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I think my favorite mother-in-law joke has to be Rick Pitino’s when he told his team he wanted them to play “mother-in-law defense – constant harassment.” That’s the first and last quote of Pitino to appear in my blog and, probably, the last mother-in-law joke. The fact is, my mother-in-law is a wonderful, caring person who also happens to make beautiful quilts - the most recent as a Christmas gift to my daughter. 

Now, examined square by square one sees that each is unique in their own color and pattern and is beautiful on their own. Viewed as a whole, however, the quilt becomes magical with an array of color and patterns that is sure to bring a smile to even the grumpiest of coaches. In short, the whole is greater than the sum of the individual parts.

While I have always admired her quilts, it wasn’t until recently, after reading the blog post of a friend and fellow Certified Financial Planner™ professional, Eric Clark from Charlotte, North Carolina, that I saw how closely Judy’s quilts resemble the sometimes-called Quilt Chart, pictured below. Consisting of blocks of color, each representing a different investment asset class, it looks like a beautiful quilt. Examining each block individually one sees how each asset class – Large Cap stocks, Small Cap stocks, Fixed Income, etc. – performed in every year since 2004.

The stock market is sometimes described as a yo-yo on an up escalator: it goes up and down a lot but eventually reaches the next level. History bears that out. Check out these amazing facts about the stock market:

If you’re like me and buy books for gifts, then you may also look for recommendations. In that spirit, below are the books I read during the year – nope, not a single finance or investing book - with a one-sentence description and a thumbs-up or thumbs-down review.

I love Christmas but I find Christmas-time stressful. Let’s face it, the world just seems to spin faster during December. We’re already busy with work and family and then we add a slew of fun things like holiday parties, office open houses, gift buying and decorating to our schedule. Who has time for all this fun?!

Yes, I know, what could possibly be more fun to read than tax tips. Rest assured, this is quick and understandable – and could save you money.

Max out your retirement account contributions

A few years ago I accompanied a very accomplished UK physician to testify before a legislative committee in Frankfort. At the meeting, a state senator asked a convoluted – and mostly off-topic – question. After several minutes of awkward back and forth, the physician finally said, “I’m sorry, sir, but I don’t know the answer to your question. I’m just a lowly surgeon.” Lesson: Even very smart people don’t automatically know everything.

Intuitively, we realize we don’t know everything. So, sometimes I think our minds assume there is a system in place to protect us when we don’t have expertise in a specialty. Think about flying: We don’t know if the plane is mechanically safe or the weather is appropriate to take off. But, the airline and air traffic control do have the information and expertise to make those decisions for us. There is a system in place to keep us safe.

Maybe that’s why some people assume our employers select the right mix of investments within our 403(b)s and 401(k)s that are appropriate for our unique circumstances. If we don’t have the knowledge and expertise, there must be a system that takes care of us, right? Right? No, not really.

When I was a freshman in High School I wanted to invest in the stock market. I, of course, had no idea what that really meant or how to do it, but it seemed interesting to me. My parents, who at the time equated the stock market to something akin to three-card monte in Times Square, told me I could invest when I had saved $1,000 from my paper route. If I had invested my hard-earned $1k into the “stock market” as measured by the S&P 500 then (1979), it would have grown to $77,217 as of the end of this October. And, get this, if I had added just $500 each year to that initial $1,000 investment, the total would now be $400,446. Holy compound earnings, Batman!

Last week I wrote about the excuses people sometimes have for not preparing for their financial futures. This week, let’s talk about the opposite – what inspires people to overcome the excuses and engage a professional to guide them toward their financial goals? No matter the trigger, people are looking to simplify their lives and for peace of mind. So, it is important to find a financial planning professional who has worked with people in circumstances similar to yours. Below are some of the issues our clients have faced that prompted them to seek our help:

Despite the fact David Letterman now looks like Santa Claus and sounds like Oprah, his Top 10 lists live on. Here are my Top 9 reasons – I don’t believe in extra if it’s not needed - why people procrastinate about planning for their financial futures. I’m sometimes asked who our strongest competition is and I always answer, “People’s own inertia.” Meaning, it can take energy to start anything new. But, it can be more nuanced than that. Here’s what I’ve seen:

It’s been said that investing in the stock market is like riding up an escalator while playing with a yo-yo: just because the yo-yo goes up and down doesn’t prevent it from eventually reaching the next level. But, what if we could get to that next level a little faster by shortening the yo-yo’s string?

F. Scott Fitzgerald said, “The rich…they are different from you and me.” Recent research published by the National Bureau of Economic Research (NBER) proves he was right, albeit not in the way he believed. Their study found that investors with larger holdings earned relatively lower peak returns, but they earned them consistently, with less up and down. In other words, they take less risk and know that winning in down markets is more important than winning in up markets. Let’s take a look at why this is the case and some guidance on how to accomplish it: