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Thin(k) About Your 401(k) Plan: Work Your Core – Five Core Investment Principals

During the middle of the market downturn towards the end of 2018, I found a truly incredible opportunity in an asset backed by the US Government and in about 45 days it generated an annualized approximate return of 117%.  What incredible, riskless investment offering such astounding returns did I find? It was the Forever Stamp!  And guess what?  The US Government told me, well in advance, that the value of this commodity was going to increase from $0.50 to $0.55 on January 27, 2019.

Okay, there are numerous logical flaws to the above story, but while we watch the volatile markets during the time of the COVID-19 Pandemic, it offers a good reminder of the five core principles for investment.  Let’s examine how each negatively or positively impacted my decision whether to go long on Forever Stamps.

  1. Discipline is Everything. It’s tough to apply this principle to my stamp example because it would tell us not to chase recent performance and stick with a well-researched strategy.  However, why wouldn’t I invest in something I know is going to increase in value by 10% on a given date?  Here’s why:  you would have to forego or sell investments from your long-term approach in order to make the investment.  Further, once you owned the stamps, you would have a commodity that holds only a small value per individual unit that would have to be sold to someone else.  Maybe you could sell them alongside your children at their lemonade stand, but you would likely need to go at it for a long time to realize a substantial dollar measured profit.  Sure, the percentage gain per unit sold is incredible, but ultimately it is dollar gains that move the needle in a portfolio.
  1. Investing is both Art and Science. This principle seems a bit simpler to apply.  First the science side of investment analysis would tell us the opportunity to make money buying Forever Stamps is as close to a sure thing as we will ever see.  But when we move back to the art view of things, I would ask myself how many letters will I send in a given year.  If I were a voracious writer who doesn’t use email, then perhaps the purchase makes sense.  However, in this scenario we have shifted the conversation from investing to consumption.  While Forever Stamps may increase in value forever, the benefit of the investment lies in either its usefulness down the road – consumption – or one’s ability to liquidate at the appropriate moment – investing.  And, here we are again, back at the crossroads of how do I get rid of these things in enough quantity to make it worthwhile.
  1. Time Matters. Time is a trickier component in this example because a long-term view of the Forever Stamp could easily lead one to conclude that it is an asset to own forever.  After all, the value is guaranteed by the US Government and simple research would show the price of a stamp has only gone up.  Unfortunately, that analysis ignores the question of why has the price of a stamp only increased.  Who is to say where the US Mail system will ultimately land or when, but clearly the cost of delivering a letter is going up and therefore the cost of a stamp is as well.  However, there are many new and efficient communication options such as email and social media competing with the US Mail.  Down the road, the price of stamps could go up forever, but my guess is that at some point the elasticity of demand is reached and the price will have to either stabilize or even come down.
  1. Depth of Research forms Decisions. This principle offers us a bit of a repeat.  By not deeply researching the various aspects of the investment in Forever Stamps, you might make the deal because of the return alone.  However, this action fails to answer crucial questions like: how do I monetize the return; what will the dollars earned per unit translate into when measured against the effort required; or how long will the price hold up even though guaranteed by the US Government.
  1. Risk Must be Considered. While the risk of the price of a Forever Stamp falling might seem next to impossible on the surface, nothing is truly guaranteed.  The US Postal System is competing with other forms of communication and therefore subject to pricing risk over the long-term.  I have left a key consideration to the end.  The Forever Stamp has a guarantee for sure.  That guarantee is that it will always be able to be used to mail a letter in the US.  But it does not guarantee the value of the investment.

In summary, every investment must hold up to the five principles above and that is not an easy feat.  The Forever Stamp with a certain increase in price generating a measurable return at a given point in time was not able to meet even one of the principles.  When I was studying for my MBA, an accounting professor taught me an important lesson that remains with me today and will forever – “There is no such thing as a free lunch.”

Here’s more about ThirtyNorth’s five core principles.

For disclosures, please click here.


1st Quarter 2018 Market Commentary

“What a long, strange trip it’s been” – Jerry Garcia, Bob Weir, Phil Lesh, and Robert Hunter

The US stock market burst energetically out of the gate in January. Fresh off double digit gains last year, the tech heavy NASDAQ index crossed 7,000 for the first time on January 3rd. At its peak on January 26th, the S&P 500 Index was up almost 7% in the first three weeks of the year. Nine trading days later, the market entered correction territory by dropping more than 10% from that peak. The remainder of the quarter was volatile, and half of the remaining trading days saw moves greater than 1.0% in the S&P 500 Index. The S&P 500 finished the quarter down -0.76%; a long, strange trip indeed.

For the quarter, International stocks, as measured by the MSCI EAFE Index, slumped along with the US, and were down -1.04%. Emerging market stocks, however, continued their leadership. The MSCI Emerging Market Index was up 1.42%. Continuing a trend from 2017, growth stocks led value stocks amongst large, mid, small and international stocks. Interest rates rose, and bonds prices suffered. The Bloomberg Barclays US Aggregate bond index was down -1.46%. International bonds provided a lift with the hedged Citi World Government Bond index up 1.50%. REITs were hurt by the prospect of rising interest rates and were down -6.66%. Finally, commodities were mixed with the Bloomberg Commodity index closing down slightly for the quarter.

A Tale of Two Styles: Growth and Value

Market segment (index representation) as follows: Marketwide (Russell 3000 Index), Large Cap (Russell 1000 Index), Large Cap Value (Russell 1000 Value Index), Large Cap Growth (Russell 1000 Growth Index), Small Cap (Russell 2000 Index), Small Cap Value (Russell 2000 Value Index), and Small Cap Growth (Russell 2000 Growth Index). World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI Emerging Markets IMI Index. Russell 3000 Index is used as the proxy for the US market. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2018, all rights reserved. Read more

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The Biggest One Day Loss Ever…Really?

After the recent volatility in the market, I once again recall a few reasonable tips that help me maintain a long-term focus on investing.


Tip Number 1 – First, although you may be watching the “financial” news or an “investing” expert on your local news, remember they are selling news first and foremost and shock value sells.  I always remind myself to take what I hear with a grain of salt.  Don’t get me wrong, I gather valuable information from the financial media.  However, when, like on Monday, February 5th, I hear experts on the news discussing the fact that the Dow dropped the most ever in a day, I take pause.  What does that really mean?


Once a drop in the Dow of 250 points seemed large, but is now only a 1% move.  This may feel painful when you look at your account balance, but volatility of this nature is normal in the stock markets even if we haven’t experienced it in a while.  As Blair duQuesnay, our Chief Investment Officer, reported Monday, February 5th, the 1,175 point drop, when measured in percentage terms, was not in the top 20 historical one day moves for the Dow (https://youtu.be/me7449asL_c).  In addition, the Dow is comprised of 30 mega-cap industrial US companies.  In today’s global world, this is a narrow list of companies used to measure a much larger universe of stock investment options.


While the Dow is a quick proxy to the markets that is discussed prolifically, for globally diverse investors with holdings in different asset classes including bonds and alternatives, a deeper dive is prudent on these days that are characterized in the press by fear and doom.


Tip Number 2 – This brings me to my second tip which is that you haven’t lost money in your account unless you sell.  I often hear pundits on the news talking about how much the market lost in a day.  The correct word, in my opinion, should be the amount the market declined.  Then, it might be easier to remember that over the long-term, back to the 1920s, the market has been on a steady incline only temporarily slowed by short-term declines.


Yes, the value of an investment on a given day may go down or up, but it is the long-term that really matters.  Historically, on average over the long-term, the stock market has gone up delivering positive returns in spite of days that get mischaracterized as the worst down day ever.  If, in a moment of fear, you sell, then you have locked in the loss.  However, if you hold for the long-term and achieve the expected growth, you should recover the temporary decline in value and more.


Owning a diversified portfolio that includes investments in different asset classes all over the world can effectively help manage the volatility of a portfolio as a whole when one asset class, like stocks, is suffering a temporary decline.  I included the cartoon above hoping to make you laugh, but also because many investors feel the market ups and downs most acutely in their 401(k) accounts.  Fear raises its ugly head here almost more than anywhere because we our retirement savings are at risk.  However, taking an appropriate amount of risk in your investment accounts is paramount to achieving a successful retirement.  This is why diversification is important to control the volatility while maintaining the right level of risk in your investment strategy.  Remember, it is time in the market that matters not timing the market that is most likely to help prevent us from having to live off our belly fat in retirement.


4th Quarter 2017 Market Commentary

Stocks around the world posted double digit returns in 2017. On the heels of a healthy 2016, the current bull market trudged along triumphantly. In a Goldilocks scenario, volatility was conspicuously absent from the markets. There were only four days that the S&P 500 Index declined more than 1%, with the largest drawdown of 1.82% occurring on May 17th. Emerging markets saw the strongest returns with the MSCI Emerging Markets Index up 37.28% for the year. No, that’s not a typo.

Bond returns were more muted with the Barclays US Aggregate Bond Index finishing the year up 3.54%. International and emerging market bonds also outpaced returns on domestic bonds, aided by a weaker US dollar. Short-term interest rates continued to rise, while long-term rates held steady. The 2 Year Treasury began the year at 1.20% and finished at 1.89% while the 10-Year Treasury barely budged from 2.45% to 2.40%. Oil seemed to break out of the $45 – $55 range it has traded in since mid 2016. West Texas Intermediate (WTI) finished the year at $60.46 per barrel.

Tax Overhaul

On December 22, President Trump signed into law the Tax Cut and Jobs Act of 2017. While the law makes many tweaks to individual taxes, the major changes affect US corporations. The maximum corporate tax rate of 35% drops to a flat rate of 21%. This is combined with the elimination of the alternative minimum tax (AMT) for corporations. Sadly, the AMT elimination for individuals was scrapped in conference negotiations, but the threshold for qualifying for AMT jumps to $500,000 for individuals and $1,000,000 for married couples.[1] In addition to lowering the corporate tax rate, the law allows corporations to bring back cash from overseas and pay a one-time 15.5% repatriation tax rate. This could be a potential boon for the tech industry, as Apple, Microsoft, Cisco Systems, and Google (Alphabet) have $483 billion in cash parked overseas.[2]

Most investors speculate that smaller companies, that conduct most of their business domestically, will benefit the most from the tax changes. However, companies carrying deferred tax assets on their balance sheet will have to recognize a reduction in value of that asset. Further, limits to the deductibility of interest could hinder companies with large amounts of debt.[3] Corporations lauded the changes, with many well-known names announcing one-time bonuses, minimum wage hikes, or increased 401(k) matching for their employees. More time is needed to digest the final implications of the tax changes. Companies reporting year-end earnings will offer the next clues.

Market Valuations

Since the low in March 2009, the S&P 500 Index is up over 430% on a cumulative, total return basis. Investors seem nervous that the market is being overvalued. There are many metrics for attempting to quantify whether or not the market is over or undervalued. Each metric has its merits and each has its flaws. The forward price-earnings (P/E) ratio of the S&P 500 Index is 18.2 times earnings. This is higher than the 25-year average of 16.0 times earnings but below the 1999 peak of more than 24 times earnings. The Shiller price-earnings ratio (CAPE) is currently 32.4, well above the 25-year average of 26.4. The price-to-book ratio (P/B), a more stable valuation measure, is currently 3.1 for the S&P 500 Index versus a 25-year average of 2.9.[4] By all measures, the market value is higher than historical average but not approaching any records.

One crucial factor in considering price-earnings ratios is the denominator, earnings. Third quarter 2017 earnings for the S&P 500 Index were $31.32 per share, an all-time record.[5] Consensus analyst estimates call for the next four quarters of earnings to break this record. If earnings are growing, future projections for PE ratios may not be as rich as predicted. While short-term distractions such as politics, geopolitical tensions, commodity booms and busts, natural disasters, and war move markets in the short-run, the underlying factor for valuation of stocks is corporate earnings. From this perspective, the growth in the markets seems reasonable.

The S&P 500 Index has reached 188 new all-time highs since March 2013. There were 61 new all-time highs in 2017 alone. This statistic tends to make investors nervous. However, historically the stock market has made many new highs to get to today. Try to remember your experience investing during the 1980’s and 90’s. Dare we hope to be in the midst of a similar experience?


Cryptocurrencies and Bitcoin dominated the financial news cycle when the price of one Bitcoin turned parabolic and climbed to more than $19,000. Let me preface this segment by saying that we have no expertise in cryptocurrencies and understand them only slightly better than the average person. However, the topic is now commonly broached in our client meetings and conversations. What we know is that the technology underlying cryptocurrencies, known as blockchain, could lead to extraordinary advances in the ease of transacting in financial markets. This has led large financial firms such as Fidelity Investments and Goldman Sachs to invest in research for the application of blockchain in financial transactions.

Before you are tempted to download the Coinbase app and start trading Bitcoin, Ethereum, or Litecoin, consider that these instruments lack some of the most basic protections to be considered “investments”. For example, there is no method of custody for cryptocurrencies. A custodian is a financial institution that holds investment assets in safe keeping and communicates the value of your holdings via regular statements. Further, the IRS issued guidance in March 2014, that cryptocurrencies are considered property and subject to taxation when received as income or as a result of a capital gain or loss. However, with no custodian to issue the appropriate tax reporting, investors have no mechanism to prove their cost basis if audited by the IRS. If you want to take a deep dive into the abyss of cryptocurrencies, Patrick O’Shaughnessy interviewed some of the leaders in the field over three episodes of a podcast titled Hash Power.

Everyone’s favorite investor Warren Buffett recently weighed in on the Bitcoin craze saying; “In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending.” Bitcoin is already down almost 40% from its December peak. It’s likely there will be many booms and busts as this technology, currency, dare we say “asset class” approaches maturity.

Fear and Greed

Despite all the statistics and fancy analysis we have today, the markets are a derivative of human emotion. Numerous studies prove that humans fail to act on logic and reason when money is involved in the decision making; especially if losing money is a possibility. There’s a great book detailing the history of market hysteria and bubbles beginning with the Tulip Mania in Holland in the 17th century. Extraordinary Popular Delusions and the Madness of Crowds is a fascinating but dense study of human greed and the “fear of missing out”. I suspect there’s a little of this happening with Bitcoin lately. In hindsight, there are always extraordinary investment options that could have been life changing. One of my favorites is holding Apple stock since it became public in 1980. But is there even one investor who managed to own it for the entire time-period? Everything looks easy in hindsight. Investors should keep their heads down, follow a disciplined strategy, rebalance periodically, and let time pass.

Remember these two? Tweedledum and Tweedledee are a great analogy for fear and greed. Both emotions are equally dangerous for investors.


January 2018



[1] Kitces, M. “Individual Tax Planning Under the Tax Cuts and Jobs Act of 2017”. December, 18, 2017. https://www.kitces.com/blog/final-gop-tax-plan-summary-tcja-2017-individual-tax-brackets-pass-through-strategies/

[2] Meisler, L. “The 50 Largest Stashes of Cash Companies Keep Overseas”. June, 13, 2017. https://www.bloomberg.com/graphics/2017-overseas-profits/

[3] Blomberg BNA, Tax Reform Watch; https://www.bna.com/2017-corporate-tax/

[4] JPMorgan Q1 2018: Guide to the Markets, slide 5, https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets

[5] JPMorgan Q1 2018: Guide to the Markets, slide 7, https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets


  • All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. It should not be regarded as a complete analysis of the subjects discussed.
  • Information presented does not involve the rendering of personalized investment advice and should not be construed as an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein. Tax information is general in nature and should not be viewed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
  • Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio. All investment strategies have the potential for profit or loss. There are no guarantees that an investor’s portfolio will match or outperform any particular benchmark. Index returns do not represent the performance of ThirtyNorth Investments, LLC, or its advisory clients.
  • ThirtyNorth Investments, LLC, is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.

Financial Wellness for Gen X and Millennials: Find the Highest Savings Rate

One of the first steps to building a solid financial plan is to accumulate a cash reserve. Popular financial planning rules of thumb suggest keeping 3-6 months of living expenses in cash. Homeowners and those in jobs subject to layoffs may prefer to keep a year or more in cash reserve. A cash reserve is a rainy-day fund that should not be invested in stocks or bonds. The purpose of a cash reserve is to pay for large, unexpected expenses such as; home repairs, car repairs, insurance deductibles, or paying bills during a period of unemployment.

If you’re planning to buy a home or car in the next few years, you might also be keeping large amounts in a savings account. Since cash savings is likely to be a larger percentage of total net worth for younger investors, it’s important to compare interest rates regularly. Now that interest rates are more than 0.00%(!), interest rate shopping is important.

First, make sure you’re getting the highest rate offered at your bank or credit union. Banks are constantly offering promotional rates for new accounts, meaning you may need to open a new account or transfer money to a different account to get the highest rate. Don’t let your savings sit in an account getting a lower rate. If you find a higher rate advertised elsewhere, there’s a chance your primary bank or credit union will match it. It might be worth a trip inside a bank branch to inquire about your options. Many banks are willing to work with you to maintain your deposits.

If the rates at your bank are less than satisfactory, look at the many online banks that offer higher rates. Each online bank has different requirements for minimum account size and number of monthly transactions. If you have a large amount of cash savings that you don’t need to access frequently, an online bank may be the best solution. When considering an online bank, be sure to select one that is truly a bank carrying FDIC insurance. A recent search of online bank rates produced the following results:

*Savings account rates found on Bankrate.com on December 12, 2017. This information is presented for informational purposes only and does not constitute a recommendation.

Keep in mind that short-term interest rates are slowly rising. The Federal Reserve is forecasting three rate hikes in 2018. That means the interest rate on your savings account is likely to change next year. Rather than constantly chasing the highest rate, set reminders to check your rates once or twice each year. Saving is hard, so make sure you’re earning a good rate on your cash reserves. You deserve it.

Financial Wellness for Gen X and Millennials – It’s About More than Investments

Part 1: Car Insurance

I’ve noticed a few recurring themes from financial plans this past year. They have nothing to do with investments, but they are in many ways, so much more important. It turns out, there are a few items in your financial life that require consistent maintenance. Dropping the ball could cost you quite a bit of money.

If you have any financial assets, you need full liability coverage car insurance. The state minimum amount will not be enough to cover you in an accident when you’re at fault, and the other party can sue you personally after the insurance maxes out. In Louisiana, the state minimum liability insurance is 15/30/25. That means $15,000 for bodily injury per person, $30,000 for bodily injury to more than one person in an accident, and $25,000 for damage to the other person’s vehicle. So, the next time you total someone’s $80,000 Tesla, you’re on the hook after the first $25,000. But the larger risk is the bodily injury limits. Have you ever seen a hospital bill, with an ambulance ride, for less than $15,000? If you carry minimum liability insurance, the injured person will be suing you for the remainder of their medical bills.

You need the maximum liability coverage of 100/300/100. That’s $100,000 bodily injury per person, $300,000 per accident, and $100,000 in property damage. In addition to full liability insurance, you might also want uninsured and under-insured coverage in case the other driver is at fault and doesn’t have enough insurance. To protect your assets further, you should consider purchasing an umbrella policy on your homeowner’s insurance that pays an amount above the maximum car insurance rates.

There are a few things you can do to lower your car insurance premiums. You might consider a higher deductible of $1,000 rather than $250 or $500. If you don’t owe anything on your car, and you have enough in savings to buy a replacement car, you might consider dropping collision coverage on your vehicle. If you run the numbers, self-insuring may be cheaper over the life of your vehicle.

Many car insurance companies are offering a discount to drivers who place a tracking device in their car for up to six months. This allows the insurance company to confirm the number of miles driven and analytical data such as speed and brake usage. Drivers deemed to be “safe” drivers are given a discount of up to 20% based on the data collected. This can backfire, however, if you’re a hot-rodder, so consider you’re driving style before taking this route.

Are you adding a teenage driver to your car insurance soon? Good luck! As parents before you know all too well, car insurance for teenage drivers is expensive. However, many insurance companies offer discounts for teens who have completed approved driver’s education classes and logged enough practice time behind the wheel with a parent. Teens can also get a discount for having good grades. Check with your insurance company to find out what information they need to apply for a teen driver discount.

I used to be the person who never changed car insurance, accepting the annual premium increase into infinity. It makes sense to shop your coverage every couple of years. Although the process is tedious, many people find significant savings by switching companies.

This is Part 1 of a series on financial wellness for Gen Xers and Millennials. Check back next week for a discussion on shopping your cash savings rate.


3rd Quarter 2017 Market Commentary

Stocks continued to climb higher during the third quarter, with international and emerging market stocks increasing their lead on U.S. markets. S&P 500 earnings rose to an all-time high of $30.51 per share for the second quarter. International and emerging markets continued to soar, assisted by a declining U.S. dollar, low valuations, and strong earnings. Large cap stocks performed better than small caps, and growth stocks outperformed value stocks. Technology was the highest performing sector in the S&P 500, and was up 27.4% for the year. On the flip side, energy and telecom stocks have posted negative returns this year. Bonds posted small positive returns as short-term interest rates ticked higher. International and emerging market bonds outperformed U.S. bonds.

*US Stocks represented by the S&P 500 Index, International Stocks represented by the MSCI EAFE Index, and Emerging Markets represented by the MSCI Emerging Markets Index

Where is Volatility? Read more


Retirement Savings 101: My Grandfather Taught Me This Lesson

When meeting with clients to discuss saving for retirement, I often note that two of the most critical elements to building wealth for use in retirement are 1. starting early and 2. saving as much as possible. After all, the goal is to develop sources of income for use in retirement as a replacement for a paycheck. Understanding that fact is step one, in my opinion, to beginning to develop a plan. Sources of income in retirement can include Social Security, retirement accounts like 401(k) or IRA accounts, rental property, etc.

In the world of investing and, in particular, investing for retirement, you might easily become confused or frustrated by what seems a daunting task complicated by industry jargon. Frustration might arise because the goal of financial security seems unachievable. Concepts such as retirement readiness (an often used term for saving enough to retire) might create confusion. Further, assessing the potential types of retirement accounts to use could lead to indecision.

Lately, I have read that States are beginning to require that businesses provide access to some form of retirement savings account for their employees even if it is not a 401(k) Plan. Illinois, California, Oregon, Connecticut and Maryland, with Oregon leading the pack, have initiated legislation to do just such a thing. The interesting thing is that the current plans appear to be to mandate businesses to automatically sign up workers for Roth Individual Retirement Accounts (IRA). Workers can opt out, but must take a pro-active step to do so. Presumably, those that choose to contribute can select investments from a menu. Those that don’t opt out are automatically enrolled and if they do not select an investment option will, most likely, be invested into a default investment option, like a Target Retirement Date Fund. Read more


Mutual Fund Names are Confusing

It never ceases to amaze me how confusing and non-descriptive mutual fund names can be. I spend a lot of time studying mutual funds and searching for the ones to fit our clients’ needs. How does the average 401(k) participant or Do-It-Yourself investor select mutual funds with names that are not only confusing, but often, downright misleading? I will try not to pick on any specific fund because honestly, there are some good funds with terrible names. Here are some of the misleading terms that bother me the most:

  1. Global vs. International – In the mumbo jumbo of investment nomenclature, Global funds have U.S. and International holdings, while International funds have no U.S. holdings. I think the ambiguous terms lead a lot of investors to believe they have more exposure to international stocks or bonds than they actually have. There are 822 mutual funds in the World Stock category with the word “Global” in the title. These funds have on average 48% invested in U.S. stocks.


  1. High-Yield – After the junk bond crisis in the 1980’s, risky bonds with low credit ratings were rebranded as “High-Yield”. Who doesn’t want a high-yielding bond fund? When I see high-yield bond funds in 401(k) lineups, I cringe to think that participants are selecting the fund without understanding they are investing in risky bonds. As recently as December 2015, the Third Avenue Focused Credit Fund (no mention of high-yield or junk bonds in this name) failed to meet investor requests for distributions and collapsed. I think the term high-yield should be banned, but until that happens, remember that High-Yield = High Risk.


  1. Growth / Aggressive Growth / Capital Appreciation – Everyone wants growth in their portfolio. That’s why this term, that refers to a style of stock investing focused on earnings growth is misleading. Growth-style investing has long periods of both outperforming and underperforming the market. The burst of the dot-com bubble is an example of a long period of underperformance for Growth stocks. Some funds amp up their name by adding “Aggressive” to the title. And then there is my all-time favorite term, “Capital Appreciation.” I don’t think it means “admiration for uppercase letters”, and it does nothing to clarify the type of investments in a fund.


  1. Equity Income – On the other hand, everyone wants income in their portfolio, too. This term is used to describe funds that invest in dividend paying stocks and/or certain bond investments. Usually funds with this moniker fall into Value-style investing, but not always. We eschewed the terms “equity” and “fixed income” in our client reports several years ago in favor of using “stocks” and “bonds”.


  1. Total Return – Total return is a popular name for bond funds. Most of these strategies invest in a diversified mix of government bonds, agency mortgages, corporate bonds, commercial mortgage-backed securities, and asset-backed securities. PIMCO Total Return was once the world’s largest bond fund, with more than $300 Billion in assets. There are 315 funds bearing the moniker Total Return today. They include funds that invest in intermediate bonds, balanced allocation funds, large cap value stocks, world bonds, and alternative strategies. Total return is a term that indicates yield + price appreciation, and is applied to stock investment strategies as well.

Over the years, I’ve seen a lot of interesting mutual fund names. One of my favorites is the James Balanced: Golden Rainbow Fund. According to the fact sheet, the Golden Rainbow fund “seeks to provide total return through a combination of growth and income and preservation of capital in declining markets.”  I like rainbows, and I like to visualize the gold, guarded by a leprechaun, at the end of the rainbow. Honestly, I’m a bit disappointed that this name is taken in case I ever manage a mutual fund.


Post Script:

I noticed that Ben Carlson of “A Wealth of Common Sense” also wrote on this topic back in 2015. He has an interesting take on the marketing aspect behind fund names. I recommend you read his blog as well:


Information Overload

Warning! Too much information is bad for your financial health. Unfortunately, we’re living in a world where information is travelling faster than light speed. News organizations are competing for your clicks and your eyeballs every millisecond of the day. Information is coming at you from every direction; your television, your radio, your cell phone, and through your friends’ social media shares. It takes effort to avoid information these days. This information is hard to digest, let alone make sense of it all.

Here is some advice from Jack Bogle, founder of Vanguard Group:

“when you get your retirement plan statement every month, don’t open it. Don’t peek. When you retire, open the statement and believe me if you’ve been putting money away in there for 40 to 50 years, you’ll need a cardiologist standing by you when you open it.”

Extreme advice, but I would love to see the reaction of someone who actually did that.

How many times a day do you look at your phone? The average person touches their phone 2,617 times a day according to this study! Read more