Thoughts on Markets

View from the Chair: Windermere's Market Perspectives (June 2019)

During the first four months of 2019, it seemed as if nothing could get in the way of markets. While uncertainty remained (tariffs, interest rates, economic strength, recession worries), markets ticked higher seemingly every day. In early May, that all changed. See below for market returns during May 2019

While it’s hard to know what caused markets to retreat, the declines appeared to begin with President Trump’s tweets that trade negotiations with China had stalled and that the planned tariffs were going to be implemented. this was a sufficient shock to cause buyers to retreat and sellers to materialize, driving prices down. Since that time, volatility has again returned, markets have pulled back from their highs, and once again, investors may be questioning whether they want to stay invested.


These downward moves never feel good - and sadly never get easier to stomach. However, when they do arise, we remind ourselves of an important adage - “it’s a marathon, not a sprint.”

We don’t view investing as a journey one should take for a month, a year, or even just a few years. We view it as a lifelong process that is ultimately guided by where you are trying to go (ie: simply put - what does your ideal future look like and what financial levels are needed to support that). If you have defined your destination and have a plan in place to reach it (ie: a diversified investment mix and a savings plan), all there is to do during times of market stress is to keep putting one foot in front of the other and follow your pre-determined road.

As you continue down the path, here are a few helpful reminders:

1.) Panic is not a strategy - business media and newspaper headlines will oftentimes incite panic in even the calmest investor. Resist this urge! Oftentimes, the exact moment we feel most encouraged to take action is the worst time to do just that

2.) Revisit your plan - we have worked alongside you to put plans in place to grow your wealth over time, while supporting any near-term liquidity needs. Again, think of assets classes in terms on liquidity buckets. If you have sufficient liquidity stores in your cash/fixed income buckets, short term volatility in equities is unlikely to have any near term impact on your day-to-day life or your long term plans

3.) Over time, investing is on your side - as this insightful chart from Blackrock shows, historically, the longer you are invested in the market, the lower the odds that you will lose wealth. While history may not repeat itself, it certainly has a tendency to rhyme

4.) Don’t miss a few days - this additional chart from Blackrock shows how missing a few major upside days in the markets over time can hurt the compounding of wealth. When will the next one occur? It’s impossible to know, which is why timing the market is so difficult

We know these sharp moves in markets can be unsettling. But when they occur, take a step back, revisit they few key reminders, and keep on running.

Invest on,


View from the Chair: Windermere's Market Perspectives (May 2019)

Normally, I use this monthly blog post to share our own views on the markets and investing. However, this month, I’m choosing to instead share some perspectives from two of the best: Warren Buffett and Charlie Munger.


The first weekend in May is unlike any other weekend in Omaha as annually, 40,000+ individuals make the journey to attend the annual meeting of Berkshire Hathaway. Last year, I was fortunate enough to attend the meeting in person for the first time. This year, despite not making the trip, thanks to the power of technology, I was able to catch the majority of the meeting on a replay of the live stream as well as the Monday morning CNBC three-hour masterclass with Warren and Charlie

Here are a 8 top takeaways from these two legendary investors and human beings:

1.) Remember what you are buying

Warren routinely reminds us to focus on what an investment in stocks really is - an ownership interest in a business. Asked about investing in IPOs, Warren encouraged individuals to challenge themselves to write out a rationale for why they are buying a stock (IPO or otherwise) at a given price - I am buying XYZ company for $x because (fill in the blank). He cautioned that if you can’t do that - or can’t come up with a reason beyond liking the product, hearing about it on CNBC, or following your neighbor’s advice, it’s best to move along.

Warren also emphasized how important it is to pay the “right” price for an investment (based upon your research). In Warren’s words, “ a business does not know how much you paid for it.” “Any investment can be turned into a bad deal by paying too much”

Lastly, as they have both done in the past, both Warren and Charlie emphasized not trying to time the market or worry about prices day to day

2.) Don’t dismiss capitalism or America

During Saturday’s meeting, Warren proudly declared himself a “card carrying capitalist” While not dismissing the inequalities in our country or denying his personal democratic allegiances, he made the case that the system is working and expressed his doubts that the US would adopt socialism in the future. In Warren’s words, “when you look at what was here in 1776 and look at what is here now, this country has done an incredible job in terms of deployment of resources and human ingenuity and that is a product of a system

Towards the end of the meeting, Warren also discussed their success and how fortunate he feels to have been an American. “This country has treated us incredibly well. We’ve had this huge tailwind which I wrote about in the annual report and it wouldn’t have happened in any other country….We’ve been very lucky that we’ve been operating in this country at this time”

3.) Better to collaborate

Charlie and Warren discussed the special relationship they have had and how the ability to collaborate on key decisions have helped them both personally and professionally. Whether it’s a trusted advisor or a business partner, being able to voice your ideas and have someone respectfully challenge them and help you further explore your thesis is exceptionally valuable. And as Charlie said to Warren “you usually end up agreeing with me. You’re smart and I’m right”. As the meeting wound down, they were asked about how they resolve conflicts. Both men stated they don’t as they’ve never been in an argument. Warren encouraged the audience to be cognizant of who you spend your time with - “having the right partners in life is enormously important. It’s more fun with a partner"

4.) Value investing

When questioned about whether a recent acquisition of Amazon in the investment portfolio was true to Berkshire’s value investing principles, Warren quoted Charlie saying “all investing is value investing. Putting out some money now to get some more later on – based on calculations as to the probabilities of getting that money and when you’ll get it…”

He went on to say that all the same calculations go in to valuing a company regardless of its multiple. If you can buy into a business now for less than what you think it’ll be worth in your specified time period at your desired rate of return, it is worth a closer look

5.) Don’t overdo delayed gratification

A young investor asked the two men about their advice on teaching the latest generation about delayed gratification and savings. Warren’s reply was somewhat surprising based on his frugal and savings-oriented nature, and of course contained a bit of humor “Delayed gratification is not necessarily an unqualified course of action under all circumstances.  I always believe in spending 2 or 3 cents out of every dollar I earn and saving the rest”

He cautioned that you need to enjoy your life and do things that bring you and your family joy. He then remarked about the people he has met in his lifetime and how he doesn’t think amassing more wealth will necessarily make you happy. “One thing you should understand - if you aren’t happy having $50,000 or $100,000, you’re not going to be happy if you have $50 million or $100 million”

6.) Find a niche

When asked about how the industry has changed since they began their careers, both men agreed that it is presently a more difficult environment. Charlie stated that it’s more important to specialize now and that the generalist/diversified approach they have taken likely won’t work anymore. As only Charlie could state, “no one wants to go to a doctor that’s half proctologist and half dentist”

7.) Think beyond our borders

While Berkshire tends to invest primarily in the US, there were many questions discussing potential investments abroad. Both Warren and Charlie did not dismiss the idea and said they’d be willing to consider opportunities (in the UK and China for instance, each of which were brought up in questions). Charlie was also sure to let the crowd know that they are in fact in China already - via their Dairy Queen holdings!

8.) Don’t lose sight of what really matters

Today’s world makes it easy for us to forget what really matters in this world. When asked what they value most in life today, Warren quickly replied - “it’s the two things you can’t buy - time and love. I’ve valued those for a long time.” Charlie, always quick with his wit said, “well, I’d like a little more of it”

Thanks for the words of insight and advice Warren and Charlie. The world is a better place with the two of you in it.

Invest on,