Letters to Our Clients
When I first set up our business I stopped by the Army Surplus Store and purchased a used typewriter. My second stop was at an office supply store where I bought some index cards, pencils, pens, tablets, typing paper, and a few sheets of carbon paper. Last, I stopped by the phone company to set up my communication system. It consisted of two lines and a rotary phone with a button to switch between lines.
Twenty years ago I entered my first multi-day motorcycle endurance competition. It began and ended in Columbus Ohio. I had entered this event without any previous knowledge of what it would take to ride a motorcycle for five days in a row averaging a little over 1,000 miles per day. Looking back, I should have sought some advice from a few experienced endurance riders. Instead I just jumped on my trusty Kawasaki Concours with a stack of AAA road maps and headed to Ohio.
“Economic laws cannot be depended upon if we disregard psychology, etc.”
Alma Volker scribbled the note, quoted above, in the margin of a 1911 economics textbook, Outlines of Economics, written by Vassar College Professor Herbert Elmer Mills. Later her son, Paul Volker, who has served six presidents over his long career in public service, shared his regret of never discussing economics with his Mom in his recent book Keeping At It.
Old Big Red sprung a leak a while back. Many of you are familiar with Big Red, but there are a few of you who might need an introduction. Big Red is my 18-year-old Chevy Silverado 2500 HD. I realize this may not be the type of vehicle driven by the majority of bankers, money managers, financial advisors, or brokers, but for me he is comfortable, and for the most part very reliable. Besides, I grew up in farm country and quickly learned the value of a pickup.
In today’s world, where politics take up the majority of news cycles and there is an ongoing war of words between the two major political parties, I decided for this letter to replace our often used phrase “conservative investor” with “cautious investor.” I believe this is a good description for the majority of affluent investors, those who have accumulated a larger sum of money through savings and investments over the years. For this majority, the preservation of wealth is a priority. However, these investors are also looking to increase their wealth. The primary method for meeting this dual desire is asset allocation.
The boring truth of financial analysis and portfolio management is that the majority of our days are spent visiting with clients, reading, reading, reading, and when required, making decisions. Years ago it would have included quite a bit of time on a calculator, but thanks to the low cost of computers and software, most of the number crunching can now be completed with the push of button.
Kendall J. Anderson, CFA