Blog Archive 2017-05-20T19:56:37+00:00

Blog Archive

The Great Pause


 The Great Pause

 April 20, 2020

Pause symbol isolated on white background

The last few weeks ushered in a major slowdown in every part of life from our work, school and social activities for almost everyone on the entire planet.  The best phrase used to describe this period has been “The Great Pause” because it has truly forced us to shutdown many of our daily routines.  Whether it is running errands, coffee with friends, dinner out with your spouse or happy hour with co-workers, all non-essential events have been suspended indefinitely across a good portion of the globe.  If you enjoy being with people like I do, not being able to see my work family, clients and friends can be a difficult time.  This realization hit me when I missed my March coaching class in Chicago.  Over the last fourteen years, I spend one day each quarter at Strategic Coach surrounded by growth-minded entrepreneurs and spend the day focusing not only on business growth but also personal and professional development.  This quarterly pause has been life changing for me and has allowed me to gain perspective that I wouldn’t have otherwise.  One of the best exercises we complete during my time there is called Positive Focus.  It is a look back over progress we have made over the last 90 days.  Keeping with tradition, I decided to complete the exercise this week.

At first, the only thing I could think of was the Coronavirus.  It was difficult to go back to January and February because the recent news and stress clouded out any progress made during Q1 and honestly, it felt like a lifetime ago.  Eventually, the good started to cascade in from my oldest son’s wedding, a few trips I made early in the year to my middle son accepting a job upon graduation and many more.  By reorienting your mind, it’s amazing how your thoughts and perspective changes.

A second thought occurred to me as I completed the Positive Focus exercise.  Although there are many things I do miss about life prior to the lock down, there are just as many I don’t miss.  You might laugh but I don’t miss going to the gas station, picking up dry cleaning, my commute and the busyness that comes with a hurried […]

2019: A Look Back


2019:  A Look Back

January 2020

2020 New year

The end of 2019 marked my first eight months at Waterway Wealth Management, LLC.  As the portfolio manager, my job is to work with the Waterway team to provide thought leadership and ensure client portfolios are managed to their appropriate allocation of stocks, bonds, and other asset types.  From a personal perspective, I am honored to work with people – both colleagues and clients – who truly try to make a difference in the world.

I have spent the last year being introduced and getting to know many of you.  Behind the scenes, I have been working closely with the team to clarify our investment philosophy, which emphasizes a long-term, goals-based approach, on-boarding new portfolio tools and analytics to help us monitor and rebalance risk exposures to the appropriate targeted level of stocks and bonds, and talking to fund managers  to get a deeper understanding of how their strategies fit within our portfolios and work under different economic environments.  I also represented Waterway   earlier this year at a Journal of Investment Management conference of academics and practitioners at MIT, talking about the challenges related to retirement investors.  This connected us to some of the premier thought leaders doing research in areas that are particularly relevant to our clients going forward.

Although 2019 was a good year for financial assets like stocks and bonds, this time last year it wasn’t so clear that markets over the following 12 months would have posted some of their best performance in recent memory.   The Federal Reserve was on course to continue raising interest rates while growth was off its peak.  Market volatility was increasing, stocks were dropping and interest rates on bonds remained stubbornly low.  Trade issues with the rest of the world also spooked the markets.

The combination of interest rate moves, slowing growth and high market volatility pointed to an economy that was entering the latter phases of the economic cycle.  Even as late as this summer, part of the yield curve, which measures what investors are willing to lend the US government over different time frames, became “inverted”. This meant that investors were getting paid less to lend over 10 years than at 1 year or less.  Headlines often emphasized the “profits recession” or looming “downturn”.

The year […]

Back to School


Back to School

August 20, 2019

It is that time of year again where summer is winding down and the start of a new school year is underway.  Parents are busy filling backpacks with school supplies, buying school clothes and getting families back in a routine. The same readjustment is also happening in the financial markets due to the Federal Reserve, China Trade issues and overall soft economic data around the globe influencing a reset in valuations.  For most investors, uncertainty and fear arises but for patient investors this volatility can be managed if we put the current facts into perspective. Here are a few economic data points:

Interest Rates 

Today the Fed Funds rate is between 2-2.25%.  The Fed just lowered rates by .25% and is anticipated to lower them again in September.  Economic growth is positive and expectations for 2019 GDP growth are trending around the 2% level.  Although it is lower than last year, 2% is a healthy growth rate for the largest economy in the world especially considering parts of Europe are in a recession and China is slowing.  According to the Conference Board, which tracks leading indicators of growth, this is down from almost 3% in 2018; however, consumers continue to feel confident.  Core inflation remains near the Fed’s target of 2% leaving only a small amount of room to continue lowering interest rates.  Ideally, the economy continues to expand, and earnings growth accelerates but it would probably take a resolution of the trade war with China to have a significant acceleration in the economy.  The most probable scenario in the short term is slower growth but not a recession with the Fed remaining supportive of continued low interest rates.


The biggest threat to the Fed’s low rate environment will be pressure coming from wage growth. The overall 3.6% unemployment rate is a record low and looking deeper into the numbers, almost every category of employment is surpassing what some economist defined as full employment.   From a business cycle perspective, the late stages see a softening of employment and buildup of inventories, but the consumer remains strong.  It is likely the US remains in the late innings of this business cycle if companies can find enough new workers without pushing wages significantly higher. According to data from the Atlanta Federal Reserve Bank, the weighted three month average wage growth numbers are north […]

Waterway 2.0


Waterway 2.0 (2)

Waterway 2.0

 May 13, 2019

This past month we had the “pleasure” of moving our offices from the 4th floor to the 5th floor in our building.  Although the distance of the move was short, the process was painful in terms of relocating every bit of technology, furniture, equipment and files.  Luckily, we had two new team members to help and afterwards there were several positive takeaways.

We occupied the previous space for almost 7 years but over that time, we accumulated plenty of stuff.  The biggest surprise was the amount of old electronic equipment like keyboards, monitors, printers and computers.  We have tried to recycle regularly but it is amazing how fast it accumulates if you don’t keep up with it.  The clarity after purging so much physical stuff reminded me of financial documents and data that many of our client’s store.  Old financial statements, reports, loan documents and bank statements can and should be discarded after a period.  The IRS has a general rule of 3 years for all returns and supporting documents.  Fidelity and Schwab archive all your monthly statements and tax documents so there is no need to fill up a filing cabinet at home.

During my desk clean out, there were several files of notes, pictures and cards I’ve accumulated over the last 25 years (yes, I started at age 16).  Surprisingly, there weren’t articles about the market drops of 1998, 2000-2002 or 2008 but instead I found thank you notes from clients or team members.  We have the privilege of walking beside clients as they celebrate milestones and see them through some of the valleys in life.  Pausing for a few minutes and taking time to reflect provided an opportunity to realize how grateful we are to have that type of relationship with our clients.

The newness of freshly painted walls and new carpet creates an exciting time for the Waterway.  In 2012, we moved here with just three people (Robert, Yvonne and me) and now we have 8 team members in The Woodlands and 4 in Albuquerque.  Those early days were filled with a nervous excitement and plenty of late nights, but the support of great clients made it all worthwhile.  We have continued to focus on quality growth rather than quantity and today have the most talented line up of team […]

New Year’s Action


New Year’s Action

 January 2019

Another holiday season has now come and gone.  As we ring in the New Year, let’s move past good intentioned resolutions that rarely are kept and take action that will benefit you for years to come.   Here are a few ideas to jumpstart your 2019:

Plan for the Unplanned – A major life event such as a death or serious illness, marriage, divorce, job change, relocation, birth of a child, purchase of a new home – can dramatically impact your circumstances and those who are dependent on you. We all know how unpredictable life can be, so make a commitment to prepare and organize now.  Whether creating or updating a will, establishing a trust or designating a power of attorney, it is important to decide how your property and assets should be distributed and the people involved.  Beneficiary designations should be considered carefully, as well as others you have entrusted with responsibilities such as executing your will or becoming guardian of minor children.

Consolidate – Odds are that you have changed jobs several times during your career, and in turn end up owning several retirement accounts. With year-end statements arriving in early January from most financial institutions, it is a great time to review and possibly combine retirement accounts.  Assets from 401(K) plans are often eligible to be rolled over to other 401(K) plans or IRA’s without incurring any tax consequences or penalties, thus making it more convenient to manage your assets and possibly reduce costs for you.  While some financial institutions require paperwork to initiate this process, others make it as easy as placing a phone call!

Protect – In an age where we manage most of our lives digitally, identity theft and fraud are becoming increasingly more sophisticated.  By taking a few preventive measures, you can minimize the potential for fraudulent activity.   Be diligent in monitoring your accounts and statements, create strong passwords and security codes, frequently change them and notify companies promptly of any suspicious activity.  Many companies now also offer a higher-level security process through “Two-factor authentication” which requires users to prove their identity through a minimum of 2 levels of verification.

Save More – The IRS is making some welcome changes to contribution limits in retirement accounts in 2019.  Larger retirement contributions can mean lower tax bills – and […]

Year-End Tax Planning


Metal Wheel Concept

Year-End Tax Planning

December 2018

The holiday season is in full swing with parties, shopping, concerts and school programs but before you get fully swept away in the chaos, now is a good time to consider some last-minute tax planning so April of next year isn’t so painful.  Here are some ideas to consider with the 2018 Tax Cuts and Jobs Act (TCJA):

Bunching Deductions – The new standard deduction was doubled ($12,000 to $24,000 for married filing jointly), exemptions were removed and SALT (state and local taxes) deductions are capped at $10,000 for 2018. This means it might be advantageous to alternate between taking the standard deduction one year and “doubling up” charitable, medical and property tax deductions in the other year.

Capital Gains/Losses – Now is a good time to review your realized capital gains and losses. Most mutual funds will also have an estimate, so you can see if you have paid-in enough to cover your tax bill or if you should capture any additional gains and losses before the end of the year.

Qualified Charitable Distribution (QCD) – If you are over 70 ½ and taking your Required Minimum Distribution (RMD) you can send a contribution directly to a charity. This distribution is not taxed on your personal return and the amount applies toward your RMD.

Roth Conversions – For 2018, the re-characterization is no longer an option. This means you should attempt to be as accurate as possible with your conversion amount because you cannot undo a portion of it like 2017 and prior years allowed.

Establish a Donor Advised Fund (DAF) – If your income is high for 2018, you might consider funding a DAF to reduce your income tax bill. The advantage of this fund is you receive the deduction when the contribution is made and can distribute the proceeds at any time in the future or even spread it out over years to come.

Estimated Taxes – A quick look at year to date income tax withholdings and payments will give you confidence you have paid in enough or possibly confirm you should make an estimated payment for Q4 by January 15th of 2019. Penalties haven’t changed but it is always better to plan ahead so you know what […]

Money and Happiness


Money and Happiness

November 2018

In the spirit of Thanksgiving, I thought this month I would take a break from the details about the market, economy, GDP, etc., and instead focus on something completely different.  The old saying is “money can’t buy happiness,” but I believe having your financial affairs in order can provide you with confidence during some difficult periods in life.  Money itself isn’t going to make you happy but it can be a mechanism to allow you to do fun things with those you care about.  Let me explain.

A few months ago, I had back surgery after dealing with severe nerve pain for months.  It was so bad I couldn’t get comfortable standing, sitting or even lying down.  As the day of surgery approached, it made me realize how much I took for granted just being pain free.  There were several trips planned for the fall such as a Napa wine tour, fall weekend in the hill country and Christmas in the mountains.  The thought of having to cancel those was depressing and made my heart sink.  It was a sharp reminder of how valuable time is with my family and friends doing activities we enjoy with each other.

The week after surgery, while recovering at home, several close friends came to visit me, many driving up from Houston.  I knew their calendars were full of work and family things, but they chose to take time out of their day to be with me.  The physical presence of a friend brought me true happiness and joy.  We talked about fun times together in the past and those still to come.  It was truly uplifting and took my mind off the pain and recovery ahead of me.

Did money make me happy that day?  Absolutely not.  Did having a plan in place to protect those around me give me comfort before my surgery?  Absolutely.  The relationships and shared experiences truly are irreplaceable.  We can’t predict the future but we can prepare for it.  In the end, the happiest people I know have done a good job preparing for the future but more importantly, they have relationships around them and enjoy spending time together.

Happy Thanksgiving!

“Money and Happiness” was published in the November 2018 issue of Life on the Green magazine, a social publication for the residents surrounding The Woodlands, Country […]

Trick or Treat


Halloween black-2909_1280

Trick or Treat

October 31, 2018

October brings fall festivals, Halloween, and my personal favorite – trick or treating!

For financial professionals, it also ushers in the 4th quarter, providing a wealth of data and potential insight into the economy, corporate earnings and where the markets may be headed in 2019.  Will we be tricked into a false sense of security or possibly receive a treat for being patient investors?  Here are some key data points to keep an eye on as we move ahead:

  1. GDP/Unemployment – The first release of Q3 GDP was +3.5%. This follows a strong 2nd quarter increase of 4.2% and shows the growth of the economy has been strong for 2018.  With record low unemployment, the Federal Reserve will likely continue raising interest rates which has been a key driver of market volatility and downside over the past few weeks.
  2. Mid-Term Elections – The uncertainty will likely keep markets in limbo until November 6th.  Polls are forecasting the makeup of the Senate will probably not change, but in the House, there are key races that could shift the balance of power.  The markets prefer gridlock in Washington, so the outcome will probably mean business as usual.
  3. Federal Reserve – The last meeting of 2018 for the Fed will be mid-December. The markets have been factoring in a rate hike at this meeting, but it is likely dependent on GDP, inflation and wage data.  The Fed has been transparent thus far under Chairman Powell in their stance of monitoring the data, so this rate hike is subject to continued growth in the economy and positive forward-looking data.

When considering your own strategy, try not to hedge your bets on any one specific event, as you would need to be right on two fronts.  The first is to predict the event and the second is the impact it will have on your investments.  We advise our clients to rebalance, diversify, and reduce some of the riskier assets if need be.   However, this current drop in equity markets is likely to add another buying opportunity if you are a long-term investor.  Be patient, stay disciplined in your strategy and try not to get caught up in the emotional “crisis” of the day because the media will always create one if needed.   In the end, we all want to avoid […]

Downsizing-Smaller isn’t Necessarily Better


Downsizing-Smaller isn’t Necessarily Better

September 26, 2018

Downsizing resized

For many homeowners the idea of downsizing can often mean the beginning of a new chapter in their lives.  Perhaps children have grown and moved out, a job relocation is imminent, or an elderly parent has passed away – the extra space once needed is now creating a drain on finances.  While the idea of decreasing living expenses by downsizing, may seem logical and well intentioned, some often overlooked factors can hurt financially.  Weighing the advantages and disadvantages equally can help prevent any potentially expensive mistakes.

The desire to downsize usually begins with the most obvious and immediate benefit – reduced living expenses – including mortgage payments, insurance and taxes.  One of the most commonly overlooked disadvantages we see in new construction home purchases is with higher tax rates based on new development infrastructure.  The attractiveness of owning a smaller home in a new or developing area may not be as enticing once the additional costs, fees, taxes and higher financing costs of today’s mortgage interest rates are considered.  We recommend putting pencil to paper and including the full cost of selling (commission, moving, etc.) as well as buying (new paint, furniture, landscaping) so you can make an informed decision.

When considering a smaller home in an established community you can realistically assume that living expenses will decrease by having less space, lower tax rates and an established infrastructure.   However, consider the additional long-term costs associated with an older home such as an aging roof, A/C unit, hot water heater or inefficient windows because these repairs can add up quickly.

One of the biggest advantages of downsizing, regardless of a home’s age, is the reduction in energy costs.  Downsizing to a smaller well-built home with energy efficient appliances and systems is not only easier on your wallet, but also reduces your carbon footprint on the environment.   By enlisting the help of a qualified home inspector or energy efficiency inspector, unexpected expenses can be avoided by identifying potential issues prior to buying your new home, and setting a solid foundation for your financial future.

“Downsizing – Smaller isn’t Necessarily Better” was published in the June 2018 issue of Life on the Green magazine, a social publication for the residents surrounding The Woodlands, Country Club, Player […]

Annual Benefits Enrollment – Time to Dig in (Reassess)


Annual Benefits

Annual Benefits Enrollment – Time to Dig in (Reassess)

September 2018

The fall brings the hope of cooler weather, schools are back in session and when it comes to work the dreaded annual benefit enrollment packages.  For most people, the default is to leave everything the same as last year.  With all the recent changes in health insurance and other features this year might be an ideal time to really dig in and reassess, to maximize all your employer benefits.

401(k) & Retirement Plans – 401(k) plans are the most popular retirement benefit which allows an employee the ability to voluntarily contribute funds on a pre-tax or post-tax basis.  The company usually provides a matching contribution which is in essence “free” money.   The funds in the plan are portable so if you change jobs you can rollover the vested portion to your new employer or into your own IRA.  Bottom line is your company is GIVING you money for your hard work and contributing to your retirement savings.  Other possible retirement plan offerings include SIMPLE IRA’s, Defined Benefit Plans, or possibly an SEP (Simplified Employee Pension).

Health/Dental Insurance Due to rapidly rising premiums, these are by far the most expensive benefits for an employer to provide.  Many will share the cost of the plan with employees and offer features such as an FSA (Flexible Savings Account) which allows you to set aside money on a pre-tax basis to cover out-of-pocket medical expenses.

Life & Disability Insurance – If you should die or become unable to work, these benefits will provide payments to you or your family to cover funeral costs or ongoing living expenses, often at little or no cost to you.  Group benefits have traditionally had much lower costs than personally owned policies but be cautious and compare.  Coverages such as Accidental Death and Dismemberment (AD&D) have extremely low premiums because the probability of receiving benefits are very low.

Commuter benefits – Whether commuting by car or public transportation, be sure to ask if your employer offers reimbursements or discounts for mileage, tolls, parking, or public-transit passes to off-set the cost – sometimes with pre-tax dollars.  Flexible work hours or work-from-home options can also reduce your monthly commuter expenses.

Matching Donations – Employers can offer this benefit to support organizations that their employees are passionate about.  When […]