Jack Ablin of Cresset Capital, who has three decades of money management experience and is the author of Reading Minds and Markets: Minimizing Risk and Maximizing Returns in a Volatile Global Marketplace, was back at our podium for the third time to present his economic forecast for the year. “It was an honor to be invited back” he said and mentioned that he was going to reframe the normal economic forecast and focus his talk on “goals-based investing.”
The reason to reframe the discussion is due to the shift from defined benefits provided by your company to having your own personal 401k; “there is now a whole generation of Americans fending for themselves.”
He explained that the dilemma is predictability when we are trying to “manage our lifestyle. The fear of losing our lifestyle can lead to irrational (investment) decisions.”
He had some interesting charts on investor behavior and annual investment returns for the last twenty years, which “underperformed due to poor allocation decisions.” The key he said is “how to employ what large employers use for their defined benefit programs and use it for our own portfolios.”
His Optimization chart focused on Goals Based Investing to “achieve the lifestyle you want via the smallest portfolio”:
Income/Lifestyle – generating cash flows for overnight to a 7-year time horizon
Growth Strategy – 7-15 years
And Opportunity – the 15+ time frame
He said that “stock market performance is random.” He does not know what will happen in three, six or twelve months, but if you hold your portfolio for over seven years, “the chance of success will be much higher.”
Here are the five factors to consider/that he considers:
Valuation of the market – he feels that it is “expensive/high” now
Economic backdrop – is “stable, we are growing at potential”
Liquidity – is “good, but where do we go from here? We need to pay close attention to this”
Psychology of bears vs. bulls
Momentum
He concluded with, “this is why the minimum amount of assets is important. We need to use the market and our time horizon to our benefit.” He answered questions on the: impact of reducing the corporate tax rate (the jury is still out though we are not seeing the level of capital investment that was predicted), the use of leverage in investment strategies (he is “chicken” to use them as they do not work as well), the impact of the 2018 tax law on charitable giving, and the benefit of using GNP versus either the US GDP or world GDP. Copies of his presentation and more information on what he discussed is available by emailing him at jablin@cressetcapital.com.
President Kim kicked off the first meeting of 2020 and introduced Bill Center and Todd Summerfelt who led us in a rousing “You’ve Got a Friend in Me” from the Toy Story movies. David Brenner inspired us and made us laugh as he talked about 2020 being a leap year, Ground Hog Day being 02-02-20 and why January 1st and new years matter: so we can “divide up our time to better predict what will happen and then try to control it. Time is limited which helps us live wisely.”
President Kim introduced our guests and fellow Rotarians, which were numerous on this first meeting of the new year and included our former VP of Membership, Dianka Linear, who has been on a leave of absence.
Fedva Dikmen announced the first Ethnic Dinner event of 2020 that will have a Turkish theme on January 28th at Kitchen Istanbul in Ballard. She mentioned that “it passed her test” and will give us a good exposure to Turkish cuisine. More information in the events section of the Totem.
Tom Mesaros updated us on the foundation’s campaign: we are at 70% of our $225,000 goal with $157,000 raised from only 56% of our members; “just imagine where we would be if everyone had given?” He encouraged us to think about “the lives that will be changed” due to what we give and to make our contribution before the January 31st deadline.
Cynthia Chirot gave a great overview of the Seattle Rotary Service Foundation’s Large Grant Committee process and the two finalists this year. She mentioned that the goal for the $40,000 grant is to help address the chronically homeless in Seattle, including those affected by mental illness or drug addiction. The grants committee received ten proposals and they narrowed it down to two finalists: Plymouth Housing's 501 Rainier Nurses' Station and the Downtown Seattle Association's Metropolitan Improvement District Street Outreach Team - Housing Fund, and now it’s up to us to decide which of these two great projects receive funding. Information on each project/organization was emailed to all members on Wednesday afternoon for us to then vote via the Survey Monkey by 5:00PM on January 15th.
President Kim wished everyone “a great year in 2020!”
