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A Process to Receive Transfers of Wealth!

Another quarter has come and gone; a tick of the second hand in your lifelong financial journey. 

At this moment, we can compare and contrast the current quarter-end to recent rounds. As a Wall Street Journal article summarized, “Stock investors have been on a wild ride the past six or so months: The S&P 500 has gone from a record high, to being on the cusp of a bear market, to being back within striking distance of its recent peak.”

At this moment, financial headlines are closely watching what’s in store for Brexit, the shape of the U.S. Treasury yield curve, China trade talks, and other potential slowdowns and stimuli. 

At this moment, a financial commentator proposed a new “golden cross” is supposedly signaling a bull market ahead, based on comparing the 50-day moving average to the 200-day moving average. Noting the historical data isn’t sufficient to be telling, the author admits (emphasis ours): “The crosses derive their power not because there is something inherent but because many investors believe in them and act on them. Moreover, the media like the stories of golden crosses and death crosses and promote them. This generates bullish or bearish sentiment.” 

Seriously? Then there’s my perspective. 

As always, this sort of circular logic (aka gobbledygook) leads too many investors astray. As you reflect on any forecasting “powers” reported in the popular press, remember the vast majority of them are premised on what may be the flimsiest platform ever devised: human sentiment, as many people say.

In his March 1 commentary, William Bernstein, MD, PhD, observed that “Investing, after all, is an operation that transfers wealth to those who have a process and can execute it from those who do not and cannot; from what I’ve seen, the average investor’s strategy consists of pride when prices rise and panic when they fall.” Good thing we have a process.

In addition to these comments, I have attached the Quarterly Market Review for the 1stQuarter. The review report features world capital market performance and a timeline of events for the past quarter. It begins with a global overview, then features the returns of stock and bond asset classes in the US and international markets. The report also illustrates the impact of globally diversified portfolios and includes an article on investment fads, which I encourage you to avoid.

Beginning this quarter, Lifetime Capital’s quarterly reporting package no longer includes investment performance, i.e. comparison to corresponding indexes, aka benchmarking. This has been a long time coming. Since the founding of Lifetime Capital, each and every discussion about portfolio performance has concluded that portfolio structure is the primary factor driving investment performance. Similarly, the management processes followed by Investing 3.0 managers are consistently applied to Investing 3.0 funds and provide operating advantages over indexing. Whenever an Investing 3.0 fund underperforms a corresponding index (benchmark), the shortfall has been attributable to the differences in structure.

Not including benchmarking in the quarterly reporting package does not mean that we’ll be sloughing off. We will continue to monitor the management company and the performance of the funds and let you know should something change. We will continue to publish reports on the advantages of Investing 3.0. And, because they provide valuable insights into our investment approach, benchmarking reports will be available upon request.

As always, please be in touch any time I can help you with matters that relate to your financial goals – or with anything else that may be on your mind. I hope you know that I’m always happy to hear from you!