Adapted from my letter sent to my private wealth management clients on November 9, 2022.

I don’t know much about football, but I do know the score at halftime or the end of the third quarter does not determine the winner. If you head for the parking lot too early, you risk missing one of those thrilling comeback victories that people will be talking about for years.

“Were you at the game? Wasn’t that an amazing turnaround?!?”

As we enter the fourth quarter of 2022 and look back at the third quarter, there’s no avoiding the fact that it’s been a bad year for stocks, a really bad year for bonds, and it’s been painful to watch.

Things may look grim in the moment, but what if there was no clock to run out, and you knew that your team had a strategy that had consistently won in the past? While there is the risk that investments in individual companies will fail and specific sectors and regions may have had prolonged struggles, but broad-based portfolios that are holding many diversified securities across multiple asset classes have provided valuable protection against this risk.

Volatility or fluctuation in the price of holdings remains a risk, even in a diversified portfolio. While volatility (“seeing your team down”) is uncomfortable, historically, market downturns have been temporary. We’ve worked hard in financial planning and portfolio discussions to plan for downturns, and not put capital needed for spending in the near-term in assets which have historically been volatile. This helps avoid the need to sell at a loss and effectively puts "time on the clock.” Investors who have followed our team’s game plan with discipline and maintained portfolios of high-quality investments have been able to ride out the downturns and win past battles against bear markets.

Markets may look bad at times, but the victories have been decisive, and the comebacks often quite dramatic. Don’t pack up and leave the game early—you’re going to want to stay to see the end!

A New Player: Derek Ketcho, CFP®

While on the theme of teams, I am excited to announce that Derek Ketcho, CFP® has joined my team here at Cahill Financial Advisors! Derek will add talent and capacity to our team as we strive to maintain the highest level of client service, provide excellent quality of advice, and allow for future business growth.

In addition to his work as a financial advisor, Derek has a decade of banking experience, both in the community bank setting and in the high-net-worth private banking area. In fact, Derek has previously worked with our a few of our clients as a lender at his prior firm.

Derek lives in Victoria with his wife Britany, and young daughters, Penny and Charlotte. Derek enjoys his family time and is an avid golfer and basketball player. Derek earned a bachelor’s degree in Finance from the University of St. Thomas, holds the Certified Financial Planner designation, and is a serious reader of investment and personal finance books!

In the News

Dimensional Fund Advisors (“DFA”), an asset manager we frequently use in client portfolios (when appropriate and available), has been in the news. RIA Intel named DFA “Asset Manager of the Year” for 2022. Even more impressive, DFA now has yet another Nobel Prize winner on their roster! Douglas W. Diamond, lead Independent Director of DFA’s US Mutual Funds and ETFs, received the 2022 Nobel Prize in Economics for his work on banking systems.

“Professor Diamond is the fifth academic with deep connections to Dimensional to receive the Nobel Prize. Three founding members of the board of directors of the company or the company’s funds—Eugene Fama, Merton Miller, and Myron Scholes—previously received the award. Robert Merton, currently the firm’s Resident Scientist, is also a Nobel laureate.” (DFA)

ICYMI: Radio & Webinars

In my recent “Money Matters” radio episodes, I shared thoughts on:

I’ve also recently conducted several Wealth Strategy Session webinars, which are available for replay:

Vanguard Market & Economic Update with Roz Beliveau, CIMA, and John Lord, CFA of Vanguard. In addition to discussing Vanguard’s financial outlook, we discuss the company’s eye-opening long-term research on the ways financial advisors can positively impact client planning outcomes.

Executive Compensation Planning (Stock Options, Restricted Stock, Non-Qualified Deferred Compensation) with John Nersesian, CPWA, CFP®, Head of Advisor Education at PIMCO

Wealth Transfer with Family Holding Companies with Leslie Geller, JD, LLM Sr. Wealth Strategist at Capital Group to discuss a niche, but powerful, advanced planning technique: the Family Limited Partnership

Tax-Advantaged Charitable Giving Strategies with Prof. Russell James, J.D., PhD, CFP®. Dr. James is one of the nation’s leading experts on charitable giving and philanthropy, and he’s an entertaining presenter. We discuss top tax-advantaged ways to help your favorite causes.

If you’d like to view of these sessions, just let Anna know, and she will provide you with the recording.

Upcoming

We will also be conducting future Wealth Strategy Session webinars that you’ll want to keep an eye out to watch:

Cash Balance Pension Plans with Jason Bolstad, Plan Design Consultant with Tax Sheltered Consultants on November 17, 2022, at 12:00 p.m. Jason will discuss how cash balance pension plans can provide a super tax shelter and rapid wealth accumulation for certain business owners.

ESOP: Employee Stock Ownership Plan with Steve Storkan, CFP®, Executive Director of The Employee Ownership Expansion Network on November 30, 2022, at 12:00 p.m. Steve will discuss how ESOPs can allow for a tax-advantaged transfer of ownership from business founder to employees. This is a niche topic most applicable to business owners considering exit strategies.

Advanced Retirement Distribution Strategies with Steven Sweeney, Director of Advanced Planning Strategies at Prudential Financial (Date TBA)

The Investing Game’s Not (Ever) Over

Investing, when well played, can be an infinite game—one with no whistle to signal the end of the game. Historically, when market turnarounds happen, they have often done so with surprising abruptness and impressive gains. Markets have also recovered from all past bear markets and marched on to reach new market highs. The rebound from this bear market may be yards downfield and require patience—or maybe not. We just finished October with the best monthly return on the Dow Jones Index since 1976—a positive 14% one-month return!

(Source: Forbes )

As always, please let us know if you have any thoughts or questions.

Thank you,

Scott