Our Background & Philosophy
Our Background & Vision
The Reluctant Investment Advisor....
What I've found is that by following the pack the likelihood of going over the cliff is greatest.
The Bull! The Wolf! The Lion..... are they all really Lemmings - headed desperately in a path of destruction, straight over the edge with their clients in hand?
From the time I was young, probably seventeen or eighteen investing has always interested me. How can someone invest in stock or real estate and create abundant wealth. The vision always intrigued me!
After college I started a successful mortgage banking career. My father and I wanted to start an office but the bank my father worked for wouldn't approve the deal. What does a young kid just out of college know anyway? Instead I was hired by one of the largest mortgage banking firms in the country and my success skyrocketed. In two years I made more than my Father and Mother combined. Too bad for the little naive bank! I thought I hit nirvana! So did my friends!
Little did I know I was about to get my first lesson in real world economics...
Interest rates were the highest in over a century and declining. Anyone with a mortgage was clamoring to get a lower rate, buy a house, get a bigger house, invest in real estate and use massive leverage to do it. For a mortgage banker the times were good - really good!
Then came the interest rate spike of 1988 from 7% to 9%. I had just bought my first new car - with cash. Then turned around and financed it to buy my first home. Nothing like leverage baby! However, soon after that no one was buying a house, no one was refinancing. I went from super hero to super zero in nothing flat! I needed a new life.
In 1990 a new career was begun with New England Financial Services, otherwise known as The New England. There is where I leaned about financial planning, insurance and my greatest love - investing. I wasn't a big fan of insurance but understood it's benefits. I really wanted to do investing.
In 1997 I started with Tower Square Securities, a CitiGroup company, as an independent registered representative. What that means is you get all the expenses of starting and running "your own business" without any help. From there I worked with various other companies as an independent registered representative.
The Dot Com Massacre of 2000 - 2003
Working mostly out of my house I had grown a small but decent business. Primarily selling insurance and investments everyone was excited about investing in the Dot Coms.
But I sensed serious problems.
In 1998 the Clinton administration with a Republican Congress eliminated Glass-Steagal and set the country on a crash course for financial disaster. Further, Alan Greenspan had increased interest rates too much. The dot.com's were raging in value and then the bubble burst.
I met a woman who was ecstatic about retiring next year. She went on to say after she increased her portfolio from $500,000 to $700,000 she would be ready. Did you get that? Ready to retire in a year - from 500K to 700K - in a year! I asked her if she was diversified? She said yes - four stocks; Intel, Gateway, Microsoft and Dell.
I told her she needed to sell - immediately! She didn't listen.
Her broker had recently quit and retired and she needed a new advisor. But she wouldn't listen. I pleaded with her to sell but she said capital gains would cost too much. I tried desperately to get her to listen but she wouldn't as her greed and lack of knowledge as well as shock got the best of here.
I finally quit trying to "help" her. As I found out later, she got destroyed by not taking my advice and as far as eight years later still hadn't retired.
2003 - 2008
In the meantime I continued to grow this practice with a small but wonderful clientele. In 2006 I quit the Registered Representative world and started the Reed Financial Group as an Registered Investment Advisor or RIA.
It may mean nothing to you but it is extremely important. I know that we should always put our clients best interest at heart - doesn't everyone? Apparently not! Soon after opening my RIA we were audited by the state of Kansas - a normal procedure to make sure were doing things like we should. After the exam the auditor told me a few stories of bad practices he ran across. It's astounding to me that in a business where we can truly help people that there are those that will take advantage of others. I guess it shouldn't be that startling to me.
A Registered Investment Advisor is required, by law, to put your best interest ahead of theirs. A Registered Representative is only required to show you what is suitable, but not necessarily required by law to put your best interest ahead of theirs. It seems obvious, but this loophole gives big broker dealers and insurance companies a lot of ground to get out of doing what's truly best for the client, even though they'll never admit it.
We've always thought that's the only way to do business!
The 2008 - 2009 Financial Crises
In 2006 my mother found out she had lung cancer. Years of smoking finally caught up with her. She quit smoking as soon as diagnosed.... Anyway in January 2008 she died. During 2007 to the day she died I helped her as much as possible while watching the financial wheels begin to come off the financial bus as they say.
In January of 2008 I was furiously calling clients telling them to get the hell out of the market - all while my mom was on her last days. You see at the time we manged money with non-discretion. That means before we did something we must get your permission.
My mom was dying - and so was the financial world!
You see, due to my background in mortgage banking I had special insight into what was going on. I called several of my old mortgage banking buddies, people who had been around before the idiot mortgage bankers of teh day. They told me it was going to be a bloodbath.
I was also learning and getting really good at Technical Analysis, the study of charts and indicators which had the potential to determine the direction of markets, stocks, bonds, currencies - you name it. Was it perfect? No! But it was a lot better than guessing and had a major benefit over the standard Strategic Asset Allocation, a method used to this day.
About seventy percent of my clients listened and agreed immediately or soon thereafter. We avoided a big sell off for many of our clients. Still thirty percent of so were told to stay the course, no matter what. I continued to convince them. Again, many didn't listen.
In September 2008 the only phone call we ever got out of the phone book looking for an advisor resulted in a new and to this day very happy client. She and her husband walked in and didn't understand why their portfolio was so volatile. They thought it was mostly bonds. They were mostly in stock. I told them to sell it all immediately, against their advisors advice. If I was wrong then they should stay with there current advisor. If I was right they should come to me.
This was days before Lehman Brothers collapsed. I reasoned with them that Lehman wouldn't be saved by the Federal Reserve as Bear Stearns was (it wasn't saved, Bear Stearns was bought by JP Morgan in a deal backed by the Fed and the Fed got screwed on the deal so I thought the Fed wouldn't back Lehman). I turned out to be right. They had gotten out of their portfolio - 100% to cash. It was the best investment at the time.
Many of my remaining clients were in cash, short term debt or a small amount of stock. I also still had some who refused to budge. I couldn't believe it! Why in the hell were these people paying me - to babysit their money? There was one reason I could understand their confusion. On the radio, the TV and other media was telling people everything was fine, stay allocated to stocks - for the long haul. Even Dave Ramsey said to listeners on the radio to just leave money in a good growth mutual fund, everything would be fine.
I wanted to reach through the radio and strangle Ramsey for that!
Most people don't realize it even to this day but the world came perilously close to financial Armageddon. You could have gone to the ATM, to the bank and they would be shut down. No money, no credit, sorry. We came that close to the edge!
In 2009 when things turned around I told my clients to get back in to the markets, slow at first, dollar cost average in. Then, we said all in by June. It wasn't perfect, nothing ever is, but it was better than just sitting there. Oh, and the clients whom wouldn't listen originally? Some got out at the worst time, again, against my advice. Then they wouldn't get back in when I told them. They either left or got fired. The 70% or so that stayed? Many of them are with me today or have passed away and I'm working with their heirs.
2009 - Today.
From that period until today we have steadily grown but not at a breakneck speed. I didn't really want to! My goal was always to provide the absolute best service possible to the clients we serve, but it was never to be the biggest, the star, the most amazing.
Along the way we've worked to refine our skills and be the best we can be at managing assets and financial planning, specifically for retirement.
However, that isn't enough!
During 2018 we have witnessed some very interesting things. Things I'm very concerned about. Some may play out, some may not. We'll have to see.
Either way, the potential to have avoided much of the destruction encountered during 2018 by using Tactical Asset Allocation to the extreme (as a traditional investment advisory approach) and move out of the way will change the way we do business and invest forever. During the Parabolic move and subsequent Stop and Reverse of January's end and February's beginning as well as the getting the hell out from the Rising Wedge formation from March through October 3rd changed the way we will invest forever.
As opposed to standard Strategic Asset Allocation, it is time for a change.
RELUCTANTLY, our perspective is defined as this:
Understand the trend and use the trend to make, preserve or grow wealth - no matter what!
Understand macro implications, what they are and how they will affect the world, our investment portfolios and our clients future success!
The market has made a very definite topping pattern, Technically speaking. Whether it will truly be top or just a really big hiccup remains to be seen.
Business cycles go up and down. We learned that in Economics. That being said, the investment world according to most broker dealers of the present day seem to believe that the market will go up and up forever, much like the mortgage bankers of 2000 through 2007 thought real estate would go up forever and then got crushed. They say "Stay invested - for the long haul" This is ridiculous!
Politically, our current administration may implement crushing tariffs on China. Whether this is just a negotiating point or a real outcome remains to be seen. In the 1920's similar positions were taken - to devastating consequence. Hopefully, this "really smart guy" get's it and is only negotiating.
We are also at an impasse with congress over a wall with Mexico. A wall which would have been approved had it been implemented under a former administration. This is pure politics and it is dangerous. Further, the rise of outwardly socialist ideals has created a dangerous path for the country and the world, in our opinion.
The market has had it's worst December since 1931 and the worst volatility since the middle of the 2008 financial crises, but we are at a top, not the middle like 2008.
The WealthSentry Asset Management Method
In response we have created the WealthSentry method of portfolio management which gives us the ability to shift between Bull and Bear Portfolios using "Beta Heuristic Optimization" which seeks to provide the purest Alpha possible to our clients by "learning" the direction of the market and switching asset allocation portfolios from high beta to low beta and back when necessary. Is it perfect? No, nothing is, however, we feel it is the only course to take going forward in order to do the best for our clients we serve.
Unfortunately, we feel this is very, very necessary at the beginning of 2019. Either way we feel we can take advantage of either an advancing or declining market and provide the highest benefit to our clients. - exactly what we're supposed to do.
In the name of full disclosure you just read it. Congratulations!
If you've read this far your in one of two camps.
1. Either you are very, very curious and have some time on your hands to read stories like this, which if that's the case, God Bless You. You've probably won the Rat Race and have enjoyed this diatribe which I have put you through.
2. You are very interested in learning about how we can create the best life possible for you and wonder how we have done it for others. If that's the case you should seriously get in touch with us, make an appointment to come in and discuss your financial vision. Is it what you want? Would you like a better course? Do you want straight answers from a firm with a long history of "putting our clients Best Interest first"! Not just because we have to legally as a Registered Investment Advisor and Fiduciary, but because it's the only way business should be done!
No matter what your situation is we'll work to make sure you're on the right path.
Make an appointment now. It's Free and there is absolutely no obligation!