Global coordinated growth seems to be back and stock markets are up. This is in line with what we have expected. As discussed in last quarter’s letter, we expected the majority of returns to come from international and emerging markets and that has definitely been the case. Of course we will see volatility in the markets, so we must be prepared. With all of this growth, interest rate normalization is at the forefront of our minds.
As the current bull market continues, more investors are starting to predict the day it all comes to an end. Instead of trying to predict a market top, according to Mark Hulbert (of Marketwatch), investors should view market tops as a “gradual process in which equity exposure is slowly and deliberately reduced over time.” Predicting tops is not only unproductive, but it is also impossible to be accurate. Trying to pinpoint the precise date of a market top cannot be done because markets all reach their tops at different times.
Because we didn’t have enough to worry about already, earlier this week we learned of a massive data breach at Equifax, one of the nation’s three major credit reporting agencies. Hackers stole names, Social Security numbers, birth dates, addresses, and in some instances driver’s license numbers and credit card numbers.In light of this unprecedented breach, we want to provide you with the necessary information to lessen your risk of being a victim of identity theft:
Venture capital has become an important driver of the economy and investment returns for many institutions. Even mutual funds have joined the party with the likes of Fidelity and T. Rowe Price having acquired the shares of pre-IPO companies in the private market within their mutual fund products. Now we are finding that these highly valued, venture backed companies may be as much as 50% overvalued.
Often times in this business, firms and individuals spend an incredible amount of time and resources trying to sell and market to prospects. And completely overlooked is the actual research: the foundation of a thesis and the guideposts to build a portfolio. This isn’t to say that nobody does the heavy lifting in this industry, but more and more often, we see "really smart people” with “complex portfolios” who, at the end of the day, are simply passive investing. In other words, they are tracking an index. Whether it booms or busts. Ignoring the future prospects.
I recently read the autobiography of Sam Zell, an extremely successful real estate investor known for his uncanny ability to buy low and sell high. In the book he tells the story of his father’s foresight and decisive action that preserved his family in Pre-world-war-2 Poland. As a successful grain merchant, his father kept apprised of political and social happenings in Europe through his extensive travel and interest in short wave radio. While some people looked at this “hobby” of international politics as a complete waste of time, it gave his father a unique outlook on the world. With this perspective, coupled with decisive action, the Zell’s were able to start a successful new life in the United States.
In this special guest interview, Donn Dimond, co-founder of The KOR Physical Therapy in Portland, OR describes his journey and key learning moments in going from startup to a sophisticated medical practice, to successful exit and why evolving and growing the business in intervals is vital to sustaining a viable business model.
Often maligned and little understood, the Millennial demographic entering the workforce represents the largest cohort since the Baby Boom generation. And for most Baby Boomer business owners and leaders, they don't get it. In this episode, Rick and Nick discuss some of the nuances of this cohort and how to leverage the contribution they can bring to the business, and what leaders need to accept and even let go of in many cases, to be successful with this generation.
Getting your company off the ground to a sustainable place should be the hardest part of starting a company, right? That’s what many think, and yet the growing pains and problems that occur within larger organizations go unaddressed until it’s too late. Rick was a recent guest on XeniumHR's Human Resources for Small Business podcast, hosted by Brandon Laws and they discuss the common issues companies experience when they grow from 10 employees to 20 employees and beyond, and how they can lay the groundwork for a successful organization – no matter its ultimate size.
If you are like most people, you have 75% or more of your stock market investment in US equities. The truth is, it’s not just the lay investors that are subject to this “home country bias.” Most financial advisors and money managers are equally prone to this bias. With the US accounting for only around 50% of global output and at historically high prices, a diversified portfolio should consist of a much greater allocation to foreign stocks.
I’ve long been of the opinion that emotional intelligence (EQ) is one of the hardest skills to acquire. But with it, it’s a heck of a lot easier to admit what you don’t know. And ask for help. And seek out mentors, advisors, and people smarter than yourself. To share your dream with others and then trust they can help you figure out how to execute it. Phil Knight’s EQ is on full display throughout the founding of Nike and in his candor retelling the story some 50+ years later.
A business' intrinsic value fluctuates very little. Yet, the price that the ever-moody "Mr. Market" will pay at any given time can fluctuate dramatically based on outside economic and political forces.
At Pilot Wealth, we feel no need to explain it, no need to tell a story. Instead, we recognize volatility happens and we welcome it.