Wednesday, April 30, 2014

What's up with Don Draper?

I know this is a blog about investing, planning, and trying to live simply, but from time to time I will go off the rails—hopefully never completely off the rails but just lifted slightly off the tracks. I am a big fan of Mad Men. Everyone knows about how great the design and look of the show is, how they have captured advertising and life of ad men in the ’50s, ’60s, and now ’70s. But I am a big Don Draper fan, and the beginning of season 6 has me asking a lot questions.

Don Draper, played by Jon Hamm, has been nothing short of awesome. Draper’s character is a dark, complicated man who drinks, smokes, and womanizes better than anyone I’ve ever met. Looking into the soul of Draper is like looking into the abyss. It is a black hole filled with a wide range of emotions. What exactly is going on in that mind of his? He is a very talented and successful creative, but he, too, went off the rails at the end of last season. During his pitch to Hershey’s, the venerable chocolate bar company, Draper unravels a disturbing story about his early life, growing up in an orphanage and stealing money from a prostitute’s john, then using that money to buy candy bars. Hershey’s hightailed it out of the meeting, and Draper was put on a leave of absence from his own firm. 



Fast-forward to this season: it is the 1970s, and the opening scene has a cleaned-up Draper arriving in Los Angeles to meet his wife, who has moved out there to further her acting career. Draper is cool as he kisses his beautiful wife, gets into her convertible, and they drive off. That is the last of the cool, brilliant, and diabolical Draper we have seen this year. The new Draper has his tail between his legs—making up with his daughter, going to movies during the day, and not responding to interludes with beautiful woman. 

In last week’s episode Draper realizes it is time to get back to work. He receives an offer from a competing agency and uses it as leverage to get his job back with his old firm. After a lot of debate among his former partners, they agree to allow Draper back but with a list of binding terms and having to report to the new head of creative, who is as bland as white toast and mayo.

This all leads to my question: why? Why is Draper acting like a puppy with his ears pulled back? What has happened to the brash Don Draper we all love? Why would he agree to these belittling terms? I guess we could assume he is setting the table for his comeback or a chance at revenge. Or is this Don 2.0, a family man, a corporate man? Please say it ain’t so. What do you think?

For those of you who don’t care or don’t watch Mad Men, we’ll get back to finances next post.


Friday, April 25, 2014

A Plan for Planning

The other day I was sitting with a client going through his goals for retirement. Thankfully, most of what he and his wife want and need should be covered. After the meeting we got into a deeper conversation about the benefits of planning.

Although his plan on paper looks good, life is funny how it throws curves at your best made plans. I shared with him one of my favorite quotes from Mike Tyson, the boxer and now actor, “everyone has a plan until they get punched in the face.”

Sorry to be skeptical, but part of my job as an advisor is to under promise and over deliver. Thankfully, my client is happy, even if some of the assumptions are off, he has a map and having that map is comforting. We all would agree that having a map when you are lost is better than having nothing at all.

Along these lines I wanted to share a recent article from Carl Richards, a financial planner, who writes for the New York Times. Richard writes about the Zen of planning and living in the moment. While this may sound new agey, the premise is right; living in the moment entails planning, or at least peeking into the future and examining what our values may be going forward.

Planning is a great exercise in envisioning our course but it’s not written in stone.

Thursday, April 17, 2014

Investing in the moment

Markets around the world have certainly been volatile of late. Market pundits will always have a reason to exploit short-term fluctuations, whether they are from the unrest in Ukraine, reactions to Fed chairman Janet Yellen’s comments, or high-frequency trading. We live in a world where news is sliced, diced, and recycled in nanoseconds. As investors, you have to look beyond the daily, monthly, and even yearly gyrations and focus on your goals and what the time frame for them is.

While living in the moment may be a positive way to live, investing for the moment is not. I’m attaching a piece from Morningstar that discusses coping with near-term fluctuations.

Morningstar Investment Services

Short-Term Focus: Coping with Near-Term Fluctuations

Probability of losing money in the market 1994–2013








Source: Stocks are represented by the Standard & Poors 500®, which is an unmanaged group of securities and considered to be representative of the stock
market in general. An investment cannot be made directly in an index. Returns and principal invested in stocks are not guaranteed. Probability of loss is calculated as the number of negative periods divided by the number of total periods using the specified frequency of data.

Instant access to real-time quotes and media reports can make it difficult for investors with a long-term investment horizon
to stay focused on their goals. In reality, these daily market movements may not be as extreme as they seem. As investors
look longer term, their perception often changes. Short-term market fluctuations can be quite volatile, and the probability of
realizing a loss within  any given day is high. However, the likelihood of realizing a loss has historically decreased over
longer holding periods.

The image illustrates that while the probability of losing money on a daily basis over the past 20 years was 46%, the
probability dropped dramatically when analyzing an annual time period—20%.  Periodic review of an investment portfolio is necessary, but investors shouldnt let short-term swings affect their view of the future.

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