"From Our President.... The Job of an Investment Advisor"

Last week, over lunch, a client accused me of being too negative in my articles and blogs. While I have been pessimistic, I started wondering what my function should be. Should I ignore the warning signs? Should I temper my enthusiasm or pessimism? Should I be direct and tell it like it is?

This is a difficult dilemma because all of you have different objectives, and all of you have different theories as to what our function should be. I have stated many times that long term, 15 to 20 years, equities will outperform every other asset class. However, there must be, by the nature of the return gained, volatility. If you are 31 and have 30 years to go until you need the money, then it is prudent to have a large allocation to equities. If you are 75 and taking income, then the equity allocation should be less. Each of you has different goals, objectives and risk tolerances, so it is important to reach all of you with information I think is relevant.

I am a wealth advisor. I am not a financial planner, economist, portfolio manager or a market analyst. I create a portfolio mix that should achieve your goals for your lifetime. Along those lines, I think you should have the proper information on which to make informed investment decisions. These are certainly different and difficult times. I try to provide you with information that is out of the mainstream press or information that is being ignored by the cheerleaders in the press, in government, and on Wall Street.

An example occurred today as I listened to a radio show on real estate. The host was proclaiming that the real estate market was certainly stabilized and even recovering. To back up his claim he cited that the Las Vegas Realtors Association said that for the first time in months the average price of a home in Las Vegas increased in price. He also stated that the increase was after the average price had gone down 50% from its high. The increase in the average home price was .2% (2 tenths of 1%). On a home priced at $143,000 which he stated was the new average price in Las Vegas that would mean that the average home price increased by about $286. While this is certainly better than a loss, it is merely a rounding error.

I do not believe that anyone can predict (a) the market, (b) interest rates or (c) the economy. The talking heads on TV and radio are paid to make predictions. They all talk confidently and loudly and most important, they have no
consequences for their predictions.

On the other hand, we have huge consequences for handling your investments, which is a trust we value and appreciate. It is not my intent to scare or alarm anyone, it is to inform so that we can make prudent decisions about your investments with as much factual information as we can garner.

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