On Pointe – Wealth Management Edition
You can Follow a Recipe but You Still Need your Senses….
My wife can cook.
She’s the daughter of an Italian American. Her mother carried on the “homeland” traditions of cooking. These recipes had been passed down for generations and made from scratch.
For dietary reasons, our family has switched over to a gluten-free diet. This does add a big wrinkle when it comes to traditional ingredients.
The elimination of traditional flour as a main ingredient creates a whole new recipe. Especially to mimic the family favorites.
Oh, and I forgot to mention that as I’ve gotten older my waistline does not dig carbohydrates!
Replacing “flour” is not easy. Even with alternatives you need to know how they complement other ingredients. Now add temperatures and cooking times differences!
Yup, dinner-time meals are a bit different. Some may think they are more complicated than when I was growing up albeit in some ways a bit better.
Sounds like a lot of things in our lives. How many times do you catch yourself saying “Wow, it was a lot simpler when …?”
Maybe I’m showing my age.
If you’ve been reading On Pointe long enough, you know I’m going to start making correlations to investing. So, allow me to set the table.
What I like about how my girl prepares our meals is her ability to use all her senses when cooking.
I don’t have much of a sense of smell and I have a limited diversity of taste. My wife has an acute sense of smell, a very diverse palate, and understands the differences in the textures.
Me…. think meat and fire…. This does bring in other senses, but I’ll wait to discuss that in another On Pointe.
I’ve found over the years that gluten-free, low-carb cooking is not easy. Especially when every ingredient tends to alter the dish.
Often, it’s the chef’s senses that can help steer a dish in the right direction, even avoiding pitfalls. Add a little bit of this, a pinch of that….
It is the ability to bring in all these senses to discover what works best. Experimenting you may find some delicious results. And a few that can’t find their way to the disposal fast enough.
For me, investing is quite similar.
Our complications with investing? The great diversity of the markets for one. And the ability to invest in new and exciting asset classes that we did not have access to in our early years. Way back in the 1990s…
For example, I never thought to recommend an ETF representing the stock markets of India, Singapore, or South Korea.
In case you might not know, an ETF stands for Exchange Traded Fund. ETFs often track indexes, much like Dow Jones Industrial Average or the Standard and Poor’s 500 index. You guess it, there are ETFs for those as well. We find different uses for ETFs in our APC client portfolios.
Or recommend commodity ETFs that attempt to mimic the underlying commodity prices. We did invest in the companies that are in businesses surrounding commodities. But invest in instruments reflecting spot prices?
How about some of the new industries that have sprouted up over the years? Want to invest in Electric Vehicles? Yup, there is an ETF for that…. How about Cloud Computing? FinTech? Social Media? Or Cannabis? Or AI? You guessed it there are ETFs for those companies and many more.
Each of these investments carries unique risks and they are not for every investor. Some have possible volatility characteristics that may hamper a portfolio. If you are unfamiliar with how ETFs operate, you may want to contact a financial advisor like Alpha Pointe Capital.
To me, the ability to invest in so many different areas is like cooking with new and alternative ingredients. The excitement is about how these ingredients fit in the dish. Of course, if you don’t know what you’re doing and introduce a new ingredient to the wrong temperature, your dish might be a failure. Are you beginning to smell what I’m cooking?
Yet, bringing one’s senses to the cooking process may be able to identify errors. If you find them quick enough to make appropriate adjustments, you can “save” the dish.
Better yet, if the dish doesn’t work out as intended, a good chef will usually be able to assess how the dish went wrong. My wife has accumulated a mental database from her experiences to bring to any new dishes she attempts in the future. She always seems to adjust the recipe for potential success.
Here at APC, we have a set of indicators that we’ve been following for years (over 25 years for me) to help guide us with our investing. These indicators act as some of our “senses” which we apply to our “dishes” or “portfolios”.
Some of our indicators are simple, with others a bit more complicated. A few have had to be eliminated as they may not be in keeping with how markets operate these days. But having the recipe, the right tools, and of course the ability to rely on our “mental database” for how the markets react is our special sauce.
We like to call our special sauce “Invest in Strength.” The name comes from using relative strength concepts which our loyal On Pointe readers are coming to familiarize themselves with.
This is where experience matters when it comes to advising investors on how to structure their portfolios.
While years in the business are important, I think it is how you use that accumulated experience. Especially if you turn this ability into wisdom investors can use in the “here and now”. Combine some wisdom with new instruments and you might create something you never thought of before.
What does your advisor use to assess the markets? What “recipe” does he or she follow to help you along the way? Are you in a more generic portfolio of mutual funds like a plate of scrambled eggs?
Sure, scrambled eggs may meet some dietary guidelines. but you’re not likely going to impress folks with eggs. More importantly, you can’t survive on eggs alone.
Recently, we’ve been in contact with people who are clients of large wealth management firms. They are concerned with their portfolios. Some believe their portfolios don’t appear to be keeping pace. Others are concerned with being in generic portfolios. Some express that they may lack innovative investments that try to capture new industries or access to new asset classes.
Use your senses if things appear to be off… or enlist a chef to adjust the recipe and turn it into a masterpiece.
Feel free to Contact Us to see if we’re a good fit.
James S. Gibbons CPFA
Alpha Pointe Capital-Founder/Wealth Manager
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Registered Representative of Thurston Springer Financial and Investment Advisor Representative of Thurston Springer Advisors. Securities are offered through Thurston Springer Financial, Member FINRA, and SIPC. Advisory services are offered through Thurston Springer Advisors, an SEC Registered Investment Advisor. Alpha Pointe Capital is a DBA of Thurston Springer Financial and Thurston Springer Advisors.