For Our Kids and for Theirs: taking the long view of investing

The biggest challenge I have as an advisor is to think long term, and to get my clients to do the same. We are conditioned to be looking for fast answers to our questions and even faster returns on our investments.  We have trouble with the slow and steady approach.

My last post on Tuesday defined the shorter view; in the interest of pushing the envelope a little bit in the other direction, let me talk about the VERY long term. I’ll call it Generational Wealth.

Generational wealth, as I’ve come to understand it, suggests that we ought to be thinking about our children’s children. That at least some of my financial wealth, and I pray piles of the non-financial kind, will be passed on not only to my kids, but to their kids as well.

So, for me, at 42, if the Lord gives me an average number of years, then I’ll live another four decades.  My children, Lord willing, will live another three decades beyond that.  My children’s children will add three more, and so on.  Again, I don’t know if I’ll even make it to the end of today. I’m promised nothing in that regard and I’m okay with whatever I get, but the averages are still a possibility, and wisdom says that I should think through what’s possible.

So it is possible, if the Lord gives me strength, that I will get very old.  It is likely then, if I’m wise, that my money will get even older. Do my decisions about money and investing reflect this likely reality? Does what I’m teaching my kids make them more or less able to grow the wealth I’ve left them?  Or am I silent on this issue? Do I just hope that they won’t make the same mistakes I’ve made? Do I hope that they find the right path where I’ve found it?  And am I doing something proactive to make sure they do?

There are hundreds of directions I could move in from that intro. Lets just focus in on investment philosophy today (more on other topics later). Capital markets have existed for hundreds of years in hundreds of countries.  For almost as long as there has been money there has been the ability to invest money in the efforts of others. Really, the only thing that is unique about the US and the last 100 years is the amount of confirmed data we have on the subject.  The fact is that people have been making investments like we do today but with less technology and sophistication, in everything from common stock in the East India Trading Company to Turkish black tulips (jump to the 5:20 mark) in Holland 400 years ago.

The past 100 years has given us an amazing amount of confirmation about what investors have known for a millennia:

  • Capital dollars invested in the for-profit efforts of others yields a return greater than what the banks will give return to hold on to it (US stocks have given greater than a 6% premium over inflation on average).
  • Capital investments are not guaranteed and are not predicable in the short term. The fact is that they appear random.

Markets are very old.  Your money has the possibility of being old as well.  Do the decisions you’re making and the investment philosophies you’ve employed reflect these potential realities?  Or, are you simply hoping for a fast buck?

Indeed, history shows that lasting wealth is gained little by little over time. 100 years from now how much could your great-grandchildren be worth (to society, to your church, financially) if you started thinking about them in your financial plan today?

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Blind Squirrels and Eucatastrophes: WEB GEMS

Must be all that water . . . In this ranking of most and least corrupt US states, Michigan comes out looking pretty darn clean.

Like blind squirrels and broken clocks . . . Elizabeth Warren got something right: this Cromnibus is for the cronies.

A Safe Haven . . . The churches’ role in combating slavery has been pivotal yesterday and today.

Gee! Thanks, IRS! . . . The Feds back away from seizing the bank account of hardworking restaurant owner charged with…well…with using her bank.

A Eucatastrophe . . . Kevin DeYoung shares Tolkien’s vision of good news in a sad world.

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The HOT STOCK: and staying disciplined for the long haul

I received the following email from a client this week.  It ties in with what we’ll be talking about at our upcoming events, and I wanted to share the exchange with the rest of you. He gave me his permission to copy his email and my response:



A friend of mine told me about a possible new product coming to market that will be handled by [Company Name] and I would like to invest. I know this is a bit outside your investment advice but seems like it could be quite a deal.

My plan is to request about $1,500.00 from my Roth account to be used to purchase $1,500.00 worth of shares. The company is [TICKER].


First of all, let me thank the thoughtful investor who sent this and encourage others of you who have this idea or other ideas to call or email me. I am more than glad to have the conversation and give you my reasons for or against what you’re thinking about doing. What follows is my response plus a few more thoughts and research I’ve added since.


If you were to do this, you would need to open a Roth IRA account somewhere else and then request the transfer – takes a day or two. But before you do that, I’d love to talk about it – the experience rarely turns out as expected.

Consider the following: 

  • You are an investor who needs to maximize return over the next four to five decades, not four or five months or even years.
  • You currently own 13,000 companies in 46 countries, a portfolio engineered on the best correlation science available to maximize return and reduce volatility.
  • 95% of all stock trades made in the US are made by professionals who do this for a living.
  • If you purchase this stock it is almost certain that you are purchasing your shares from a professional who is willing to let it go for that price.
  • Is the information you have about this company information that they or others don’t have?
  • If they do have it, which is almost certain, and the information really does clearly suggest a brighter than average future for this company, why would they still sell you the stock if they already own it, and for today’s price? Why would the price not already be moving up?
  • All public companies are always coming out with new ways of making money and expanding. They must do this to satisfy their boards.
  • Is there a very good reason for you to believe that this company has the ability to outperform the other companies you already own over the long term?
  • If you put $1,500 into this stock now, when will you pull it out? How do you define success in making this purchase?


I have a number of clients (more than I know of, likely) who have side accounts where they play around with some of their investments in a variety of ways including this way. I’m not naïve to that, neither am I threatened by it.  What I’m most concerned about is the mental side of this which can affect your peace of mind as well as how you think about investing.

Moral of the story: If you have a question, don’t hesitate to call me.  I don’t have all the answers, and I possibly have a different answer than the one you’re looking for, but hopefully I can add some insight to how you are thinking about things.

Call me anytime.






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Truth and Consequences: WEBGEMS

Mutual fund or funk?. . . A must-read if you’re considering an investment involving actively traded funds.

Show them the money! (3:30) . . . Prof. Peter Jaworski explodes some of the fallacies about why we don’t pay college athletes.

Good unintended consequences? (3:30) . . . San Fransisco seems to be experiencing one in the form of reduced violent crime as budget cuts force their PD to stop prosecuting drug users.

Surprise! . . . 25 years after Chile’s abortion ban went into effect, the statistics are in and even its critics are shocked.

Let’s cut defense spending (2:50) . . . It’s what real conservatives would do, says ReasonTV’s Nick Gillespie.


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HANDING OVER THE KEYS: Is your millennial ready for your wealth?

Did you know that Millennials, the 14-to-34 year-old crowd, already control nearly $9 Trillion dollars of wealth in our country?

Did you also know that the Boomers, parents of Millennials for the most part, will leave to this group nearly four times that amount? That’s another $34 Trillion over the next forty years.

I don’t know about you, but if I’m on the parent side of that equation, I want to know that my money is being left to someone who will know what to do with it.

Do your twenty-something’s understand markets and investing?

Would you like them to?

I’d be glad to teach them . . .

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