 1950, in any given 1 year period, the S&P 500 was anywhere between -39% and +47%. That is quite a volatile swing. It’s no wonder that investors typically jump from the ship too early, and lock in permanent losses. This misbehaving is compounded by investors waiting on the sidelines in cash, while markets rapidly recover. This misbehaving means they buy high, sell low, and repeat.

Time In Markets Is Important

An intelligent investor will reflect on the right-hand side of the chart and realize that although in the short run, anything can happen, a disciplined long-term approach will smooth out the ups-and-downs, resulting in a potential for a greater chance to succeed. The problem is that the constant 24/7 media doesn’t help investors with their constant focus on fear, because let’s face it—fear sells. Even in the above example, having a hypothetical 50/50 portfolio of stocks and bonds over a 5-year rolling period didn’t produce a negative return. Will this chart repeat in the future? Probably not exactly, but having a long-term approach and diversified portfolio may give you a better chance of meeting your long-term goals than having a short-term mindset.

Time in markets is important... not timing markets. Click To Tweet

Intelligent Investing is dedicated to improving investor behavior by being a behavioral coach through the market cycle rollercoaster that we get by participating in markets. If we can help you stick to your financial plan, please let us know. We work predominantly with high net worth individuals and institutions who want to become Intelligent Investors.

Dangers of Backtesting Performance & Managers

August 7, 2019 by Hans Blake, CFA, CPA

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On today’s Intelligent Money Minute, we’ll interview Rick Ferri on surviviorship bias and the dangers of backtesting performance and managers. During this episode, Rick defines survivorship bias and how it can skew one’s investing strategy. He explains how dataset information can be inaccurate due to the exclusion of closed funds. In conclusion, Rick highlights the difficulty in outperforming the market.

At Intelligent Investing, you are the center of our wealth management philosophy. For that reason, we want to get to know you, your family relationships, your dreams, and goals, and not just on a surface-level conversation. Read more about our wealth management philosophy.

Check out our previous podcasts with Rick on The Power of Passive Investing and Remembering the Legacy of Jack Bogle. We’ll be interviewing Rick on several podcasts regarding index investing, behavioral finance, and practical tips for retirees, so be sure to subscribe to our Intelligent Money Minute podcasts.

Rick Ferri Bio

5 Things You Should Do About the Capital One Hack

July 31, 2019 by Hans Blake, CFA, CPA

Reading Time: 3 minutes

Capital One Data Breach

Capital One said a hacker had compromised the personal information of more than 100 million people on Monday. It was one of the largest-ever thefts of data from a bank. A data breach at a major company exposes lots of sensitive information, putting millions of people at risk of online fraud. For the vast majority of those consumers, the breach appears to have exposed only relatively inconsequential details like names and addresses, rather than Social Security and bank account numbers. The bank said it was “unlikely that the information was used for fraud or disseminated by this individual,” and that no credit card numbers or passwords were exposed. Capital One says it will “notify affected individuals through a variety of channels.”

Unfortunately, hacking and data breaches continue to be more and more commonplace. Last year, it was Marriott. The year before, Equifax. Ironically, the news of the Capital One data breach came just a week after Equifax reached a $650 million consumer settlement stemming from the 2017 breach — highlighting the importance of digital security at a time when major leaks of consumer information are a fact of life. We think there are five things you may want to do about the Capital One breach.

1. Enroll in Credit Monitoring or Identity Theft Protection Service

While there is usually a cost involved with a credit monitoring service or identity theft protection, Capital One has promised to make free credit monitoring and identity protection available to anyone affected by the breach. Be sure to read the details, as you may waive your right to sue the company for the hack if you take advantage of the free credit monitoring.

2. Check Your Credit

This breach actually happened three months ago, so there’s a chance that your information is already being used. Check your credit report and make sure there’s nothing out of the ordinary happening. But keep in mind, most credit monitoring services only track your credit reports. They still won’t alert you to suspicious activity on your credit card or in your bank accounts. These services won’t prevent fraud from happening. But some do offer identity recovery services to help you regain control of your finances after identity theft occurs. The government offers a free resource for recovering from identity theft at IdentityTheft.gov.

3. Freeze Your Credit

This is an extreme step and might not be necessary, especially if you don’t know for sure that your information was compromised. A freeze blocks anyone from accessing your credit reports without your permission. But it can be an inconvenience for you, too. If you want to take out a loan or open a new credit card, you’ll have to contact the reporting agency to temporarily lift the freeze. It’s also not free. Fees to freeze your account vary by state, and if you freeze your credit, anyone who wants to use your credit to open an account needs a special Personal Identification Number (PIN). If you’re not planning on making any big purchases soon or opening any new credit cards, then it can be a good preventative move in keeping your credit safe.

4. Set a Fraud Alert

Setting up a fraud alert will make using your credit a bit of a hassle, but can keep you protected. If you set up a fraud alert, then a company will have to verify your identity before they can open an account in your name. You set one up by contacting a credit bureau (Equifax, Experian, TransUnion), and the alerts last 90 days.

5. Keep an Eye on Your Bank Statements, Credit Card Statements, and Taxes

It is wise to always review your bank statements and credit card statements for unusual charges, but especially after such a security breach. Also, hackers will sometimes use stolen personal info to file false tax returns to get refunds. That means if you file your taxes after them, you might get a message from the IRS saying your taxes have already been filed. If you can, make sure to file your taxes early.

You’re Not Alone When Placing a Parent in a Nursing Home

July 25, 2019 by Hans Blake, CFA, CPA

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On today’s Intelligent Money Minute, we’ll interview Beverly Flaxington on realizing that you are not alone when placing a parent in a nursing home. Making the decision on whether or not to place a parent or spouse in a nursing home can be complicated and burdensome. The life adjustment that will ensue can take a significant toll on the family, so you need to be prepared. During this episode, Bev stresses the importance of implementing a network of friends and family to provide emotional and physical support. Our previous podcasts with Bev highlighted Should You Put Your Parents In Assisted Living? and How to Handle Long Term Care Regret.

The Hardest Decision a Child Will Make is a blog that talks about this tough subject. We’ll be interviewing Beverly on several podcasts regarding behavioral finance, and the emotional journeys one can embark on during retirement, so be sure to subscribe to our Intelligent Money Minute podcasts.

Beverly Flaxington, American businesswoman and founder of The Collaborative, holds the trademarked moniker, Human Behavior Coach®. She received this title for her years in professional consulting and the human behavior development industry. Also, Flaxington has authored seven books on personal and professional development.

Beverly Flaxington Bio

In addition to being a coach on changing human behavior, she is a three-time bestselling and Gold-award winning author, an international speaker, behavioral expert, and business development expert.

Bev has created a number of proprietary approaches to changing human behavior and helping companies reach excellence. In addition, she blogs for Psychology Today and answers human-related questions in Advisor Perspectives Magazine.

In 1995, Bev co-founded The Collaborative, a sales and marketing consultancy. The firm provides strategic and tactical support to help financial services and wealth management firms reach higher levels of effectiveness. The Collaborative specializes in delivering effective coaching, training, and proprietary consulting services.