Getting Back to Better


This article originally appeared in the Denver Post, June 21st, 2020.

As a dad, I’ve always embraced my inner Tim “The Tool Man” Taylor when it comes to Father’s Day. Whether it’s a new drill, pressure washer, or some other home improvement gadget, I’ve always enjoyed gifts that keep me building. In a way, I enjoy the metaphorical message behind it too: tools give me the ability to enhance the environment that keeps my family safe, warm, and protected. It’s what I’ve always strived to do as a father.  

My goal as a parent has always been to build a better future for my kids, and to give them opportunities that I didn’t have. Whether that’s financial, educational, personal, or whatever it may be. It’s an essential part of my “why.” I think deep down there’s a part of us that wants our kids to be better than we ever were. To me, that’s progress and hope. It’s an innate and immeasurable desire – to want our tomorrow to be better than our today.  

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Improving Investor Behavior: Fear is a Very Powerful Emotion


This article originally appeared in the Denver Post, May 17th, 2020.

After almost 45 years as a financial advisor, one realizes that there’s truth behind the phrase, “Reality is made up of circles, but we see straight lines.” Market cycles, crises, and investor behavior are all echoes of things we’ve seen in the past and will likely experience again in the future. No doubt the COVID-19 crisis impacts us all, and while it may feel like something completely new, it really isn’t. This is especially true when focusing on finance.

You’ve likely heard the comparisons of this crisis to the Spanish Flu of 1918. While there are many parallels, this event was long ago. With so many innovations and improvements in the meantime, it’s hard to wrap your head around their similarities and differences. The “what-ifs” prevail. What if they had had better hospitals? What if they had better testing, doctors, technology?

So, for comparison’s sake, let’s consider more recent events. My career includes four large fear-driven market “crises” that come to mind: Black Monday in 1987, Y2K in 1999, the World Trade Center attacks in 2001, and the recession in 2008. Though these events are all unique, they were all the same in many ways.

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Improving Investor Behavior: An Unintentional Sabbatical

Has it been a month already? In some ways, this feels like the longest 30 days many have ever experienced. For others, it seems to have gone by way too quickly. When much of the world is committed to staying home and avoiding COVID-19, time becomes relative. In many ways, it feels like a sabbatical, albeit an unintentional and unwelcome one.

Sabbaticals are offered as a chance to skip the routine and learn something new. An extended opportunity to challenge your perspectives and grow your skill set. With that in mind, what are you learning during your sabbatical? How will you grow from the experience? What will be different in your life afterward? New? Improved? The Same?

 We’re learning a lot right now, on both micro and macro levels. Lessons about the economy, markets, human nature, and teamwork are appearing daily. If we fail to notice and learn from these, it will be a huge missed opportunity.

In that spirit, here are a couple of things I’ve learned over the past month.

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Highlights of the CARES Act

Late last week the senate passed and the President signed the CARES stimulus package designed to, among many things, curb the financial turmoil created in the wake of the Coronavirus. This $2.2 trillion, 800+ page legislation offers meaningful help to investors, business owners, and those directly impacted by layoffs or the virus.

Using several sources we’ve compiled a list of some of these benefits that our clients might find most helpful. If one stands out to you, please reach out to us and we’ll be happy to walk through how it might apply to your situation. We’d also recommend connecting with your CPA regarding tax-related items.

Here are some of the highlights:

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Fire Drills and Why We Do Them

Every meeting we have with clients includes a line item on the agenda: Fire Drill. 

What would you do if the market dropped significantly tomorrow? What would that look like for you? For years now it has felt like an unnecessary discussion point, even with the occasional pull back due due to a tweet or tariff threat. Yet we keep it on the agenda because, in the words of Mike Tyson, “Everyone has a plan until they’re punched in the face.”

Two months ago, no one could have anticipated a worldwide pandemic resulting in a virtual halt of economic activity. Yet it happened. But isn’t that the purpose of fire drills? To know what the plan is if-and-when something disastrous happens?

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Timeless Truths & The Cycle of Market Emotions

Just 30 days ago, on Feb. 18th, markets were at all-time highs. Today, fear grips the market and recession is at the top of every financial pundits’ mind.  Benjamin Graham, said to be one of the best investors of all time, and a mentor to Warren Buffett reminds us:

Control what you can control: yourself, your emotions and your response (or behavior) to those emotions.

Through many of the articles I’ve read this week, one stood out to me. Here’s an excerpt, written by the Collaborative Fund:

The majority of your lifetime investment returns will be determined by decisions that take place during a small minority of the time.

Most of those periods come when everything you thought you knew about investing is thrown out the window.

How you invested from 1990 to 1998 wasn’t all that important. The choices you made from 1999 to 2001 shaped the rest of your investing career.

What you did from September 2008 to March 2009 likely had more impact on your lifetime investment returns than what happened cumulatively from 2002 to 2007, or from 2009 to 2017.

The pilot’s famous answer when asked about his job — “Hours of boredom punctuated by brief moments of terror” — applies perfectly to investing. The brief moments of terror are the rise and fall of markets like this.

Ask yourself: Am I a speculator or an investor? What is the difference?

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Improving Investor Behavior – Investing in Panic

A lot can change in 30 days. One short month ago, markets were knocking on the door of all-time highs, businesses were doing well, and Joe Biden was behind several candidates in the Democratic primaries.

Oh, how things change quickly. Very quickly.

Even when compared to historic drops, the decline of about 18 percent that we’ve seen in the broad market indices took only 13 days. The start of the Great Depression took 28 days to reach that level. In 1998, it took 31 days. The Great Recession didn’t even make it in the top five fastest drops.

I want to focus on two questions in this column: First, to what can this speed of this market drop be attributed; and second, is it warranted?

All dramas need a villain. This time it’s the Coronavirus. The rapid spread of the virus led to ghost towns (Wuhan), which in turn led to locking down an entire country (Italy). This is a serious virus, and any amount of death or damage caused by it is too much. I don’t intend to trivialize it, nor the efforts of healthcare workers around the world fighting on the front lines.

But as investors, we have a mandate to try and understand where to draw the line between reasonable concern and emotion-driven panic. Too much emotion leads to panic selling, which in turn creates opportunities for those willing to buy when others are fearful.

I’d argue that we are well over the line of reasonable concern and deep into an emotional panic. During the 2008-2009 recession, corporate profits declined 46 percent, according to Brian Wesbury, Chief Economist at First Trust. Comparably, the current declines point to an estimated profit decline of 50-80 percent. Effectively, the market is saying that Coronavirus will have a greater effect on American businesses than the Great Recession, a time in which the entire monetary system seemed to be teetering on edge.

Consider these five critical elements of an economy: The Federal Reserve, taxes, regulatory policy, trade policy, and spending. What’s the status of these? The Federal Reserve just announced yet another cut to rates last week, making them even more accommodative than they already were. We just passed significant tax reform two years ago. Burdensome regulatory policies have been reduced. Trade policies (while challenging) have shown progress. All that to say that our economy is a pretty good place for business right now, and far better than it was during 2008-2009.

If the economy is strong and unemployment continues to be at an all-time low of 3.5 percent, why is there such a panic? I think part of it is the unknown. We’ve seen movies and TV shows designed to scare us with viruses. A disease that demolishes populations, creates zombies and generally wreaks havoc. We’re seeing something we don’t fully understand, and governments around the globe are reacting. Social media posts are encouraging everyone to start wearing gas masks and stockpiling toilet paper. Media, both traditional and social, perpetuates panic with continuous updates from a variety of “experts.” Couple that with the financial industries’ recent trend of eliminating trading costs and arming investors with phone apps, and you start to understand how easy it is for investors to panic sell with virtually no barriers.

On February 3, some 12,000 Robin Hood (a “free trading” app) investors bought Tesla shares for the first time. It reminds me of Bitcoin in 2017 and the dot.com bubble of 1999. Greed is a powerful emotion. When prices decline, human nature extrapolates that values will go to zero. Fear overtakes common sense, rising to panic.

Going one level deeper, consider a popular investment these days called exchange-traded funds (ETFs). These derivatives are designed to mirror the performance of a basket of underlying assets, usually stocks. For example, this allows an investor to buy a share of an ETF that reflects the performance of the entire S&P 500. Investors like them as they provide a low-cost method of diversification.

But behind the scenes, there’s a lot of trading going on to keep the derivative in line with the underlying asset. This gets complicated quickly, but suffice it to say that I think ETFs may be contributing to the dramatic swings we’ve seen lately. Liquidity, options, and other derivatives drive big moves, and these funds utilize tons of them. Computer-driven buying and selling mean it can all happen in a moment’s notice. I think the very financial instrument that was designed to give investors an edge has increased volatility and speculation.

Even when armed with logic and facts, our emotions can still get the better of us. There’s no doubt that headlines are scary, and the market drops are meaningful. But logic has to win over emotion. Think about this: during the Apollo 13 mission of 1970, the moon landing turned bad when two oxygen tanks and two fuel tanks failed. According to Jack Swigert, the chief pilot on the mission, had those variables been thrown at them during the simulator drills, they would have responded, “Come on, you are not realistic.” No one could have seen this coming, but it happened. One month ago this whole scenario seemed impossible, but here we are.

It’s during times like these we are reminded of the importance of good investor, and indeed financial, behavior. Get back to basics: Do you have a financial plan? Do you have savings? Do you have a project account set aside for emergencies? Are you spending less than you make? Are your investments diversified?

If all these boxes are checked, good investors will look at moments like these as opportunities. Asset prices have declined, allowing us to purchase some of the best companies in the world at discounts unimaginable only 30 days ago.


A Note to Clients on Virus Volatility

As I’m sure many of you are aware, this past week has been a difficult one for investors. The broad market indices have seen swift and dramatic drops, leaving many scared, confused, and upset.

Make no mistake; it is moments like these that define all of us as investors. Fear is an emotion, and one that can quickly snowball into an all-out panic. We’ve often said your behavior as an investor will ultimately have a far greater effect on your outcome than when or how you are invested. This is one such moment.

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Improving Investor Behavior – Campbell’s Soup & Rising Income


This article originally appeared in the Denver Post, February 16th, 2020.

Cold winter weather means it is soup season here in Colorado, and none feel more familiar than Campbell’s Tomato Soup. Just the name conjures a familiar aroma, a warmth in your chest.

Campbell’s feels familiar because it’s been an American icon for more than a century. Introduced in 1898, Campbell’s tomato soup is an excellent benchmark for understanding the impact of the persistent enemy of all investors: inflation. For more than 100 years, the size hasn’t changed, but the price sure has. About 45 years ago, in 1974, the soup cost about $0.12 per can. Today, it retails for about $0.87 per can. That points to an average inflation rate of 4.3 percent.

Forty-five years may sound like a long time, but that’s about the length of a typical retirement. Read more


PRESS RELEASE: Steve Booren Recognized in Forbes as a 2020 Top Wealth Advisor in Colorado

DENVER, Colo. — January 30, 2020 – Steve Booren of Prosperion Financial Advisors was recently ranked No. 26 in Colorado in the 2020 Best-In-State Wealth Advisors list published by Forbes.

According to Forbes, the annual list spotlights the nation’s top-performing advisors, evaluated based on a methodology developed by SHOOK Research. Advisors are also evaluated based on personal interviews, industry experience and revenue trends, among other criteria.

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