Our Gambling Culture

The craving for immediate gratification has spread well beyond Wall Street.

April 2015 | by Laurence Fink, chairman and CEO of BlackRock

Retirement gambling CultureWe tend to speak of short-termism as though it’s a problem that only afflicts investors or corporate leaders, but that’s not the case. Short-term thinking pervades our most important institutions, from government to households. We’ve created a gambling culture in which we tune out everything except the most immediate outcomes. If we’re going to meet our commitments to our children and grandchildren, and to society as a whole, we need to open up the lens and start taking a more responsible, longer-term view of the challenges we face.

There’s a host of reasons short-termism has taken hold in our culture, both in the United States and more broadly. Greed and the media’s reliance on daily bombardments of bad news certainly play a part, but more important, we’ve lost sight of our actual goals. It’s in everyone’s interest to provide opportunities for education, a reasonable level of healthcare, and a secure retirement for the most people possible, just as we should all be working to conserve our natural resources to assure that clean air, clean water, and renewable fuel sources are available to our children.

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Football & Investing; Don’t Throw in the Towel Too Soon

Football & InvestingA couple weeks ago, I made the mistake of going to bed with five minutes remaining in the football game between Tennessee & South Carolina. With South Carolina having a two touchdown lead, I thought for sure the game was over. My 6 year old son excitedly awoke me the next morning and told me Tennessee won in overtime. As a Tennessee fan at heart, this is a good lesson not to throw in the towel while there is still time on the clock. It is also a great example of how quickly momentum can shift. These happen to be good lessons that can be applied to football and investing. Many investors pay too much attention to short-term investment returns and throw in the towel too early when their investments begin to underperform the index. Others may under-estimate the market’s ability to reverse its previous course on either on the upside or downside.

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Buffett hoards cash, individuals’ holdings hit 14-year low

C&J Wealth Advisors are big fans of the long-term strategic value that cash offers investors when it is deployed at advantageous prices. As markets continue to make new highs, it’s natural that more individual investors want to participate in these gains and disdain the role that cash plays within their investment portfolio. As this article illustrates, Warren Buffett is doing the opposite and letting cash accumulate to all-time highs. Investors should look beyond the fact that cash is earning nothing today and recognize that it holds future value when it’s invested intelligently. The hardest part in holding cash is maintaining the patience & discipline to wait until an opportunity arises.

Scott Smith
C&J Wealth Advisors
Article Credits: CNBC Business News | James Saft; a Reuters columnist. The opinions expressed are his own.

Buffett hoards cash, individuals’ holdings hit 14-year low

cash in portfoliosIndividual investors have been cutting back on cash in portfolios, the exact reverse of what Warren Buffett has been doing at Berkshire Hathaway.

Who do you think has got it right?

Cash at Berkshire Hathaway stood at just over $55 billion as of June 30, an all-time high and two and a half times the level he’s in the past said he likes to keep on tap to meet extraordinary claims at his insurance businesses. That’s also up more than 50 percent from a year ago.

Buffett’s green pile is in sharp contrast to individual investors, who’ve cut cash in portfolios to 15.8 percent, a 14-year low, according to the July asset allocation survey from the American Association of Individual Investors.

To be sure, businesses and individuals hold cash for different reasons, but Buffett has used Berkshire, in part, as an investment vehicle through which we can interpret his views on markets, or at least the prices of some assets in them.

Berkshire, of course, has some difficulties in putting cash to work not faced by your average dentist or lawyer, in that it tends to make very large investments and as such may need to be more patient than smaller fry. So it is quite possible Berkshire Hathaway is waiting for the right acquisition to come along.

It is also similarly possible that Buffett is not happy with the prices, and is biding his time against a day when prices have been marked down. One thing not influencing Berkshire is tax policy, as all of its cash is generated in the U.S., making it not one of the legion of corporations holding money offshore to avoid a repatriation tax.

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Smart Investors Ignore the News

When describing my job to friends, I tell them that most of my day is spent reading.  To be more specific, it’s deciphering good information from the rest of the headlines that are simply media noise.  Enclosed below is a good blog post from Chuck Jaffe that talks about his observations of the headlines and his advice for investors to avoid knee-jerk reactions to media noise.  With so much information and so many opinions out there today, it’s our goal as an advisor firm to filter out the noise and provide clients with straight talk that conveys facts that are meaningful to our clients.

Scott Smith
C&J Wealth Advisors
Article credit: By Chuck Jaffe | MarketWatch | August 18, 2014

Smart investors ignore the news
You can read the headlines, just don’t trade on them

If the market is making your head swim, you may be able to solve the problem by Flying Colors Slots spins turning off, tuning out and dropping out of the 24-hour news cycle.

That’s an oSmart investors ignore the newsdd suggestion coming from someone who works in the media, but what makes it doubly strange is that it’s prompted in part by the website I trust like no other, MarketWatch.com. Beyond simply being my employer, I trust the site because I know personally the quality people and journalists my fellow staffers are

But, last month, MarketWatch set a site record for the number of unique visitors to its news pages, which set me to wondering what kind of messages we were sending to both new and increasingly active visitors at a time when they were presumably drawn in looking for some measure of market guidance to calm their nerves or keep them on top of the financial news.

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