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“How build a roadmap.” With Jason Hartman & Lacey Cobb

The most important financial action people can take right now is to build a cash emergency fund of at least 3–6 months of expenses. Obviously, people are not just worried about money right now, they are also worried about their family’s health, but this can hopefully provide a peace of mind in an uncertain world. […]

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The most important financial action people can take right now is to build a cash emergency fund of at least 3–6 months of expenses. Obviously, people are not just worried about money right now, they are also worried about their family’s health, but this can hopefully provide a peace of mind in an uncertain world.


As a part of my series about “Investing During The Pandemic”, I had the pleasure of interviewing Lacey Cobb, CFA, CFP® Direct of Advice Solutions at Personal Capital.

Lacey Cobb is a CERTIFIED FINANCIAL PLANNER professional and is a member of the Personal Capital Investment Committee that oversees the construction and management of strategic investment portfolios for 23,000+ clients. Cobb has over a decade of experience and lives in San Francisco, CA with her husband and two dogs.


Thank you for doing this with us! Before we dig in, our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?

My “backstory” is probably a little bit of both nature and nurture. I like numbers and tend to approach things from an analytical perspective so naturally gravitated towards finance. My older brother also had a large influence on me. He “strongly advised” I open a Roth IRA and start saving as a teenager. Ultimately though, it was the Personal Finance 101 course in college. I was an Economics major at UC Davis (like my brother) and had no idea what I wanted to do for a profession until taking that course. I remember using the course textbook to prepare for my first interview which helped me land the job.

Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?

This was a surprisingly difficult question for me to answer even though I started my career in the depths of the financial crisis and here we are now in the middle of a global pandemic. You would think there was a story that stuck out as “most interesting” … but it really feels more like a string of experiences that have helped shape who I am today. Looking back historically, you can see there is always going to be something scary out there, which is what makes investing so challenging. Whether it is a trade war, interest rate policy, Brexit or some other market impacting event like the current pandemic, there is always some level of uncertainty in the market that makes people uncomfortable.

Today’s environment is the most challenging market environment I have experienced so far, and it will be interesting to see how this ultimately plays out. What is interesting to me though is that I am never really stressed about my own portfolio, even in today’s extreme volatility, but there is a different sense of stress you feel when you are managing other people’s money. Even though I am fully confident we are doing the right thing for our clients, I still feel empathy for those clients scared of the market. I have spent my career trying to help clients avoid making emotional decisions based on what the market is doing that could severely impact their financial future. The thought of this happening causes me stress.

I could not be happier with the road that brought me to Personal Capital and think we have a truly unique platform to address challenges like these through the combination of our technology and people.

Are you working on any exciting new projects now? How do you think that will help people?

At Personal Capital, we are always working on exciting projects geared towards helping people which is one of the many reasons why I love working here. We just recently announced the release of The Financial Roadmap, a new feature on our dashboard. It’s designed to improve the financial outcomes of advisory clients by delivering personalized, useful, and timely guidance at scale. This is only the beginning. I can not say just yet what things I am working with our product team that will soon be part of The Financial Roadmap, but you can expect to see future enhancements around client education and improving the client experience.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

There is no doubt in my mind that I would not be where I am today without my dad. He was the ultimate planner and led by example. He was a tax attorney and by the time he was 40, had his entire estate plan in place, put money away for his four kids to go to college and had secured enough term life insurance in case something happened so that we would be okay. By 45 he was diagnosed with cancer and eventually passed away right before my 7th birthday. It’s devastating to lose a parent, but what I can’t imagine is going through that loss with added fears about money and my future. I am forever grateful that he showed us the importance of taking control of your financial life at an early age. I also made a point to become financially savvy at a young age so I would never have to worry about being financially dependent on anyone else — life is uncertain!

Let’s shift a bit to what is happening today in the broader world. Many people have become anxious from the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty and loneliness. From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain?

The best advice I have that is not just relevant to investing is to try to focus on what you can control. One way to do that is to turn off the news and focus your energy on things you can do to put yourself in a better financial position to ease some of the anxiety. Reacting to the latest headlines to make decisions in your investment portfolio would be a very poor investment strategy.

The most important financial action people can take right now is to build a cash emergency fund of at least 3–6 months of expenses. Obviously, people are not just worried about money right now, they are also worried about their family’s health, but this can hopefully provide a peace of mind in an uncertain world.

Ok. Thanks for all that. Let’s now jump to the main core of our interview. As you know the stock market and the economy in general have become extremely volatile and uncertain. Many people “dollar cost average” and put aside a monthly sum into a long term savings plan for retirement, college, or a home purchase. If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?

I have actually already had several people come to me with similar questions. Generally speaking, I think many people have a somewhat inaccurate perception of what investing is. Their approach and mindset are often misguided, so I usually start by addressing that. They tend to think it is all about trying to time when to enter an exit the stock market, or how they should adjust their investment approach based on the current market conditions. Which I don’t believe is the right way to think about it all.

I advise them that it is important to continue to invest money, if they have the ability to do so and have sufficient amounts in their emergency fund regardless of what is going on in the stock market at the time. Investors should focus more on making sure they have a properly diversified portfolio with the appropriate amount of risk rather than trying to time when to buy into the stock market.

With this example, if they felt comfortable buying into the stock market when prices were higher, why would it make sense to stop investing when prices are lower if their investment time horizon is long? It is more or less the whole point of dollar cost averaging; to buy continuously over a period of time independent of what the stock market is doing. So deviating from your initial objective defeats the purpose.

In fact, I have been advising those who are able to and have multiple decades until retirement to take advantage of the opportunity by upping their 401k contributions during this time. Although I make sure to remind them not to confuse opportunity with market timing or calling the bottom, the market may continue to fall.

Eventually the economy will recover and rebound. Certain sectors, like travel and hospitality might be hurting for a while. But other sectors, like technology and healthcare, might do very well. If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?

We believe the best approach is to maintain a properly diversified portfolio consistent with their risk tolerance, goals, and financial situation rather than tactically try to navigate bear markets and recessions. In our view, part of doing that means taking a more balanced approach to sector weighting instead of making sector bets based on what one thinks will happen. The reality is, most financial professionals rarely successfully time the market or accurately predict the business cycle despite what they tell you. And as we have seen lately, the stock market and the economy are not the same thing and don’t always necessarily move together. Broadly speaking, the stock market is forward looking and often overshoots both ways. That means, the market has usually already had a significant correction by the time a recession is known, and the market will rebound well before the recession is over. If you are waiting until the sky clears and things look better you have already missed the largest part of the rebound. It is hard to rationalize making sector bets on this information.

Looking at the current situation, being bullish on technology and health care is a pretty popular opinion and you can see it in the relative pricing compared to other sectors. Investors should be wary of tactically positioning to consensus or piling into crowded trades because even if it turns out to be “right”, price matters. Some sectors will perform better than others and some industries are going to take longer to recover in this environment, but I caution investors to be skeptical when something looks obvious. Because it probably looks obvious to a lot of people, not just you. We think a balanced approach is superior to trying to position a portfolio for what you think is going to happen.

Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?

I think in this environment, where volatility has reached levels not seen since the Great Depression, it is hard to argue there is not an exciting sector to invest in right now. There are plenty of opportunities in every sector because high uncertainty creates the potential for bigger risk reward scenarios especially at the individual stock level. Many people probably don’t realize the level of carnage out there at the individual stock level when they are focused on the S&P 500. There will be some big winners and losers when we come out of this within every sector. Our approach is to own a very well diversified basket of individual stocks so that we will own what turns out to do well and should benefit from rebalancing along the way as people overshoot both ways on sentiment.

Are there alternative investments that you think more people should look more deeply at?

Alternative investments are a great way to add diversification to a portfolio. One thing many people don’t realize is that they can improve the risk adjusted return of their portfolio by adding alternatives despite their historically high volatility. This is due to their lower correlation to other asset classes. Alternative investments can also help protect a portfolio against inflation. We hold REITs, gold and commodities ETFs as a way to enhance diversification for our clients. Generally speaking, an aggregate 10% weighting to alternative assets should provide sufficient diversification benefits in a portfolio, but will vary for each individual. Once again, we recommend a broad diversified approach here. Gold has done well in the turmoil and real estate and commodities have not, but buying only what has done well in the past may not be a sound investment strategy.

If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long term investment what would you advise them to do with it?

The advice given to this particular person will depend on several factors such as their current financial situation, their financial goals with this investment, risk tolerance level, and the number of years they anticipate investing before withdrawing any of the funds.

Ultimately the goal is to have a globally diversified multi-asset class portfolio in the allocation that is appropriate for that person. So if $10,000 is all they have to invest, an efficient way to achieve that would be by buying low cost broad market index ETFs to construct an allocation that aligns with their particular situation.

Ok, thank you! Here is a more general finance question. You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each?

5 intuitive essentials:

  1. Make a plan and keep track of your progress — Your financial goal plan should be a living document that states clear and measurable financial goals and includes steps to accomplish them. This enables you to see where you stand and hold yourself accountable. It also reiterates your purpose for what you are doing, helping you keep your eye on the prize. You are investing for the long run, so it is important to have the proper mindset going in about what you are trying to accomplish. A plan alone won’t get you where you need to be, but it is a great start!
  2. Start saving as early as possible — Step one is to get your emergency fund in place by saving at least 3–6 months of expenses in cash. Once you have that in order some other great places to start saving are in a 401(k), IRA or Roth IRA. If your employer offers a 401(k) make sure you participate and at least contribute enough to receive the full employer match if there is one. Investing in a Roth IRA early while you are in a very low tax bracket can be immensely valuable to you later in life. As I mentioned earlier, I am very grateful that my brother pushed me to do this.
  3. Understand your risk tolerance and stay invested- Investors often overestimate their risk tolerance in a bull market only to realize they were taking more risk than they could tolerate and as a result tend to make emotional and costly decisions. Even if you know your tolerance, some people are just more likely to make emotional decisions regardless of their risk tolerance. So get a sense of yourself to know what kind of investor you are. That way you don’t force yourself out of the market because you are uncomfortable at the wrong time. More recently, we just experienced the fastest bear market in history and plenty of people fled the market when the market was down 34% or fled at level below where we are today. Since then we have had an impressive rebound off the lows and very quickly making it impossible to time. I have no idea if we will retest the lows or go up from here. But for me personally, I feel so much better staying in the market riding it out then the anxiety of trying to make two incredibly hard timing calls. That is to get out in time and then to get back in. I don’t think people realize how hard that is and or that they are taking risk simply by going to cash, there is a massive opportunity cost to that.
  4. Invest, don’t “trade” — I have many friends who don’t invest, and instead try to trade the market. I can not say this enough, as a new investor I do not agree with this mindset. If you are a professional trader or have a small play account on the side that you enjoy dabbling with separate from your investment portfolio, go for it. But treating the stock market like a casino game usually doesn’t end well. A close friend of mine has been trading in the stock market for over 10 years and does not own a single investment. Instead he speculates on a single stock or two at a time or uses leveraged ETFs to make short-term bets on market direction. Recently, when markets were crashing he was texting me every day about his great trades. I haven’t received a text about his great trades in over a month, but have received plenty of texts about how he thinks the market is rigged. So, you can guess how well that worked out.
  5. Educate yourself in financial literacy — Financial literacy is one of the most important life skills you can learn. Taking online courses, reading books and blogs or listening to podcasts are great ways to get started. Without it, how can you make informed and effective financial decisions for yourself? If they were interested in becoming a financial professional, I would suggest they work to obtain the CFP certification. It is a great way to learn and even if you don’t end up using it in your professional career, it is worth the effort just to have the knowledge base for your own finances. I personally found the course material interesting and useful for myself and clients.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

I am not sure who said it first, but I love the quote: “Humble yourself or life will do it for you.”

Throughout my career I have witnessed so many professional and individual investors alike approach the stock market with arrogance. The great thing about the stock market though is it loves to make a fool out of those who think they have it all figured out. There could not be a better example of this behavior than what has been happening over the past few months. Just log on to financial twitter and you can see in people’s tweet history. There were plenty of “new traders” bragging about how they shorted the market in February and March who clearly were overconfident in their abilities. Now many of those same people are blaming the Fed and confused why the market is not reacting to jobless numbers and death tolls. You must respect the stock market or it will humble you because it is not always going to “make sense”.

One of my favorite things about Personal Capital’s objective investment approach is that it takes the ego out of the decision making process. When deciding where my next move would be in my career, I found this very refreshing and felt it aligned well with my own personal investment philosophy.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂

In my opinion, a mass movement toward improving financial literacy of the population could do wonders for peoples’ financial outcomes. Basic financial literacy is so important but often people are intimidated or feel it is taboo to talk about money. This needs to change. Personal Capital is helping change these attitudes by empowering people to take control of their financial lives. Free financial tools, transparency and investor education can help combat this.

Thank you for the interview. We wish you only continued success!

Personal Capital Advisors Corporation is a registered investment advisor with the Securities and Exchange Commission (“SEC”). SEC registration does not imply a certain level of skill or training. Investing involves risk. Past performance is not a guarantee or indicative of future returns. The value of your investment will fluctuate, and you may gain or lose money. All charts, figures, and graphs are for illustrative purposes only.

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