Tinkering Can Be Perilous
Tinkering Can Be Perilous
For many investors, the temptation to make adjustments to their portfolios can be overwhelming. Whether it is selling underperformers or buying winners, often the investor would have been better off simply staying the course. An apocryphal story from Fidelity Investments suggested that the clients with the best portfolio returns were those who had died, leaving them unable to make any changes at all. Similarly, recent analysis by JP Morgan Asset Management, which compares the returns of nearly a dozen investment strategies over the last 20 years, supports the idea that action for the sake of action is often wrong. Surprisingly, the average investor has underperformed every strategy (stocks, bonds, real estate, balanced, etc.) and barely outpaced cash. This underperformance results from the tendency of many investors to “tinker” with their accounts at the wrong time and for the wrong reasons. In our view, this clearly illustrates the pitfalls of not following a disciplined investment strategy. At First Fiduciary, we will not stray from the process that has helped our clients meet their financial goals over the past 45 years.
Articles We Liked:
Sweatpants Forever
An interesting look at how covid-19 has likely permanently impaired the fashion industry as we have come to know it.
Life Found on Venus
The news that there might be life on Venus should have made bigger waves than it did; but in 2020, there are plenty of other stories closer to home that are worthy of headlines.
Shoe Problems
Are your shoes doing more harm to your feet than good? That is the conclusion drawn by a Harvard evolutionary biologist. Shoes may make walking more comfortable, but they also weaken the foot, leading to painful problems down the road.
Honeywell CEO Book Review
The former CEO of Honeywell* has written a helpful guide for managers, Winning Now, Winning Later. Cote manages to draw on the success he had managing the industrial conglomerate for 15 years, offering tips that should be applicable to companies of all sizes.
Money in the Banksy
Masterworks, founded in 2017, is a start-up that expedites the sales of fractional interests in luxury goods. Owning an entire thoroughbred racehorse might be out of most people’s budgets, but through Masterworks, small investors can own a tiny percentage. The “democratization” of luxury is an interesting trend…but one that seems to gain in popularity during bubbles in other asset classes.
Sustainability = Profitability?
Struggling farmer Adam Chappell went in search of a way to make his family farm more profitable. Turning his back on conventional agriculture practices like the heavy use of fertilizer, herbicide, and insecticide, Chappell began experimenting with non-GMO seeds and alternative crops. The results have been better than he could have ever dreamed, and more farmers are taking notice.
Books We Read:
Death's End
by Cixin Liu
The Three Body Problem trilogy unfortunately went out with a whimper. A long slog of a book that spanned a few centuries, Liu should have left a few hundred pages in the middle on the cutting room floor. That said, the ending was shocking and left me thinking about it days and weeks later. Throughout the series, the author’s ability to explain advanced scientific theories and themes succinctly was particularly commendable, and it sparked an interest to read more high-concept fiction. – AG
Born Standing Up: A Comic's Life
by Steve Martin
“Perseverance is a great substitute for talent,” writes Steve Martin in his autobiography, which became a running theme of his early career. At his peak, Steve Martin was the biggest stand-up comedian on the planet, filling stadiums night after night. This book barely touches on that era of his life. Instead, it spends the majority of the time on how he got to that point and the many struggles he encountered along the way. Starting with his dysfunctional family life and his first job at Disneyland, Martin colorfully details the countless gigs that molded him into a comedian-magician-musician who ultimately became a global sensation. – AG
Restaurant Review:
Kinship (1015 7th St NW, Washington, DC 20001, 202.737.7700) is a must-visit restaurant at the pinnacle of Washington’s impressive culinary scene. Awarded a Michelin star, Kinship features contemporary American cuisine in a simple, but beautifully designed environment. The nondescript exterior caused us to double check the address before entering. The tables are well spaced and the professionalism of the staff made us comfortable about dining indoors. The cocktail menu is creative and features alluring drinks with novel ingredients. Most noteworthy, however, are the “zero-proof” drinks. The smooth Garden Party contains grapefruit, rosemary and ginger beer while L’Orangerie combines orange, lavender, vanilla and lemon. The Temperance Cup features an amazing find, Seedlip Garden 108, a distilled non-alcoholic blend of vegetable juices and hay. Maine lobster French toast highlights the appetizers and is unforgettable. Pan-roasted sunchokes also stand out for their glamorous presentation and delicate flavor. Among the entrees we enjoyed were an olive oil poached halibut and a perfectly prepared duck breast. Our meals were prepared to technical perfection in both presentation and taste. The desserts are equally inspiring. The chocolate soufflé cake and passion fruit ice cream sandwich are beautiful enough to tempt the most disciplined diner. When in the DC area, don’t miss a chance to enjoy dining perfection at Kinship. – BH
More Than a Trusted Investment Advisor
We recently helped a 70-year old retiree analyze options for an annuity she had held in her IRA for the past ten years. After considering her specific set of circumstances, we recommended that she cash in the annuity and invest the proceeds in a balanced account in order to satisfy her desire for near-term income and long-term growth.
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*Honeywell is owned by the authors and in FFIC-managed portfolios.
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