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“Why you should prepare.” With Jason Hartman & John Petrie

Sometimes preparing is knowing what not to do. Remember that a great company does not always make a great investment. We believe that understanding the value you are receiving by viewing your investments in relation to the cash flow of the underlying business is extremely important. Therefore, looking for investments with consistent earnings and not […]

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Sometimes preparing is knowing what not to do. Remember that a great company does not always make a great investment. We believe that understanding the value you are receiving by viewing your investments in relation to the cash flow of the underlying business is extremely important. Therefore, looking for investments with consistent earnings and not overpaying for those businesses is the best way to build wealth. There are many great companies that we believe are overvalued.


As a part of my series about “Investing During The Pandemic”, I had the pleasure of interviewing John Petrie CPA, CFP®, CIMA®, Managing Director in Total Wealth Management and Partner at Aspiriant

John has been providing investment and wealth advisory services to high net worth individuals and their families since 1992. He joined Aspiriant in 2010 as a result of the merger with Deloitte Investment Advisors. He is the team leader of the Midwest Region and also serves on the firm’s national Client Service Committee.


Thank you for doing this with us! Before we dig in, our readers would like to learn a bit more about you. 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?

Afew years ago, a client I had been serving for many years confided in me that his second wife and adult daughter, whom I had not yet met, had a terrible relationship. Sharing this was a big deal for him as he is an extremely private person. He asked me to meet with his daughter to try to help improve their relationship. I did so several times over the past few years and we have developed a great relationship. I did the same with his wife with similar results. During that time, I was able to share financial information at the discretion of the client that has helped the situation. However, interestingly there was a significant component to our conversations that had nothing to do with finances. It was a great reminder we don’t just live “financial” life with our clients. We live life with our clients.

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

While I have been leading our offices in Milwaukee and Minneapolis for many years, I was recently asked to broaden my role and serve as a Managing Director within our Total Wealth Management service line for our offices in Boston, Cincinnati, Milwaukee, Minneapolis and New York. I am thrilled with this opportunity because it gives me a great chance to better get to know our people and clients outside of the Midwest. I fundamentally believe “we” is much stronger than “me” so while I look forward to further building our team and sharing my knowledge and experience more broadly, I know I will be gaining as much as I am giving.

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?

My predecessor was an outstanding delegator. I was given many opportunities to interact with clients and prospective clients very early in my career. His expectation was for me to produce a quality work product with very little supervision. He let me run with most everything, provided I was performing. By the time I was thirty, I was assigned as the lead advisor to several significant client engagements that helped shape my career. More than twenty years have passed since then and I continue to serve many of those families to this day. However, I am not doing so alone. I have helped build strong teams to serve our clients in part by affording my younger colleagues the same opportunities I was given many years ago.

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?

Unfortunately, bad news sells. We often encourage our clients to turn the volume down or even shut off their TV when we are talking with them and CNBC is blaring in the background during those periods of time when the stock market is declining sharply. Moreover, it is ok to put monthly investment account statements in a drawer unopened if they know their portfolio values are down, and reviewing the statements will cause them unnecessary angst.

The current situation is more challenging than anything most of us have experienced thus far in our lives. Setting aside the financial implications, many of us took our health and the benefits of human interaction for granted leading up to the current pandemic. Often it was just easier to send a text message or email than to make a phone call or a personal appearance. Now phone calls and video conferences rule the day. Safe personal interaction beyond that of spouses, dependent children and maybe co-workers is a precious commodity.

It is now more critical than ever that we take care of ourselves first. Eat right. Get enough sleep. Exercise regularly. Pursue personal growth opportunities. Enjoy the simple things like breathing fresh air during those occasions when we are outside of our homes. While these things may seem basic and to a certain extent selfish, it is the only way we can stay healthy and properly be there for the people in our lives.

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?

An easy question never has an easy answer. Yes, you should continue saving and investing every month. No, you shouldn’t just buy an S&P 500 Index Fund. Continuing to invest every month during bad times is a good way to continue building wealth. However, what to buy depends on many factors such as your time horizon (house or college in a couple years or retirement in 20 years) along with your ability and willingness to accept risk. Do you have a cash reserve to meet short-term expenses in the unfortunate event of a loss of income? Are you willing to tolerate significant short-term risk of the stock market? What ruins a good plan is selling out at the worst time. Investors need to understand the stock market could drop further. We have seen the S&P 500 drop more than 50% twice in the last 20 years and it is possible we see a similar path today. Assuming you have the ability and willingness to accept the short-term risk of equities you should diversify by purchasing an international equities fund. Global diversification is always smart, but we believe now is an especially good time to favor international equities, specifically emerging markets, over the S&P 500.

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?

Sometimes preparing is knowing what not to do. Remember that a great company does not always make a great investment. We believe that understanding the value you are receiving by viewing your investments in relation to the cash flow of the underlying business is extremely important. Therefore, looking for investments with consistent earnings and not overpaying for those businesses is the best way to build wealth. There are many great companies that we believe are overvalued.

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

In many respects it is too early to become truly excited about most investment opportunities. However, we do believe emerging markets and value companies provide compelling long-term return potential; especially compared to other equity asset classes. We are keeping an eye on potential opportunities within the high yield corporate bond markets. The credit spread, or the additional yield above investment grade bonds, is approaching compelling levels. However, the fear has subsided a bit and we are far from the end of bad corporate announcements. This could lead to better opportunities in the future for corporate high yield bonds.

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

Alternative investments mean different things to different people. Unfortunately, the best alternative investments are very difficult for most people to access. Therefore, it is an area to be cautious. If it sounds too good to be true, then it probably is. We are able to help clients access alternative investments by having the scale of aggregated client assets to access managers with long track records of success in the area that would otherwise not be available to individual investors.

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?

It is always great when people are looking to save and make an investment for their future. We are firm believers in diversified portfolios, and you can start this with any dollar amount. All diversification means is having a mix of U.S. equities, international equities, and bonds; which can be done in as little as one fund. For someone starting out, a target retirement date fund with low cost may be the most appropriate. This fund will be diversified, rebalance as the market moves, and become more conservative as you approach retirement. Having a personalized plan that manages risk becomes extremely important as your nest egg grows, when your time horizon is shorter, and you are using your portfolio for your cash needs. The most important factor for people early in their careers is to save and invest. Adding small amounts on a regular basis to this investment over time will be more impactful than the return from the initial investment. Finally, beyond what to invest in, we would help them think about the type of account (i.e. traditional IRA or Roth IRA) would be most beneficial for their investment.

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?

  1. Develop a long-term investment plan and stick with it. Determining the amount to invest in higher-risk assets (e.g. stocks) and lower-risk assets (e.g. bonds) is the most important decision to make. Stock investments should be globally diversified. Once asset allocation percentages have been established, cash should be invested accordingly and rebalancing should be done as needed.
  2. Don’t invest any cash you will need to meet shorter-term obligations. Are you holding cash for a near-term home down payment? Do you have cash set aside in an emergency fund? This cash should be held in a very low-risk money market fund or similar cash equivalent.
  3. Buy low and sell high. Typically, the best time to invest in stocks is when the stock markets are down and the best time to rebalance from stocks to bonds and other lower-risk assets is when the stock markets are up. Beware that emotions can and often do prevent investors from acting on this strategy.
  4. Market timing does not work. Market timing involves moving in and out of the financial markets or making significant short-term shifts between asset classes. It is widely accepted that nobody can consistently time the markets.
  5. Don’t chase historical performance. Many retirement plan participants tend to review the performance of the investments offered by the plan and they gravitate toward those that have performed the best over the past year. These same investments are often the worst performers the following year, so the participant shifts into the best performing investments over that time period, and the cycle repeat itself. Always remember the common warning label “past performance is no guarantee of future results”.

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

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