Four of the Most Reliable Words in Investing, Coaching, and Parenting.

Patience, Discipline

“It’s tough to make predictions, especially about the future.” Yogi Berra

Armed with brainpower, insider information, and sophisticated tools, even the most powerful global institutions cannot outguess economic data and financial markets. One such institution, the U.S. Federal Reserve officially diverged from other central banks with a much anticipated December monetary policy  announcement, and Fed Head, Yellen, steadfastly exuded confidence in an ability to execute on central plans. While seemingly small now, this historic event does signal added change, uncertainty, and hypersensitivity to future news-flow.

Default risk, volatility and extreme downside in security prices were reintroduced in 2015. Well-intended 2016 forecasts are on the way to our inboxes, and these notes often serve only to confuse yesterday’s confident beliefs. Stocks, bonds, commodities, emerging markets, and currencies will continually jostle investors and prognosticators.

No crystal ball or “black-box” strategy guarantees consistent and successful market timing, so let us briefly examine four words able to more reliably trigger clearer thinking in times of added stress.

Patience, Discipline, Process and Customization have proven a helpful and mightily resilient decision-making framework throughout a career of investing, coaching, and parenting.

#1 Patience helps to promote less emotional decision-making. We have all been in that daunting place, a moment where reactions, words, and instructions are paramount to a more successful outcome. Take a mental moment or even physically remove yourself from a tough situation. Intentional breaths also enhance one’s ability to patiently respond when control is momentarily lost.

Quick Tip: Avoid an immediate investing decision if you have recently been exposed to the flashing of red and green price-change indicators.

#2 Discipline reinforces adherence to well-grounded investment strategies and financial plans. The temptation to impatiently chase the latest fad, change styles, or to abandon the “game plan” out of fear, often leads to instability more detrimental than whatever short-term deficit or problem exists.

Quick Tip: Avoid compromises or exceptions only made to make a decision work this time.

Fearful headlines and twitter feeds sell ads and keep people glued to screens, but fear does not make money in the stock market.

#3 Process translates into effective execution of less emotional disciplines. Successful investors, coaches, and parents rely on consistent process methods to evaluate reward-to-risk relationships. This ability is wired into survival–Is that a stick or a snake? Should we kick an extra point or go for two? What will tomorrow bring if the kids win the battle to stay up too late? Investors should define and document reward and risk targets to compare with current prices. Key stats and ratios can help to set the limited price you are willing to pay and the point at which a sale is appropriate for each holding. This preparation should be done prior to the potential constraints of euphoria or despondency.

Quick Tip: A scheduled routine to review financial plan health, asset, sector and security allocations, tax efficiency, all-in expenses, and risk-adjusted performance is important and helps to avoid random thoughts and decisions.

#4 Customization can produce more optimal bottom-lines over robotic or glide-path plans. Armed with patience, discipline, and a process for execution, the flexibility to adjust for the conditions on the field is critical. Hard-earned wealth is proactively built, so unique circumstances deserve collaboration and measured decisions. Simple strategies to achieve low cost, diversification, and risk management can be achieved while paying attention to the changing complexities of taxes, special requirements, and crazy markets.

Quick Tip: Be wise with model recommendations found in newsletters, popular media, or other widely distributed platforms. While often good advice on the surface, what is right for your neighbor is not always right for your family.

Happy New Year and Best Wishes for 2016!

It is tough to predict any 12 month period. This investing year is especially difficult with so many large players like China, the U.S. Federal Reserve, and the European Union attempting historic shifts alongside a daunting list of uncertainties. Besides turbulent markets, our basketball team is struggling, and we “welcome” our first teenager into the house. The written words of Patience, Discipline, Process and Customization will literally be turned to as reliable triggers to handle tough decisions (see pictured office whiteboard).


Michael loves to empower investors with his expertise in securities and economic analysis, goals-based wealth management solutions, and FinTech smart decision-support tools. While directly managing over $5 billion in growth and retirement assets; his proactive advice and software innovations have influenced thousands of fiduciary advisors to better their practices and service to clients. He enjoys spending time with his wife and three boys, competing in USTA tennis, and mentoring others to succeed.

Email |

Twitter | @MichaelHakerem


Don’t Roll the Dice with Your Retirement

The costs of not implementing personalized advice will escalate so watch out for products and overly standardized solutions.


The S&P 500 has sustained an unusually high 15%+ annual pace of returns over the last three years. Still, U.S. retirement savings and pension plans fall short by multiples of trillions. Our lifestyle, investment returns, and retirement success are partly in the hands of competent and caring central bankers; unfortunately, they are in experimental territory! Despite hope for a “this time will be different” outcome, last night my wife and I experienced another demonstration of well-intended microeconomics gone awry–Family Monopoly Night. Will the global macro-economy have more success in its quest to provide stability for its growing and ageing citizenry? Let’s not assume a complacent path toward GO!

European emergency deals with Greece, signs of disinflation, and a litany of other mixed data points prove constant reminders of burdens resting on the shoulders of the world’s most powerful central banks. The March 18th U.S. Federal Open Market Committee (FOMC) meeting and the associated Summary of Economic Projections and press conference by Chair Yellen come with great anticipation for insights on paths for interest rates, inflation, and global growth.

How can any players evaluate
what is what, or who is on first?

Whether fiscally shaky countries, unstable companies loaded with high yield debt, or individuals afflicted with an addiction to self-dealing blowups, at some point global powers must allow fundamentally sound principals of reward and risk. So-called emergency measures of quantitative easing (QE), market manipulations, and data-spin have created illusions of great prosperity. Can market players truly evaluate the past and future quality of their investment portfolios? How do you prudently plan for future retirement cash flows? Will liquidity exist when massive amounts of investors make the same allocation decisions–see Energy sector? As certain as death and taxes, the FOMC will inevitably trigger a soundness test of our wealth management processes. It will test its own resolve, too.


Don’t try this at home or on
the global stage!

The primary focus of family game nights is to share equally in the seemingly easy task of promoting fun. To this end, all players are bribed with pleasantries and tasty snacks. Though often too soon, the more formidable Monopoly traders emerge and our micro-economy changes its character. We can now wheel and deal our way to a fortune even faster loading millions onto debit cards instead of cash! Unfortunate bubbles and bankruptcies loom, and we are unsure how this game will unfold. I survey the bubbling emotions of the table and decide to step-in as central banker and quickly implement a few minor tweaks to the rules as relied upon since 1935. Surely, a few rent-free passes around the board, lower mortgage rates and a special one-time QE program are acceptable as a fair trade-off for a prolonged cycle of family fun (and snacks).

monopoly credit cardsUnfortunately, emergency tweaks force a new set of incentive behaviors, and control quickly becomes a rear-view mirror phenomena. The artificial nature of our “new normal” game introduces an evolution of hypersensitivities. Prudent savers shed tears as interest payments and cash flows are severely strained. Formerly on economic life-support, a certain type of grin emerges on the face of wildly aggressive players as fair consequences remain suspended. Never extrapolate current circumstances!

No press conference, but…As the most powerful central banker in the house, I cannot reveal any lack of confidence in how this game may end.

Further details from my reign over family game night shall remain sealed in order to digest the facts as I plan to recall them and to avoid critique. Meanwhile, real life global central bankers, finance ministers, academics, and financial market participants are clearly articulating their own visions for currencies, growth, jobs, and policy options. In fact, seventeen central banks have clearly spoken in 2015 with monetary easing. Sweden slashed its main policy rate into negative territory! Economic battles may ensue as countries try to protect self-interests.

The S&P 500 stands at 2,100 and the
U.S. Ten Year Bond yields 2.14%.

Many managers of wealth agree that broad stock market valuations are elevated and economic cycles cannot be completely eradicated. Nearly seven years since the last U.S. recession, risks of negative asset returns and even lower interest rates are real. At the same time, life expectancy and years in retirement are extending. The EBRI estimates that “at-risk” early baby boomer shortfalls range from $71,299 for married couples to $104,821 for single women.

The costs of not implementing personalized advice will escalate so watch out for products and overly standardized solutions.

Market players put too much faith in the ability of humans (or machines for that matter) to legitimately map desired outcomes with high certainty. The well-intended programs and tools unleashed by global central bankers may produce more future risks than current rewards. Aided an abetted by political dysfunction, demographic trends, geopolitics and a multitude of unforeseen variables, it is impossible for anyone to predict an exact transition from policy-induced tweaks to a self-reliant global economy. Even Dr. Janet Yellen could not have predicted the outcome of our family game night, and this is precisely why it is such an instructive econometric tool!

Like it or not, we were all invited to this global Family Game Night, and an important test looms sometime in the future. No matter the status of your preparation or distance from retirement, take control of your security and freedom with a foundation of financial knowledge, trusted advisory relationships, and methods to review and verify your family’s unique circumstances.

  • Cover the bases of the continuous cycle of wealth management with discovery and understanding, financial and estate planning, strategy implementation, supervision and review.
  • Re-check your human and online advice platforms: Many investors are clearly paying too much and receiving too little OR paying too little and not receiving enough mission critical advice.
  • The National Association of Personal Financial Advisors (NAPFA) is a leading professional association of Fee-Only financial advisors:
  • The CFA Institute strives to lead the investment profession globally by promoting the highest standards of ethics, education, and professional excellence:
  • The Employee Benefit Research Institute produces non-partisan data on health, savings, and retirement issues:

I welcome your comments.

Email l

Twitter | @MichaelHakerem

Michael embodies client-stewardship in all his work and happens to be a passionate expert in securities analysis, asset allocation, economic analysis,
and wealth management solutions.

More than 275 million Monopoly games have been sold worldwide and are available in 111 countries and 43 languages. Your family and the U.S. Federal Reserve should invest in this classic econometric tool for a cost of less than $20. 

Sip Your Wall Street Carefully

Michael's Cup2

A great mentor required me to hand record daily and weekly prices of copper, oil, interest rates, currencies, money flow, sentiment, etc. from the Wall Street Journal & Barron’s onto a card stock grid. I know, I know…no automated download and this task was usually completed by 6:30 am. What an awesome way to get close to the data, market barometers, and the pulse of the world’s financial markets.

My LinkedIn Post on December 5th entitled An Ark, a Speedboat, a Tight Bathing Suit, outlines a thought process and framework for asset allocation and portfolio construction. The last paragraph read,

Thoroughly review all your taxable and tax-deferred accounts. Make sure you and the advisors who work on your family’s behalf have coordinated strategic (long-term) and tactical (short-term) estate, asset allocation, and margin-of-safety plans. The tides will inevitably change so do not wait to hear the thunder before the next big storm!

There are thunderous signals abound as prices of oil, copper, and money plummet. See below for a graph of the benchmark 10-Year U.S. Treasury Yield–dropping from 3% to well below 2%. If upward moving 401k plans and investment values have delayed urgency to this point, then the sheer velocity of recent change should cause an immediate review of your complete portfolio and unique circumstances. True, draw-downs of 10% in broader stock gauges are considered “normal” through the course of any given year; that is, a change in prices from some high point to a low point, before reversing upward again. Also true, professional and novice investors are clearly getting burned with dramatic moves taking place in specific sectors, asset classes, and investment vehicles. 

Sound investment strategies expect and withstand this level of two-sided volatility and, in many cases, a buy and hold strategy may make sense. Unfortunately, anecdotal evidence shows clear signs of misalignment and potential hidden dangers. For example, history-making low interest-rates have caused investor’s to demand and advisor’s to reach for a myriad of new products and solutions. Do you or your advisor clearly understand and appreciate the costs and risks in higher yielding MLPs, exchange-traded-products, and lower-rated bonds? Was publicity, slick marketing or a cool chart enough to place your hard earned wealth into a buy decision?

Wise from all points as investor, advisor, and chief investment officer, I can write with certainty that sometimes it just feels right to make changes, no matter how slight, to satisfy a behavioral need to feel more in control of the often uncontrollable. Stress levels are sure to rise in 2015–Investors at all levels will come to appreciate an emotional connection and plenty of great communication with peers and advisors!

10-Year Yields

Let me repeat some advice, do not count on your advisors’ portfolio review timetable or ability to proactively call you. Take the appropriate initiatives (this is not the same as panic) and be aware that various Wall Street incentives and potential conflicts of interest exist on Main Street and Your Street. Be an astute consumer of financial services and feel confident that you have a comprehensive understanding when it comes to fees, rationale of advice, allocation of time to your family, methods of implementation, risk assessment techniques, and so forth. Even good professionals get ensnared in poorly constructed advice business models, overly simplistic tools, and limited offerings. Yes, a so-called fiduciary relationship infers a certain standard of care. Still, a discretionary fee-based relationship is not a license of faith. Some advisors consider marketing fiduciary acts as a license to avoid more laborious and detailed work. Trust, but verify!

Difficult Discussions:

Investor Rights:

An Ark, a Speedboat, a Tight Bathing Suit

Famous investor, Warren Buffett is credited with the following quote, “You never know who’s swimming naked until the tide goes out.”


China, Japan, and Europe are cannonballing into high tides with new stimulus announcements. Downward global GDP growth and lower price pressures are clear on the horizon, even as metrics ebb and flow. At the same time, the U.S. central bank has indicated an end to one element of its monumental wave of Quantitative Easing (QE).

My Asset Allocation Strategy

Ark: This core and stable vessel is built to last, to withstand storms, to leave mostly untweaked in times of stress–emotional or market related. This majority of my portfolio should be untethered to a reliance on any one central bank, one asset class, one direction of interest-rates, or my ability to outguess new bulls or bear markets. This is not to say that significant shifts in underlying investments simply stay put forever or that damage will not occur.  More importantly, this reliable piece of my asset allocation remains steadfast in its character traits.

Speedboat: This satellite and more aggressive watercraft is built for quick maneuvers, possibly fun and entertaining, and an opportunity to impress myself (or teach humility). This smaller allocation should demonstrate my most active portfolio management, style, and security selection skills. Rockin’ and Rollin’, these investments better take advantage of great ideas, dislocated markets, and short-term behavioral mistakes made by my fellow investors. These vehicles provide an opportunity to earn much greater returns than those generated by the more passive portion of the portfolio.

Tight Bathing Suit: I wholeheartedly pay attention to risk management. Famous investor, Warren Buffett is credited with the following quote, “You never know who’s swimming naked until the tide goes out.” A rising tide of asset prices like we have lived through since 2009 can make a lot of people and investments appear intelligent. Over my twenty-year career, many of my most important lessons occurred when I realized just how dumb I could be. More importantly, with so many boats lifted in the high tides, consumers of financial advice and even Do-It-Yourselfers may miss indiscretions, poor advice, lack of stewardship, and inferior tools and techniques. You worked hard to build wealth so avoid getting caught showing your assets at the wrong time!

Central-Bank activity, global interest-rates and currencies are interconnected with your portfolio and retirement goals!

The European Central Bank (ECB), led by Mario Draghi, holds its next monetary-policy meeting January 22nd of next year with high anticipation for its own bond buying QE program. Somewhere in the vicinity of a 2% sustained pace is the goal-line target for official inflation measures. Germany is close to 1% price increases, however, the rest of the Eurozone is struggling at 0.3% in November as energy prices fell. Source: Eurostat. Data prior to 1996 are estimated on the basis of non-harmonised national Consumer Price Indices (CPIs).

Stage 3 graph

The Federal Open Market Committee (FOMC), led by Janet Yellen, concludes its next monetary-policy meeting December 17th with high anticipation for the associated Summary of Economic Projections release and press conference. Yellen has clearly reiterated that the timing and path of the target federal funds rate is data-dependent. Financial market reactions and preemptive interpretations by systemically important financial institutions will be important inputs.

Sales at the holidays are good, right?

Like most things in life, balance and stability are the keys to success. Central banks attempt to stop severe deflation (price drops), along with severe inflation (price increases), in an attempt to keep the excessive volatility in prices to a minimum.

Deflation is in almost all cases a side effect of a collapse of aggregate demand – a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers. -Dr. Bernanke

Deflation is viewed as the greater and less “controllable” threat, and it can be caused by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to economic depression. For example, Eurozone headline unemployment stands at 11.5%.

U.S. asset investors have benefitted greatly from the reflation of stock and bond prices. The FOMC leads an interesting experiment on how to safely exit the high tide environment of unusually accommodative or even emergency-like monetary-policy. U.S. growth, prices, and employment are thought to be stable. China, Japan, and the Eurozone are not in exit mode. In fact, Japanese Prime Minister Shinzo Abe’s ruling party may claim a fresh mandate for his economic revival policies as his coalition is projected for victory in recent elections; after all, the Japanese stock market (Nikkei) is at 7-1/2 year highs.

Thoroughly review all your taxable and tax-deferred accounts. Make sure you and the advisors who work on your family’s behalf have coordinated strategic (long-term) and tactical (short-term) estate, asset allocation, and margin-of-safety plans. The tides will inevitably change so do not wait to hear the thunder before the next big storm!

Please visit my October 29th piece on the U.S. central bank’s policy dilemma and scroll to the conclusion for an investor checklist of more controllable factors, ex. Take charge of the collaboration amongst your tax, legal, and business advisors to maximize your family’s financial, tax, and investment planning–do not assume this is taking place without your encouragement


I welcome your comments.

Michael embodies client-stewardship in all his work and happens to be a passionate expert in securities analysis, asset allocation, economic analysis, and wealth management solutions.

Email: & Twitter: @MichaelHakerem

House of Horrors? Prepare to Get Spooked!

Opportunities for investment return treats exist in many sectors and securities as we enter the backdrop of a historically favorable November-April money flow season and mid-term election cycle. Still, tricky twists, feelings of lost control, and shadows of uncertainty may loom just around the corner.

US_Federal_Reserve_Eccles_Building_1937-2Opportunities for investment return treats exist in many sectors and securities as we enter the backdrop of a historically favorable November-April money flow season and mid-term election cycle. Still, tricky twists, feelings of lost control, and shadows of uncertainty may loom just around the corner. Central Banks bear the queasy burdens where politicians and ugly structural dynamics fail to deliver the goody bags. Broader markets could be in for a real scare or two so our smart preparation will translate into a steadier pulse if fear really accelerates. Lessen the potential for emotional decision-making and focus on those things which can be better controlled. Please review the concluding checklist to help control your fears and advantageously position your comprehensive plan.

Not Quite Campfire Worthy–A Tale to Set the Scene 

One beautiful fall day in 2014, they walked along the streets paved with greenbacks. The skies were blue, and the air was refreshingly crisp. Perhaps ready to embark on a different journey, they reminisced the ups and downs of a six year history since the miserable fall of 2008. Tears and smiles were shared as they chronicled times of fear and euphoria. At some point on this fine day, the road became twisted, winding aimlessly, briefly directionless. The skies were suddenly grayer and less reflective. Look! Ahead there…a house! An eagle sculpture above the federal entrance signaled prestige and power. They huddled, and the group thought, this place will provide the guidance we seek. They approached the monumental iron doors and grasped the ice cold lion’s head door knocker. A pleasant and welcoming white haired hostess invited them in as the door slowly creaked open. The foyer was extremely bright with sudden flashes of extreme darkness. The new air felt cold as it occassionally drifted across the back of their necks. The smell turned foul as the uninvited musty taste breached their tongues. BOOM! The door abruptly shut behind them, and despite the hostess’s assurances of safety, the group’s confidence and expectations were terribly shaken…

The World Relies on the U.S. Federal Reserve

October 29th marks the next scheduled policy announcement from the most powerful central bank in the world, and investors, media, and politicians will parse every word for signs of confidence and expert guidance. U.S. monetary policy is made by the Federal Open Market Committee (FOMC), which consists of the members of the Board of Governors of the Federal Reserve System and five Reserve Bank presidents. The FOMC holds eight regularly scheduled meetings during the year, and it is widely anticipated that the Committee will officially cease material additions to its QE3 bond buying program at October’s meeting.

A few key goals of this so-called Quantitative Easing (QE3) program:

  1. maintain downward pressure on longer-term interest rates
  2. support mortgage markets
  3. help to make broader financial conditions more accommodative, which, in turn, should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate

All three QE3 goals impact your retirement portfolios, college savings accounts, and “fun money” brokerage accounts. Your willingness to become an astute watcher of market inputs such as FOMC activity and the inverse relationship between interest rates and bond prices will increase your basic understanding of fluctuating account values, and it will enhance your potential success as an individual investor and consumer of financial advice. Never rely 100% on an advisor with sole discretion over your accounts and the directive, “just make me money!”

Thank you to my friends at Intrinsic Research for supplying charts for three of the key market proxies spooked this October: daily S&P 500 stock index, weekly US 10-Year Bond yields, and weekly Crude Oil prices. Explanations for soaring market volatility range from Ebola, terrorism, European woes, politics, and concerns over top-line revenue growth. Bottom Line: The complacency of clearer skies has been replaced with a cloudier picture; whereby professional, novice, and machine-driven traders demonstrated an ability to accelerate out of assets such as lower rated corporate bonds and stocks.


Current Chair of the Federal Reserve, Dr. Janet Yellen, has pointedly reiterated that interest rate targets are “data-dependent” and not based on a calendar projection; that is, when economic conditions and the economic outlook warrant a less accommodative monetary policy, the Committee will raise its range for the benchmark interest rate it targets (federal funds rate). Many powerful market participants are betting that early to mid-2015 will mark the beginning of a new higher rate regime. This dynamic relationship between two sometimes opposing forces (central banks & traders) will likely cause great angst, volatility, and uncertainty in many portfolios over the coming quarters as the Federal Reserve attempts to tip-toe in and out of the lurking economic shadows. Home mortgages, business loans, corporate deal-making, global trade, a range of asset classes, currencies, and critical decisions will be impacted. Make sure to solidify your well grounded short and long-term plans in order to avoid the emotional decision-making that overwhelms so many people at dark moments.

A Famous Chart & Unprecedented Efforts

As provided by the St. Louis Fed’s fantastic FRED database and courtesy of S&P Opco, LLC, the below graph illustrates the total assets of the Federal Reserve, which have grown considerably from $869 billion pre-crisis levels during the summer of 2007 to today’s levels of nearly $4.5 trillion (left-axis). The leader of this growth effort is an American Hero, Dr. Ben Bernanke, former Fed Chair, who succeeded Alan Greenspan in February 2006. Bernanke’s outstanding reputation included his thorough studies on The Great Depression and Japanese deflation. In 2002, one of Bernanke’s first speeches as a Federal Reserve Governor, was entitled “Deflation: Making Sure ‘It’ Doesn’t Happen Here.” A so-called Bernanke Doctrine emerged to identify specific measures required to combat or prevent deflation. There is little doubt that heroic actions were taken during the Great Financial Crisis of 2007-2009, and there is little doubt that the S&P 500 stock index (right-axis) benefitted greatly from unprecedented and continuous support.


Deflation is in almost all cases a side effect of a collapse of aggregate demand – a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers. -Dr. Bernanke

Bernanke theorized that a central bank should always be able to generate inflation. Ironically, I believe the Federal Reserve’s decision to continually add post-crisis stimulus through QE2 and QE3 programs, its attempts to modify the natural course of business cycles, and its promotion of a whatever it takes now and forever rhetoric has actually aided and abetted other deflationary forces. Of course, a strong argument can be made that other parts of Washington failed to be as heroic in efforts to restore our sub-optimal economic growth and prosperity.

Global debt burdens, demographics, impacts of technology, skills degradation, and plummeting velocity of money are structural forces that compete hard against Dr. Bernanke and his best laid plans. -Michael (no doctorate)

Global stocks, bonds, property, and numerous other assets’ prices have risen and probably contributed to some rough wealth effects; that is, some aggregate upward change in demand encouraged by more spending and less saving. Of course, a major risk factor is the potential reflation of yet another set of asset bubbles caused by excess central bank liquidity and credit rather than “fixing” economic fundamentals. Whatever the case, it is hard to argue “mission accomplished” as large and small economies face growth fears and fragility this fall of 2014. Therefore, any change in U.S. monetary policy runs the risk of igniting a chain reaction of extreme volatility throughout the globe.

Smart Preparation Goes A Long Way

As the Federal Reserve soon attempts to lead a new confident path, a trajectory of structural resolutions is unclear and negative side effects loom large. I fear Bernanke’s, and now Yellen’s, traditional econometric modeling will reveal numerous break downs in theory as the Federal Reserve shifts its unconventional policies. Unfortunately, market players put too much faith in the ability of humans (or machines for that matter) to legitimately map flawless outcomes for real growth, unemployment levels, interest rates, credit markets, and behavioral reactions. Smart market strategists believe the European Central Bank (ECB) will take the global baton with its own rumored unconventional programs. Again, not a fix for long-term structural problems, and this notion of a global market fully confident and supported by a non-unified group of Euro Nations to replace the United States Federal Reserve provides no comfort to this investor.

Previous attempts by the FOMC to exit QE programs in March 2010 and June 2011 were met with significant volatility and lower asset prices.

8655576585_d0621b62a4_kThe FOMC’s announcement on October 29th may not spook market participants due to its widely anticipated outcome; however, just like expecting to be scared at a Halloween haunted house, an expected “BOO!” can still raise the hair on your arms and make you jump! Let’s avoid complacency or delays in necessary portfolio adjustments even if financial markets seem settled and the S&P 500 (1,971) again surpasses the 2,000 level. The next Summary of Economic Projections and press conference by Chair Yellen (pictured) will be December 17, 2014: It is sure to be interesting and educational!

Focus on more controllable fear factors:

The below topics are important, and I wish to 
empower you with more specific tools, tips, and experience. 
I feel strongly about efforts to shape a trustworthy, forward-thinking
financial industry where families’ interests are served first. 

  • Communicate, Educate, Empower with all close family members;
  • Take charge of the collaboration amongst your tax, legal, and business advisors to maximize your family’s financial, tax, and investment planning–do not assume this is taking place without your encouragement;
  • Assess your family’s unique growth, income, tax, risk tolerances, and asset location needs–be your best advocate and communicate with your advisors;
  • Revisit portfolio diversification within and across all taxable & tax-deferred accounts–examine holdings beyond broad buckets of stocks, bonds, cash to ensure comprehensive suitability, proper risk alignment, and balance;
  • Be more selective with the evaluation of reward-to-risk factors among your individual securities and less reliant on “a rising tide lifts all boats” strategy;
  • Note: Cash is an important asset class with its own characteristics of safety
    and future opportunity–even worth paying a fee upon;
  • Maximize retirement strategies (Social Security, Roth, 401k, insurance);
  • Know all your costs such as quarterly fees based on assets, transaction costs on trades, additional fees not easily seen from owning and trading mutual funds, closed-end funds, and exchange-traded-products–hint, the trend is down; and
  • Check conflicts of interest (too many to list) among your advisors, investments owned, products sold, trade execution & allocation, and actual services rendered versus those promised before you signed the dotted-line

Previously, I suggested that the FOMC invest in a classic econometric tool (a family game of Monopoly) to simulate what happens when you dramatically change the rules of the game and then attempt to “normalize” back–not pretty:


I welcome your comments. 

Michael embodies client-stewardship in all his work and happens to be a passionate expert in securities analysis, asset allocation, economic analysis, and wealth management solutions.

Email: & Twitter: @MichaelHakerem

Photo Courtesy of U.S. Federal Reserve: Eccles Building 1937
Photo Courtesy of IMF Staff Photograph/Stephen Jaffe: Dr. Janet Yellen

The S&P 500 index is proprietary to and is calculated, distributed and marketed by S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC), its affiliates and/or its licensors and has been licensed for use. S&P® and S&P 500®, among other famous marks, are registered trademarks of Standard & Poor’s Financial Services LLC, and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. © 2014 S&P Dow Jones Indices LLC, its affiliates and/or its licensors. All rights reserved.

One Blessed Encounter with a NYC Squeegee Man

Squeegee Man & Car
It cannot be, but this man resembles one who treated me honorably more than two decades ago in NYC and inspired me to share this piece. The New York Post declared, “Squeegee men are back terrorizing NYC streets.” I, too, recall the quickening of my pulse, checking the door locks, and looking back and forth between the ever approaching men spraying car windshields and the traffic light that just will not turn GREEN! While many of these men are rightly termed notorious and infamous for intimidating behavior, I can attest that even the targeted squeegee men are capable of a generous spirit.

It was the summer of 1990, and this west side story began as the night sky quickly darkened and the breeze accelerated, cooling the air and prompting an ominous swirl of clouds. My heartbeat accelerated and my pace quickened as I passed through Hell’s Kitchen on my way to Pier 76 in Manhattan. Empty handed and nervous, every shadow seemed to reach out. Suddenly and despite my lack of a vehicle, an aged and rugged street window washer approached me for spare change. Within seconds of my shaken response, the generous man handed this young college student two quarters for phone calls, pointed me in the right direction, and wished me many blessings.

As it is written, “The one who had much did not have too much,
and the one who had little did not have too little.”

Despite my education, family, and resources, prior to that moment of receiving, I was destitute. By contrast, a man who struggled every day to find a meal, prior to that moment of giving, saw me as an opportunity to add money to his own pocket. Nearly 25 years later, I faithfully believe that wealth can never define a man’s true character. Still, this investment professional finds great personal purpose in enabling families and institutions to relieve three primary wealth burdens: Is their financial advisor trustworthy and rich in integrity? Can they comfortably sleep at night with a fully transparent and understandable portfolio of assets? Are these assets coordinated in order to meet their unique objectives? Wow! Those fifty-cents helped to shape a lifetime career for me.

(Read to the end to access bonus websites for empowerment)

Millions of Americans will soon celebrate a 65th birthday at a
rate of approximately 8,000 per day. The most pressing financial concern of these current or future retirees: Will they outlive their money? This great generation is facing more than just pen to paper analysis on their own spending, saving, budgeting, and views of risk. They must consider the challenge to agree on a financial plan that may include support for children and elderly parents. Extremely low interest-rates and looming entitlement and pension deficits threaten incomes while the costs of living, educating, and staying healthy are escalating. Although making assumptions about the future is complicated, greater threats reside in dark and unpleasant clouds elsewhere. This pending storm troubles me greatly, and I feel compelled to share my two cents.

It is painful to write this; however, when it comes to your financial matters, do not completely trust anyone and verify everything you read, see, or hear. This advice pertains to every corner of Wall Street and Main Street where wolves often lurk. It also reins true to be careful of every magazine cover, news report, website, government statistic, and yes, even your well-intentioned friends and family. No, a Ponzi-schemer or high-frequency trader does not lurk beyond every corner ready to separate you from your hard-earned savings. Instead, quality information, fair dealing, and truly customized guidance are difficult to discern and consistently secure. You probably spent 40 years or more building your nest egg, so spend more than 40 minutes protecting it. Your loved-ones’ futures depends on it!

“What is the chief end of man? To get rich. In what way?
Dishonestly if we can; honestly if we must.”
— Mark Twain-1871

Too often, the motivations of the financial services industry, not unlike most industries, is unbalanced in favor of business goals versus client advocacy. For example, merger headlines frequently highlight the need for more distribution of product to more customers. How often do you read, “We executed this merger to ensure our success in providing outstanding advice, personal service, and the very best strategies on behalf of our cherished clients.” I am curious, did your Financial Advisor reveal all the reasons they left one major firm for another? It is possible they received as much as a seven-figure incentive to move while all you received was the inconvenience of new paperwork, passwords, and quarterly statements. Are you paying high fees for standardized portfolio models or index funds while your Financial Advisor’s golf handicap gets lower? The Securities and Exchange Commission has targeted so-called “reverse churning” where investors are placed in accounts that pay a fixed fee but generate little or no activity or services to justify that fee.

It upsets me to read so many stories of improper behavior that are sometimes criminal and every so often just morally wrong. It will take some work on your part to look past clever marketing, impressive technology, and the veil of fiduciary standards claims to find those professionals who will truly be your family’s trusted financial advocate. Face-to-face interviews and introductions from your other trusted advisors, such as tax and legal consultants, will move you in the right direction; unfortunately, this is not enough. Family members must gain a sufficient understanding of financial services and capital markets in order to be savvy consumers of advisory services. I encourage you to take your time and ask tough and pointed questions. The best Advisors will listen, proceed at your desired pace, and encourage detailed inquiries.

Getting fleeced by an auto repair shop or swindled by some other domestic service
is bad enough. The mistrust of mainstream finance has actually increased
fraudulent pitches across smaller communities with an estimated negative impact
measured in multiples of tens of billions of dollars.

It is rare that a gang of unruly villains dressed in business suits is the only powerful threat to retirement success and financial peace of mind. Look no further than the trustworthy person you see in the mirror. Studies show that eligible plan participants do not save enough, and they make unnecessary asset allocation mistakes. Many investors do not heed the simple yet sound advice of saving more and spending less. Human nature gets in the way too, as we are often our own worst enemy when greed, fear, and other behavioral mistakes blur our vision: An abrupt and emotional change to well-reasoned financial plans lowers your odds of retirement success. Some people say it takes money to make money, look no further than the sad bankruptcy statistics for professional athletes and lottery winners. As is true concerning your physical health, you are your own best advocate when it comes to your financial well-being. My advice is for you to stay comfortably engaged with the processes and critical inputs necessary to create and adjust your family’s unique financial plan and investments–DO NOT delegate 100% responsibility and authority.

The National Endowment for Financial Education cites research estimating
that 70 percent of people who suddenly receive a large sum of money
will lose it within a few years.

It has been more than two decades since my journey through Hell’s Kitchen. I remember as if it were yesterday when a man with so little, who struggled to survive the streets of New York City, helped me not only at that moment in Manhattan, but more importantly, often reminds me that no amount of wealth can define our character. I, too, recall the chilling of my heart, checking a friend’s portfolio and fee schedule, and looking back and forth between the faces of the iWolf & Sheepnnocent couple and the ever approaching wolves on their street. We all have an opportunity to be generous stewards of our moral fiber, and I believe it is a mistake to measure our success in financial terms. Yet, issues of money always top the worry list for families. New Stock Market highs and IPO media blitzes may cause two problems: disguise bad advisor behavior and promote investors’ vulnerability to chase the promises of riches. Despite signs of economic recovery and exciting prospects for growth, the global population faces great uncertainty, financial imbalances, and challenges.

Dedicate time to the below checklist, and you will find more trust in your own ability to make sound financial decisions, be better suited to select trusted advisors, sleep more soundly, and improve the odds of your asset’s ability to meet your unique objectives!

Action Checklist:

Read The Millionaire Next Door to explore the impacts of spending and saving (New York: Simon & Schuster, 1996)

I know this will be overwhelming; however, please visit the below websites to explore basic and advanced investing topics:
CFA Institute
Employee Benefit Research Institute
National Endowment for Financial Education
American Institute of CPAs
Council for Economic Education
Investopedia (great for quick definitions of financial terms and jargon)
Research individual brokers, firms ,and investment advisers at the U.S. Securities and Exchange Commission (SEC) website under the “Education” heading

Squeegee Man Photo by Rich Docherty:  Wolf & Sheep Illustration: The Economist, 2012;
Clouds Over Manhattan Photo: Andrew Dallos


I welcome your comments.

About Michael Hakerem, CFA:

Michael embodies client-stewardship in all his work and happens to be a passionate expert in securities analysis, asset allocation, economic analysis, and wealth management solutions.

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