HighTower Podcast: Collective Wisdom

Jimmy Hausberg, managing partner at The Hausberg Group in Beverly Hills, Calif., says that people staying safe at home during coronavirus but watching the market plunge and the economy grind to a halt are wondering if they're seeing the start of the next Great Depression, and they need to be working with their financial counselors to address concerns, stay calm and to develop a tactical plan that protects their short-term interests while also looking at the long-term potential for a rebound and the investment vehicles and sectors that will lead a comeback.

Long-time HighTower money manager Andy Morse of Morse, Towey and White Group in New York acknowledges that the market's response around the coronavirus pandemic is unlike anything he's seen in his long career, but he notes that it resembles past events enough for him to know that calm and patience and adhering to strategies pursued before real trouble started will pay off in the end. He notes that the market's big gains in 2019 triggered the purchase of hedges and fixed-income that have already softened the blow, and that time will leave investors ultimately talking about the future recovery as much as the current downturn.

Adam Thurgood, managing director and partner at HighTower Advisors Las Vegas, says that investors shouldn't be shaken from diversification and other measures just because it looks like it's not working when the market has a terrible day. Even gold moved down big in the market's huge drop on March 9, he notes, but precious metals -- as well as high-quality corporate bonds and other safe havens and diversifiers -- did their job and held up well over the market's entire 20 percent drop from a high on February 12 through the March plunge. You're not defending against a bad day, Thurgood noted, but against bad conditions long-term.

Roger Shaffer, managing partner at Shaffer Wealth Management in Alpharetta, Ga., says that the financial-planning process doesn't change during times of market strife, and notes that investors and their advisers must focus on process and their ultimate individual goals in times of uncertainty. By focusing on personal needs and where they are in their own lives -- rather than falling into the news cycle and reacting to what the market is doing -- Shaffer says individuals can more easily ride out and profit from market turbulence.

Matthias Kuhlmey, chief development officer at highTower Advisors, returns to Collective Wisdom after a lengthy absence to give his take on worldwide investing, noting that he believes interest rates will be lower for longer because the global economy can't digest high rates now or in the foreseeable future. With the economy facing deflationary pressure, Kuhlmey said investors must find compelling market valuations and balance it with the personal investment policies and philosophies that push forward in spite of slowing economic forces.

Matt Harris, head of the outsourced chief investment officer division at HighTower Advisors, said the market's is showing technical signs that mild trouble lays ahead, noting that the recent strength of the Standard and Poor's 500 index compared to its moving average -- where the benchmark is 11.5 percent above the average, which has occurred less than two percent of trading days over the last decade -- generally results in a two to five percent decline in two weeks to three months from when it first occurs.

Jim Ewing of Ewing/Cona Wealth Management in Marlton, N.J., says that the long current market rally appears to be overbought, which isn't necessarily a reason to expect a protracted downturn, but it should inspire investors to be more cautious. To that end, Ewing notes that many investor portfolios have grown fabulously over the last few years, gaining in size but moving away from their underlying financial plan. He suggests that investors wanting to respond to current market conditions look at rebalancing to see if it is both necessary and more likely to give them a comfortable portfolio for riding out the market's upcoming volatility.

Jimmy Hausberg, managing partner at The Hausberg Group in Beverly Hills, Calif., said that headlines like the coronavirus outbreak or even news of the presidential cycle shouldn't be ignored, but he noted that investors should use those events as a chance to review their portfolio rather than trying to capture short-term profits in ways that can derail long-term strategy. Hausberg's approach is defensive, more focused on avoiding the mistake rather than trying to enhance profits around news events.

Jake Falcon of Falcon Wealth Advisors discusses how investors should pay attention to the news, but should not be buying or selling the hot names that are ancillary to the headlines, for example companies that could profit from coronavirus, issues affected by political tensions, and even trendy newsworthy industries like cannabis and marijuana. Instead, Falcon urged opportunistic investors to use news events that create dips and downturns as buying opportunities for more mainstream securities.

Collective Wisdom revisits a recent discussion with Adam Thurgood of HighTower Las Vegas about how inventors can balance current risks with their own risk tolerance, noting that the proper ways to play defense right now could well involve investing internationally and adding gold and holding additional cash in the portfolio, rather than stretching for yield through fixed-income and dividend plays.

Cory Bittner, chief operating officer at Falcon Wealth Advisors in Mission Woods, Kansas, says that while investors may read and hear annual forecasts that they want to take to heart, they shouldn't do too much to take those predictions into their portfolio. Forecasts help advisors and customers frame discussions about a portfolio and expectations, Bittner said, but if a client is so dedicated to an outside outlook that they're forcing big changes to previous investment decisions or going against the financial planner's core reasoning, they're exposing weakness in the advisory relationship.

Given increased tensions between the United States and Iran and other current events, this week's episode revisits a recent chat with David Bahnsen of the Bahnsen Group, discussing the junction of politics, current events and personal finance. Bahnsen notes that investors need take a dispassionate view of how current events can and will impact the market, while also maintaining a personal balance because ignoring politics altogether while investing can be costly in its own ways

At the end of the year, we revisit the start of the year, when three veteran financial advisers -- Richard Flahive of HighTower Westchester, Laurie Kamhi of LCK Wealth and Jake Falcon of Falcon Wealth Advisors -- discussed the questions they most wanted to hear from clients and prospective clients about their finances and financial goals. Kamhi's question involved expectations that both the adviser and client have for the relationship and the year ahead, Flahive suggested discussing the fiduciary relationship and Falcon hopes clients will ask about what they and their planners can and can't control when it comes to the markets, returns and more.

Matt Harris, head of investment strategy at HighTower Wealth Management, said that both the current 'feel' of the market plus some technical signals -- where risk-on sectors are outperforming safe-harbor peers, for example -- are making it look like the market has more room to grow in 2020, though he did suggest there may be heightened volatility as a result both of election-year-politics and 'concentrated trades,' where the major market interest has been in specific areas that may now trade with more vigor and action.

Jeremiah Reithmiller of Sarian Strategic Partners and Steve Tresnan of Tresnan Ferst Wealth Advisors cite data showing that fixed income is no longer the same kind of buffer for equities in troubled times. But in this re-broadcast of a past Collective Wisdom episode, the two advisors come up with different solutions for balancing rate risk with the need to provide an equity hedge. While Reithmiller uses a traditional barbell-style strategy to give his clients balance, Tresnan looks more to private credit in order to diversify and achieve better balance.  

David Molnar of HighTower San Diego says that investors and advisory clients need to evaluate results based on progress toward goals rather than being focused primarily on investment returns. Focus solely on results, Molnar says, and you will miss out on the true planning and control benefits that come from planning, and that lead clients with advisers ultimately to have superior performance to do-it-yourself investors. 

Adam Thurgood of HighTower Las Vegas said that investors trying to match their risk tolerance to the market right now should not play defense by stretching for yield in today's low-interest-rate environment, noting that he does not suggest loading up on dividend-paying domestic stocks but instead wants to achieve greater diversification and return potential through international investments and some gold, offset by some additional cash holdings waiting for times to be pro-active in the future.

A year ago, the stock market shocked investors by cratering just after Thanksgiving, and while no one is calling for a similar event this year, Jimmy Hausberg of The Hausberg View in Beverly Hills, Calif., talks about the importance of keeping that decline in mind, investing as if the next downturn is on the way, even if the current landscape is dominated more by rumor and innuendo than by disturbing facts. Hausberg notes that reacting to headlines and news historically has been a bad way to invest, but that investors must be prepared to ride out the market swings caused by such non-events.

Jake Falcon of Falcon Wealth Advisors in Mission Woods, Kansas and the Upticks podcast discusses the effects of modern media on investors, how it often leads to ideas that disrupt a portfolio rather than enhance it. Falcon talks about the messages individual investors should be listening for -- where it feels like they are having a mini-meeting with an adviser rather than pursuing hot stock tips or the next big thing -- and how to balance the media and the message.

Andy Morse, senior partner at Morse, Towey and White Group in New York, said that investors can't believe that politics doesn't impact the market because earnings and policy are two factors that go a long way to driving the market. Morse said that interest rates have settled down -- even if future cuts and hikes are uncertain -- but that trade concerns continue to make it tough on manufacturers and farmers. While he expects trade issues to be resolved, Morse made it clear that he does not expect the economy and market to be overly robust going forward.

With the trade and tariff battles between the United States and China showing no signs of abating and threatening to continue well into 2020 and the election year, Collective Wisdom today revisits a recent chat between Joseph Klein of HighTower's investment strategy team and Jake Falcon of Falcon Wealth Advisors in which they talk about how trade concerns translate to what they are doing -- and not doing -- and planning for client portfolios now and until political tensions are resolved.

David Bahnsen of The Bahnsen Group discusses the intersection of politics and personal finance, noting that investors may not want to talk politics but they need to factor current events and the political climate into their investment choices. Bahnsen notes that  investors can create portfolio problems when they choose to invest based more on their political leanings than on a dispassionate view of how current events can and will impact the market, but he noted that trying to ignore politics altogether while investing can be costly in its own ways.

Mike PeQueen of HighTower Las Vegas said that investors are facing a melt-up situation, with the stock market drifting upwards despite bad-news headlines. He noted that whenever the market is showing mixed signals, the bad ones get more media coverage, so he pointed out the market's tailwinds of strong jobs reports, low unemployment, record-low mortgage rates and reasonable gas prices as reasons why there is not likely to be a recession 'now or in 2020.' He did acknowledge that the negative indicators are worth heeding, but noted that investors must 'muddle through' the noise to achieve the market's potential.

Matt Harris, head of investment strategy at HighTower Wealth Management, says that there is a variance between how people are feeling due to economic, market and political headlines and how they are acting, which shows up in the price actions measured by technical analysis. Harris says that indicators like breadth, the spread of companies rising and falling and more are not typical of a market top or indicating a price drop over the next few months.

Richard Flahive, private wealth advisor at Hightower Westchester, and Ray Baraldi, senior financial advisor with Sarian Strategic Partners discuss the role that real assets plan in a portfolio during volatile market times in this rebroadcast of a discussion from last summer.

Richard Sapertein, chief investment officer, Treasury Partners -- a HighTower advisory firm -- gave Collective Wisdom host Chuck Jaffe a surprising take on how bond investors should act in the face of negative interest rates on international treasury securities and falling interest rates at home. Saperstein said that as the negative global rate environment 'marches onto U.S. shores,' investors should actually extend maturities on the fixed-income instruments they are using, even though that could put them on the short end of the inverted yield curve. Saperstein explains that and more in this bonus Collective Wisdom podcast.  

In this re-broadcast of a discussion from earlier this year, Michael Sheldon of RDM Financial Group and Peter Lang from Hightower Westchester discuss the ways that investors can celebrate and make use of the differences between active and passive investments and the role that both can play in building a diversified portfolio.

Jake Falcon of Falcon Wealth Advisors and Joseph Klein, senior investment analyst with the investment strategy team at HighTower Advisors, both expect to see sector rotation from the market during the fourth quarter of 2019, as investors continue to see a bond market and stock market that are sending different messages, with the bond market forecasting a recession while the stock market hints that the long rally can continue. Both Falcon and Klein expect that the rally can continue, but said they anticipate changes as to the sectors and investment types that are driving future increases.

Following up last week;s discussion of the trade war and tariff concerns between the United States and China, Joseph Klein, senior investment analyst with HighTower's investment strategy team, and Jake Falcon of Falcon Wealth Advisors, discussed their big concerns for the market, noting that the nation's evolving health-care coverage concerns lead the way. Klein said the downside risk in the biotech, pharmaceutical and managed-care industries has him leaning towards health-care technology and equipment stocks in a situation that could extend through next year's election. Falcon, also concerned with health care, noted that he has concern over technology stocks entangled in privacy issues, but also noted that he's turning a common concern -- reduced income from falling interest rates -- into a positive by diversifying and changing income portfolios now.

Jake Falcon of Falcon Wealth Advisors and Joseph Klein of HighTower's investment strategy team discussed how the ongoing trade war with China is impacting the way they position client portfolios, with both noting that there is the potential for the tariff battle to rage on well into the election year if China is determined to keep it going. Klein noted that investors have been 'head-faked' by news and tweets about the situation and need to wait until they see a real deal on the horizon to expect the market to move past it.

Ask advisers about 'alternative investments' and you will get a wide range of answers. Alternatives can be a simple way to say you are investing in something beyond stocks, bonds and cash, or it can mean you are buying into complex assets designed to provide returns no matter the market conditions. In this rebroadcast of a recent Collective Wisdom segment, Steve Tresnan of Tresnan Ferst Wealth Advisors, and Jeremiah Riethmiller of Sarian Strategic Partners discuss their personal -- and wildly different -- approaches to using alternatives in a portfolio.

Richard Flahive of HigTower Westchester and Ray Baraldi of Sarian Strategic Partners stressed in Collective Wwsdom that figuring out how to make savings last a lifetime takes more than picking the right retirement date. It requires appropriate timing on when to take Social Security, proper calculations of your future needs andyour budget and more.

Ray Baraldi of Sarian Strategic partners and Richard Flahive of HighTower Westchester discussed the 'accumulation phase' of every saver/investor's lifetime and how gathering, gaining and controlling assets is better and easier with a defined process, rather than some vague make-as-much-as-you-can idea. Baraldi noted that planning helps to eliminate stress and uncertainty that makes investors uncomfortable; Flahive added that planning -- especially for items that most investors overlook, such as taxes -- helps to maximize accumulation opportunities.    

Richard Flahive of HighTower Westchester and Ray Baraldi of Sarian Strategic Partners discuss the merits of real assets -- precious metals, real estate, commodities and more -- in a portfolio and how they use real assets as a diversifier, both based on current market conditions and on long-term portfolio goals.

Jimmy Hausberg of The Hausberg Group and Michael Policar of HighTower Bellevue discussed the non-traditional ways they use to diversify portfolios and protect clients from volatile markets, with Hausberg discussing newfangled defined-outcome funds while Policar said he favors what he described as 'core private real estate' as a way of creatively allocating assets and reducing market risk.

Michael Policar of HighTower Bellevue and Jimmy Hausberg of The Hausberg Group answer an audience question and walk a nervous investor back from the edge of making a massive asset-allocation change out of fear of the next market downturn, noting instead that other factors -- from income to mortgage status to the actual need to tap investments to longevity -- should drive allocation decisions. The duo noted that the timing is right for reviewing allocation changes -- with a calm market near record highs -- but they warned against letting fear have major influence over long-term plans.

Jimmy Hausberg from The Hausberg Group and Michael Policar of HighTower Bellevue discuss the importance of properly assessing risk tolerance and setting appropriate asset allocations, noting that current market conditions -- with the market near highs but not seeing gut-wrenching volatility -- are ideal for making calm, rational decisions. Hausberg noted that few investors he has seen in his career have a good handle on risk and how they really deal with it, while Policar noted that investors who only consider their risk tolerance after a big market move tend to make mistakes when the market hits the bottom of a move or a cycle.

Lauren Pearson of HT Somerset and Jim Ewing of Ewing/Cona Wealth Management acknowledge that financial-advisory technology is changing rapidly, and that while technologies can give clients more and better control of their money, too much tech can create paralysis-by-analysis and other problems. In this rebroadcast of a podcast from January, the two veteran advisers discuss how they integrate fin-tech with their clients.

Cory Bittner of Falcon Wealth Advisors and Peter Lang of HighTower Westchester discussed how financial planning helps clients cross the divide from working and accumulating funds to retirement and living off of investments, and how critical choices made in the early stages of retirement can have life-long consequences, creating a need to careful planning rather than seat-of-the-pants reactions to momentary market conditions.  

Peter Lang of HighTower Westchester and Cory Bittner of Falcon Wealth Advisors discuss the many ways they get into the lives, dreams, hopes and plans of clients in order to make sure that financial planning encompasses more than just the portfolio. In this week's Collective Wisdom discussion, both talked about the tools they use to help clients prepare for and deal with 'life events' as part of their advisory process.

Cory Bittner of Falcon Wealth Advisors said that while value investing has undeniably lagged growth and momentum investing through the long bear market, the style itself still has merit, and he warned that history shows that declaring any investment style as dead tends to happen shortly before the market ultimately rewards that style again. Likewise, Peter Lang of HighTower Westchester, noted that what passes for value investing these days has changed, and that investors can benefit from diversifying to own deep- and relative value stocks, especially as changing markets constantly put the value label on new and different names.

A discussion of the proper use of alternatives and the decision to give up liquidity late in the market cycle highlighted the vastly different strategies investors can follow when it comes to bringing non-correlated assets into the fold. Jeremiah Riethmiller of Sarian Strategic Partners suggested keeping 10 to 15 percent of a portfolio in alternatives, with about half of that money in issues that remain liquid, the more traditional managed-futures, market-neutral or absolute-return strategies. Steve Tresnan of Tresnan Ferst Wealth Advisors, by comparison, was willing to put up to half of assets into alternatives, and was willing to go much more illiquid, using private-equity investments along with the traditional alternatives to build a more endowment-like all-weather portfolio.

Steve Tresnan of Tresnan Ferst Wealth Advisors and Jeremiah Riethmiller of Sarian Strategic Partners both cited data showing that fixed income is no longer the same kind of buffer for equities in troubled times, but came up with different solutions for balancing rate risk with the need to provide an equity hedge. Tresnan said he is looking more to private credit to diversify and achieve better balance, while Riethmiller is sticking with a more traditional barbell-style approach to give his clients balance.

Jeremiah Riethmiller of Sarian Strategic Partners and Steven Tresnan of Tresnan Ferst Wealth Advisors are watching the same economic news and reading the same news headlines, but are reacting slightly differently to what they see now. Riethmiller sees a market and economy that is slowing but not stopping or falling off a cliff any time soon, while Tresnan sees good news -- like record-low unemployment rates -- as creating some tougher times for businesses. Both see positives in the economic numbers, but say the market will still have to push hard to avoid the growing obstacles beneath the surface of the data.

The buzz about alternative investments had faded over the last few years as performance in securities outside the stock/bond/real estate space had been lackluster, but the return of volatility to the market late last year coupled with its late-year swoon had financial advisers reconsidering the role of alternatives in portfolios. In this rebroadcast of an episode from late 2018, Jake Falcon of Falcon Wealth Advisors in Mission Woods, Kansas, and Ed Terwiliger of the Nulman Group in Providence, R.I., examine the appropriate role for alternatives to play in a portfolio now.

When it comes to finances and love, true romance comes in the boring conversations about budgeting, savings, beneficiaries, estate planning and more. In this conversation -- originally broadcast in 2018 -- Matt Harris of HighTower Global Investment Solutions, Peter Lang of HighTower Westchester, and Jake Falcon of Falcon Wealth Advisors discuss the efforts couples need to make to cover the important financial issues they face and to share information that will help the function better both individually and as a unit.

In a discussion of key investment themes for the second half of 2019, Jake Falcon of Falcon Wealth Advisors in Mission Woods, Kansas, noted that he'll be looking for companies that can generate real earnings growth at a time when overall economic growth is slowing, while David Hartness of IronGate Partners in Wilmington, N.C., said he will be focused on balancing market growth with risk and guarding against complacency in any possible slowdown later in 2019.

In this week's Collective Wisdom podcast, David Hartness of IronGate Partners in Wilmington, N.C., and Josh Falcon of Falcon Wealth Advisors in Mission Woods, Kansas, discussed how overseeing client portfolios means working with the customer's other counselors, from lawyers to accountants to insurance agents and more, and that coordinating those efforts involves communication, cooperation and, occasionally, the ability to stand up and be strong in your belief on what is the best course of action for the individual investor.

In Collective Wsidom this week, Jake Falcon of Falcon Wealth Advisors and David Hartness of IronGate Partners talk about how their firms work with clients, and the various resources that clients can look forward to, because while individuals think they are hiring an adviser, their experience can be a lot different -- and much more -- than simple sit-downs with the face of the firm. Understanding what you will get before signing on is key to being happy with the advisers you ultimately work with

Peter Lang of HighTower Westchester and Ruth Gretz of RTD Financial discussed the long-term, non-financial concerns that investors need to consider and both noted that timing Social Security and considering increasing lifespans are among several crucial decisions that need to be made properly in order to protect a lifetime's worth of saving and planning.

Ruth Gretz of RTD Financial in Westport, Conn., and Peter Lang of HighTower Westchester (NY) discussed properly maintaining beneficiary designations on this week's Collective Wisdom podcast, noting that it's a small, forgettable task that has big consequences when not kept current after life events and other changes. They discussed the gamut of documents and situations where a small mistake -- not updating a form -- can have enormous consequences that can effect families for generations.