Whether you’re worried about the new administration, losing the high values in your investment account, or anything else coming this year, we encourage you to focus instead on what you can control and let 2017 worry about itself. Rather than waste our time concentrating on what could go wrong and where to place the blame, we’d rather talk about something productive: our strategy and our service.
Strategy
While I was training to drive boats for the Coast Guard last year I was given some helpful advice, “Porter! Stop focusing all your attention on the compass and drive the boat!” Of course, I thought I WAS steering the boat, but what he wanted me to do was pick an object in the distance off my bow – like a navigation marker or house – and steer on that. If the coxswain focuses on the compass to steer they will constantly be over correcting because it’s almost impossible to stay on a compass heading perfectly.
This is simple but sound advice and can help us in our investment strategy as well. Don’t focus on the value of our accounts on one day, one month, or even one good year like 2016. Whichever portfolio you’re invested in, income or growth, take a long-term approach and trust the strategy of buying strong companies at reasonable values and holding them for a long time – like decades!
We’ve been fortunate to have world-class minds at Morningstar helping us pick stocks the last 3.5 years. Stocks like the billboard company Lamar LAMR we bought just a few months ago that’s gained 25%, or Time Warner TWX in the growth accounts that’s up 50% on the proposed merger with AT&T.
Of course buying undervalued companies is only half the job, we also need to be selling overvalued companies when the opportunity presents itself. Like this week, as markets were high we sold one position in the income portfolio, an industrial company Fastenal FAST that was up some 30% since the election, and also sold one stock in the growth portfolio, the credit card company Discover DFS that was up a similar amount over the same time period. We still like these companies, but both are significantly overvalued. We will most likely buy them again if the stocks pull back significantly.
We consider this to be minor “tweaking” as opposed to major changes. Regardless of the situation that has come or is coming – political, economic, or otherwise – we want to GAZE at the long-term objective and GLANCE at the short-term.
Service
The other area we want to focus on is in our service to you, our client. To convey the mindset we seek to have here in the office, we sought to find a story of authentic and genuine public service. I looked and looked to find a story that would help me define what real service was: there are military heroes, founding fathers, maybe Jesus? But then, I found it! Real service is found with… the Porters! I mean, porters.
Researching the industry that shares my last name I found we have gigantic shoes to fill to measure up to the, “…trained, disciplined, and proud…” Redcap porters from the Pennsylvania Railroad.
I found this letter that a passenger wrote to the railroad in 1926 about the exceptional service she received one day on her way to Florida. She was late to her train, saddled a porter with her awkward bags and ran off without him to catch her train.
It was a miracle she made it on time, but the porter and her bags were not so fortunate. No doubt the porter was lagging far behind due to the weight of the luggage. She boarded the train without her bags and then panicked to another railroad service member who, “…infinitely, beautifully, calmly…” assured her everything would be ok.
They had already phoned the train. She would get off at the next stop and the porter would be on the subsequent train with her bags. Sure enough, they let her off at the next stop then delayed the train a few minutes so the following train could catch up and the porter came running to her, “…perspiring with bags and worry and conscientiousness…”
In a great display, this porter showed true service by taking the passenger’s challenge on as his own. The greatest part of the story is the calm response and the relentless service the porters showed in seeing that this gal would be taken care of. Below is how we want to apply this to our firm in 2017:
- Your challenge becomes ours: Just like this passenger had a goal of getting to her destination with her luggage, we strive to know our clients by listening to their hopes and fears. Then, we want to hustle to help our clients carry the heavy bags of investing and financial planning. At times that means doing things that are not the norm, like offering to go with an older client to the car lot to buy a car, or meeting another client at the bank to make basic banking changes. Whatever you need, whether it’s a high-level task or low level, we are ready to hustle to help you with the heavy load. Please let us know if there’s anything we can help with.
- Calm response: Like the porters in this story we stand at the ready to serve our clients. When the baggage appears to be lost, when worry is the emotion of the day, we will calmly steer our clients toward the solution. This is so important because of the temptation to panic and make bad decisions when things get tough. Helping our clients eliminate bad decisions is one of our great missions.
- Relentless service: Rather than put the bags down and shrug his shoulders when things got difficult, the porter continued to persevere until the bags were delivered. We know the market will go down again. We know that some clients are already “late” for retirement and every downturn feels like an assault on their future. While we can’t keep that from happening, we promise to stand by you through the next downturn and help you persevere until we’ve made it through.
In other personal news, my family had a great time in the snow over the holidays and we hope yours did too. Bruce opted for a trip to South America where the weather was lovely and boring, and Brian wins the award for worst timing for an outdoor remodel, which he started on the first day of snow in December!
Thank you for allowing us to serve you in 2016. We look forward to another great year in 2017 and beyond.
-Tim Porter, CFP®