Good to Know

Good to Know Laws enacted by those ladies and gentlemen we send to Congress are seldom a panacea for all. The 2022 Inflation Reduction Act certainly fits that mold, as will be evident as we summarize the winners and losers under the Act. But first, here’s a quick editorial note—as with all of our articles,…

Good to Know A decorated marine combat veteran and friend of the author once compared being under enemy attack to corrections in the stock market. His advice was to “stay in your foxhole when the bombs are falling and make no sudden moves.”  While many would completely agree with this Marine’s timeless advice, others would…

Good to Know Think about this situation. You have a client who has a significant amount of their wealth in a concentrated position. This might be because they are an executive with a company and have received equity-based compensation over the years or simply have accumulated the position through an inheritance or other means. Regardless…

Good to Know Unmanaged concentrated position risk can be a ticking time bomb in your client’s portfolio. For example, one of the nation’s oldest (founded in 1879) and most respected banks was trading at $38/share in 2007. It had a long-term, loyal stockholder following, many of whom with holdings — accumulated over generations — valued…

Good to Know Loss aversion, taken to its extreme, can wreck long-term retirement planning and investment success. We’ll unpack what drives “irrational” loss aversion, identify a dangerous decision error, and illustrate a potential guardrail to remain on track with our long-term investing plans. “Irrational” Loss Aversion We’re a logical, evolved species, right? Before you answer,…

Good to Know Imagine an individual investor passionate about a specific stock (it happens more often than you might think). Assume the investor’s portfolio is worth $2 million, but $1 million is in just one stock. How could that $1,000,000 concentration hemorrhage into only $12,000 in just over one year? Sadly, that’s precisely what happened…

Good to Know Purpose The goal of a swap fund is to reduce concentration of wealth risk through a unique approach to diversification. We will review this intriguing strategy’s operation, legal structure, tax implications, pros, and cons. Operation A swap fund (after this referred to as “the fund”) is a pool of concentrated positions in…

Good to Know Forewarned is forearmed when studying for the CFP Board exam or choosing a CFP® Certification program. In its latest release of public discipline, CFP Board telegraphs its continued priority for enforcing ethical conduct. Recent disciplinary actions include public censures, suspensions, and revocations. Public Censures Public censures were issued for: Selling securities without…

Good to Know The question posed in this article’s title can be answered by applying the timeless wisdom of a Chinese general who died over 2,500 years ago. “If you know the enemy and know yourself, you need not fear the result of a hundred battles.” -Sun Szu, 544-496 BC While the CFP Board exam…

Good to Know This is the final article of our four-article series on investment risk for the CFP Board exam. Here’s a reminder of the risk concepts we’ve covered so far in the series: Part I: When to trust the “mean” return, Part II: Using standard deviation to manage investment risk, and Part III: Skewness—Do…