How to Avoid Running an Illegal Casino in Your Home

College Admissions Counselor: “You don’t have enough money.” Father of incoming Freshman daughter, Alex: “It says right here we have $401,000. You missed it!” Mother of Alex: “Jackpot!” Counselor: “Uh, that says you have a 401k account.” Later at home Mother: “Alex thinks we can afford tuition and we can’t.  What are we going to do?” Father: “We’ve got to lie.  That’s what parents do.  Because otherwise the kids are going to realize that we don’t know what we’re doing!” These few exchanges give the basis for the plot of the soon to be… [read more]
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Rebuilding After Madoff

On Saturday, May 20th, HBO released its new film, The Wizard of Lies, which depicts the events leading up to and following the arrest of Bernie Madoff.  While it does a reasonable job explaining how Madoff ran the largest Ponzi scheme in history, its core storyline is about the type of person Madoff is and how he justified continually deceiving virtually everyone in his life.  It details the impact of his crimes on his investors, many of whom had no idea their investments were even associated with Madoff, and the impact to his… [read more]
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Where Does It Go?

“I just can’t figure out where the money goes.  We should be doing well with our salaries, but we never seem to have anything left over at the end of the month.” My client’s frustration is shared by many other people I’ve worked with over the years, regardless of their age.   Knowing the amount we spend, and who and what we spend it on, is one of the key questions to unlocking financial security.  But it’s also the one we have the most trouble with, for many different reasons. One couple I worked with years… [read more]
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How Thin is Your Ice?

When something goes wrong, how do you respond? Last Thursday morning I read that opening line in Seth Godin’s blog, and I had to laugh. A few minutes earlier I’d received an email from the associate pastor of my church, letting me know the food and preparations we’d made to serve the congregation between services on Easter Sunday had to be cancelled due to flood damage.  Calls had to be made, food orders cancelled, and apologies delivered to the folks who had already prepared food and rearranged their schedules to help. It was by no… [read more]
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Investment Shock Absorbers

(from Dimensional Fund Advisors’ Outside the Flags blog by Jim Parker dated February 2017. Jim is a Vice President with DFA, leading the communications and marketing team in the firms’ Australian office.)    Ever ridden in a car with worn-out shock absorbers? Every bump is jarring, every corner stomach-churning, and every red light an excuse to assume the brace position. Owning an undiversified portfolio can trigger similar reactions. In a motor vehicle, the suspension system keeps the tires in contact with the road and provides a smooth ride for passengers by offsetting the forces of gravity,… [read more]
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The More You Know

They say sometimes ignorance is bliss.  That nagging pain, a drip in the basement, stepping on the scale to see how the new fitness plan is going, anything worthy of our attention that goes ignored due to our reluctance to know the truth. This can especially be true with our finances.  It is not uncommon for us to see resistance from potential new clients, existing clients or even those just making their first call to the office.  In those cases, when we are able to dig a little deeper into the reluctance, it’s almost always… [read more]
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React, then Reflect

On June 23, the United Kingdom voted in favor of what has become famously known as Brexit, a referendum instructing the British government to exit the European Union.  This vote surprised most every poll and odds maker who ventured a guess on the outcome. That day, the Dow Jones Industrial Average* (the Dow) closed before election results were known at 18,011.07. The next day the Dow lost more than 610 points in response to the surprise outcome.  As concern spread over the weekend, the average continued another 260 points lower on Monday, closing at… [read more]
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In Case of Emergency

I spent last weekend at the Greenbrier Resort, the location of my annual CEO Roundtable retreat this year.  A historic landmark nestled in the Allegheny Mountain foothills near White Sulphur Springs, West Virginia, it offers horseback riding, skeet shooting and other activities.  But the most unusual offering is a tour of the Super Walmart-size bunker that was built underneath it during the Cold War, to house Congress in the event of a nuclear attack. Code named Project Greek Island, it was completed in 1961 under the guise of adding a convention exhibition hall and… [read more]
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We are Not Homo Economicus

I want to introduce you to a species of human you’ve probably never heard of before: Homo economicus. If there was a perfect investor, Homo economicus would be it. He knows everything there is to know about every company, country and market. He is motivated by self-interest and isn’t swayed by the needs of others. Best of all he always acts rationally. Choices are simple for Homo economicus. When faced with how best to achieve a goal, he would calculate the optimal path and follow it without deviation, hesitation or regret. The complete absence of… [read more]
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Short Attention Span Theater

This week, New York Times columnist and political analyst on numerous TV networks, David Brooks wrote an op-ed piece on Why America’s Leadership Fails.  In it, he makes the case that the gridlock that persists in Washington is caused, at least in part by politicians arriving in Washington called to serve, only to be overcome by the short term calculations necessary for self-preservation.  Whether surviving the crisis du jour or getting in the right sound bite for the next election cycle, the incentive to fight for any long term calling or strategic goal is… [read more]
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