Market Turmoil: Three Things You Must Do Today

Tyler Linsten Investing

Today’s market action was much worse than Friday’s (or insert a new date here), which was the worst day since early 2014.

Here are three steps you must take TODAY after the mini “crash” in stocks:

1)

 

 

 

 

 

 

 

 

 

2)

 

 

 

 

 

 

 

 

 

3)

 

 

 

 

 

 

 

 

 

In case you didn’t pick up on the joke, you need to do nothing, definitely nothing and especially nothing. This doesn’t change your goals, it doesn’t change the outlook for a long-term focused diversified portfolio and it certainly shouldn’t cause you to lose any sleep if you’re allocated properly.

Volatility is actually a huge relief to see right now – it’s a sign that our markets are actually functioning properly. A straight escalator higher is not healthy, nor is it normal.

A Friendly Reminder

Tyler Linsten Uncategorized

The stock market had its worst day today since February, 2014.

Here’s how you should feel about it:

Woman Sleeping 2002

Here’s how many people feel about it:

colbert-panic

Here’s what they’ll do about it:

BN-JK873_POLGIF_G_20150716165729

Here’s what you should do about it:

Woman Sleeping 2002

Impulse is not rewarded in financial markets so just keep sleeping easy for exactly one reason: patience is a highly compensated activity.

 

Q2 Client Letter

Tyler Linsten Client Letters

[gview file=”https://aldercovecapital.com/wp-content/uploads/2015/08/ClientLetterQ22015.pdf” save=”1″]

Net Worth: Where Do You Rank?

Tyler Linsten Personal Finance

Thanks to a great share on Twitter by @Jesse_Livermore, we have this very interesting gem of a chart:

Screenshot 2015-08-10 at 12.09.52 AM

Reading between the lines, the Under 35 cohort reveals a fascinating tidbit: a homeless “Millennial” with no assets and no debt has a higher net worth than 30% of his/her peers. Think about that one for a second!

Just because you’re in a high (low) net worth percentile, it doesn’t have much to do with your specific financial goals but we all have a conditioned desire to be graded against our peers after all of that standardized testing in school, right? It’s a guilty pleasure in this case – if you’re in an upper percentile, that is.

Now that I have you thinking about net worth, some gratuitous self-promotion for my Personal Balance Sheet Tool (a simple, one-page worksheet to determine your net worth):

PDF

Spreadsheet Version

True Independence

Tyler Linsten Uncategorized

What does “Independent Investment Advisor” even mean?

True-Detective

It’s a scary (financial) world out there. Just as the first season of True Detective had its gumshoes searching the seedy underbelly of Louisiana for a serial killer, finding a financial professional with your best interests truly at heart is a dangerous undertaking.

The process seems simple in principle:

You need advice.

Financial Person has the advice.

You have money.

Financial Person gets a little bit of the money for advice.

Case closed, the world is better off! A case study for the gains made by trade, both parties are now better off.

Unfortunately, as we know, the advice seeker is rarely better off. This is why the financial industry has the reputation it does.

Where does it all go wrong? Why do so many people get ripped off, sold bogus financial products while perpetuating a terrible feedback loop for the average investor where inaction, or poor decisions by going it alone, are the norm? The answer lies in incentives, but I believe that more specifically the level of independence a Financial Person possesses is crucial.

Nearly every Financial Person – the brokers, the insurance agents, the CPAs selling mutual funds, among others – are incentivized to sell. They claim to have the advice investors seek but are not required to put client interests above their own and they are beholden to the organizations they work for. Sell or find another job. They are agents of a bigger machine designed to squeeze the sponge that is the lowly advice seeker and his/her peers.

Ask yourself: who does this Financial Person serve? Do they have the leeway to recommend a product, or advise a transfer out, or any other decision that doesn’t have a direct pathway to monetization to them and their employer?

True independence as an investment advisor means I recommend any solution I deem suitable for clients. I don’t have a list of approved funds or products, I don’t receive commission and I have no boss. I don’t have the conflict of being pushed to boost this month’s bonus numbers for the firm I work for. My incentive is ultimately to be trustworthy, which is something that’s earned over time and cannot be packaged in a shiny prospectus, a finely tailored suit or implied with a name on a business card.

True independence allows me to be more like an Amazon.com, working to bring the lowest cost to clients, instead of  running a shop where extracting the most revenue possible is my mandate. Simply put: I am betting that doing this the right way will resonate with clients. I am betting that, when educated about how the advice industry actually works, people will choose good advice over shiny objects.

Remaining independent – free from being a financial sponge-squeezer – is how I’ve decided to make my way as a Financial Person. It’s certainly not the path of least resistance to fame and fortune but working for the benefit of clients first is the only way I can be a Financial Person and sleep soundly at night.