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I did a post on decision-making years ago (here) but I wanted to share some more on it.  As financial advisors, our “product” is really wisdom (as I’ve said before), and it turns out we are wiser about other people’s situations than we are our own. This has two implications, 1) our clients (even our …

My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Winter 2022

What should be the response to a low return environment (i.e. high prices on stocks and bonds)? I have touched on this before (here for example), but it seems like it might be time again. If returns are lower than they were in the past, but risks are the same (i.e. the return per unit …

I have been thinking about wealth taxes that have been proposed and it occurred to me that we already have a few of them (property taxes are one, I’ll get to the other below) but we don’t think of them as wealth taxes. That led me to think about some other illogical tax items. This …

My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Fall 2021

If you have a prudent financial plan, with no legacy desires, you very well might accidentally leave your heirs an estate large enough to have an estate-tax problem anyway! I’ll give the conclusion first (less technical) and then the detail of how it was derived (which is almost certainly more than you want to know). …

This is new, although I’ve written similar things before: Financial Success (2016) Broke Rich People and Loaded Poor People (2016) “Good With Money” (2019) Aristotle believed that our goal should be eudaimonia which is frequently translated as “happiness” but what he meant was much closer to well-being or human flourishing.  Before Financial Architects existed I …

My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Summer 2021

I thought this paper was excellent. Our language influences what we see and think and having the term “Veblen Entrepreneur” available is very useful. (For example, in cultures without words for certain colors, they can’t easily see that color. We have trouble thinking about concepts without appropriate terminology; this is where jargon is useful to …

There are three ways to beat the market: Know something no one else knows Process known information better that the collective wisdom of the market Exploit a structural or psychological anomaly The first one is generally insider trading, but maybe on occasion you can learn something relevant unknown to the marketplace at large. (I had …

My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Spring 2021

Continuing the theme from last month’s post, in a recent NYT magazine article, Madeline Albright said, “I’m an optimist who worries a lot.” We should be optimists because, in general, economies grow and life gets better (see Triumph of the Optimists). But we should worry about risks in the short run. The concept of “permanent …

I think I have touched on this before, but not at length and some of the things that happened in the world in 2020 are good illustrations of the point so I think it will resonate more right now. I want to explain the difference between being a specialist vs. a generalist or, what is …

My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Winter 2021

I’ve talked about related topics before (most recently in Signs of a High-Quality Advisor), but I want to come at this from a different angle. This will start with substance and end with marketing. Both are important, I think. First, I was thinking about what attributes a high-quality (by which I mean they do an …

Purchasing life insurance on a child is almost always foolish.  It might feel like the “responsible” thing to do, but the responsible thing it to carry appropriate life insurance (and disability insurance) on the child’s parents (or whoever is financially supporting the child). Here is the math: The highest odds of death, from ages 1 …

My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Fall 2020

We all go through four stages of competence as we learn something new: Unconscious Incompetence – we don’t know enough to even know we are incompetent (Dunning Kruger Effect) Conscious Incompetence – we know enough to recognize our incompetence (Socrates: “The only thing I know is that I know nothing.”) Conscious Competence – we know …

You may have heard of the strategy of “bunching” charitable contributions.  This is a tax optimization strategy for folks who are charitably inclined, but who might not itemize other than that (or even despite that). Obviously, the new tax law makes the strategy applicable to a much larger number of people. For example, suppose someone …

My latest quarterly ramblings to my Financial Professionals list are out: Financial Professionals Summer 2020