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Begin with the End in Mind

So, a buddy comes in…actually…our buddy was visiting with us online via GoToMeeting as we at Warburton Capital continue to work remotely and shelter in place to defeat the Coronavirus!

Our buddy had been watching Financial Pornography and heard an “Expert” utter the alarming words “It’s Different This Time”!  Man, oh Man…I really think this “Expert” was dropped on his head before he was a year old.

Personally, I throw up when I hear alarmist statements like “It’s Different This Time”.  The Legendary Investor, Sir John Templeton, once commented that “The Four Most Dangerous Words In Investing Are – It’s Different This Time”!

The crisis du jour may change, but it’s never really different in the marketplace is it?

Investors around the globe meet in the marketplace to exchange securities in pursuit of a profit.  They make their bid/ask offers based on their individual views of all available information, market prices and speculations – Investors Do This Today Just Like Investors Have Done This In The Past!

The varied opinions of investors/traders are very healthy and lead to “Price Discovery”.  When a trade is made – everybody in the entire world knows Just What A Security Is Worth – At That Instant.  Of course, the Efficient Markets Hypothesis has taught us that that Unexpected News in the near (or far distant) future will lead to Securities Having A Different Price On Some Unknowable Date In The Unknowable Future.

Our advice to our buddy went down the road of “Let’s Forget About Forecasting, Let’s Derive A Rational Goal Achieving Plan and Let’s Begin With The End In Mind”!

Thereafter we laid out a 12 Step Program for our buddy – and any of you who would like – to pursue “A Rational Wealth Management Experience”:

  1. Make Your Goal(s) the Centerpiece.
  2. Avoid “Investment Generalists” and engage in Top Down Planning with an Objective Professional who thinks about your wealth beyond, simply, “Your Portfolio”.
  3. Maintain a Long-Term Perspective and Long-Term Discipline.
  4. Globally Diversify Stock and Bond Holdings.
  5. Forget about What Percentage Of Your Investments Should Be In Stocks Or Bonds, rather, Allocate A Purposeful And Necessary Dollar Amount To Fixed Income For Emergencies and/or Lifestyle Funding.
  6. Having funded your Known Spending Needs with Fixed Income, Allocate Surplus Liquidity to Global Equities.
  7. Invest your Fixed Income conservatively (we each take plenty of risk with our Equities – don’t bear a similar risk with Fixed Income) favoring short-term investment grade Bonds.
  8. Over-Weight Equities to Sub-Asset Classes which have exhibited statistically significant broad market out-performance on a risk-adjusted basis.
  9. Invest ONLY in Securities with minimal expenses (Give yourself a “Fair Shake”) and minimal tax ramifications (Why pay unnecessary taxes?).
  10. View short-term markets news as “interesting” but not “useful”.
  11. Ignore the forecasts of the financial media and other speculators.
  12. Sit back and Enjoy Your Life!

Having considered our logic, our buddy sat quietly, appeared to be reflecting, scratched his head a few times, nodded affirmatively and blurted out – “I Get It – Let’s Do It”!

Our buddy is now on the road to deriving, with our collaboration, A Rational Wealth Management Plan designed to achieve his uniquely personal goals with minimal risk.

Our buddy is, also, starting to view the financial market talking heads as Entertainers – which they certainly are!

In closing, I trust you are watching CNBC much like you watch the Weather Channel.  It’s a terrific source of Current Events which we find to be “Interesting”, however, “Not Useful” for Long-Term Goal-Achieving Planning!

I further trust you are not making investment decisions based on the many – and often conflicting – predictions coming out of the mouths of the “so-called” speculating experts.  These folks on Television are experts alright, experts at entertaining us!

Always wishing you well, I remain

On Behalf of the Firm,

Tom Warburton




Coronavirus and the Market

What is the impact of Coronavirus on my investments?

The term “novel coronavirus” is so new, some people have apparently wondered whether it is related to Corona beer. (It is not; it’s named after its crown-shaped particles.) And yet, how quickly it has grabbed global headlines. As the viral news has spread, so too has financial uncertainty. What’s going to happen next? Will it further infect our domestic or global economies? In case it does, should you try to shift your investments to remain one step ahead?

Our advice is simple: Do try to avoid this or
any other health risk through good hygiene. Wash your hands. Cover your mouth
when you cough. Eat well, exercise, and get plenty of sleep.

But do not let the
breaking news directly impact your investment strategy.

The keys to following an evidence-based investment strategy
are …

  • Having a globally diversified investment
    portfolio.
  • Structuring your portfolio to capture a measure
    of the market’s expected long-term returns.
  • Tolerating a measure of this sort of risk to
    earn those expected long-term returns.
  • Identifying how much market risk you must expect
    to endure to achieve your personal financial goals and allocating your
    investments accordingly.

In other words, it may feel counterintuitive, but if you
have done the above you have planned for this type of contingency already. In
investing, there are things that you can control, and there are things that you
cannot. The impact of coronavirus to the market is something that we can’t
control; sticking to your plan is.

Admittedly, that’s often easier said than done. Here are a
few reminders on why sticking with an evidence-based investment plan remains
your best financial “treatment.”

“I’m assuming there will be no
apocalypse. And that’s almost always, if not quite always, a good assumption.” —
John
C. Bogle

If you’re not invested, your investments can’t recover. Few
of us make it through our days without enduring the occasional moderate to
severe ailment. Once we recover, it feels so good to be “normal” again, we
often experience a surge of energy. Similarly, markets are going to take a hit
now and then. But with historical evidence as our guide, they’ll also often
recover dramatically and without warning. If you exit the market to avoid the
pain, you’re also quite likely to miss out on portions of the expected gain.

Markets endure. We by no means wish to downplay the
socioeconomic suffering coronavirus has created. But even in relatively recent
memory, we’ve endured similar events – from SARS, to Zika, to Ebola. Each is
terrible, tragic, and frightening as it plays out. But each time, markets have
moved on. Whether coronavirus spreads further or we can quickly tamp it down, overwhelming
historical evidence
suggests capital markets will once again endure.

The risk is already priced in. The latest news on
coronavirus is unfolding far too fast for any one investor to react to it … but
not nearly fast enough to keep up with highly efficient markets. As each new
piece of news is released, markets nearly instantly reflect it in new prices. So,
if you decide to sell your holdings in response to bad news, you’ll do so at a
price already discounted to reflect it. In short, you’ll lock in a loss,
rather than ride out the storm.

Bottom line, market risks come in all shapes and sizes. This
includes the financial and economic repercussions of a widespread virus, be it
real or virtual. While it’s never fun to hunker down and tolerate risks as they
play out, it likely remains your best course of action. Please let us know if
we can help you maintain your investment plan at this time, or judiciously
adjust your plan if you feel it no longer reflects your greater financial
goals.




PRESS RELEASE: Tina Parkhill Elected to Our Board of Directors

Thomas K. Warburton, Chairman of Warburton Capital Management announced the election of Tina Parkhill to our Board of Directors.

As an impassioned community advocate, Tina is heavily involved in a number of non-profits with a focus on the arts, family and children, abuse and recovery and mental health.  Most recently, Tina earned a 2016 Woman of Distinction award given by the Tulsa Business Journal.

Tina serves as board vice president of resource development for Family &
Children’s Services, president-elect of Leadership Tulsa and serves as a board member for both the OSU National Alumni Association and the bArt Center for Music.

She was recently selected as chair-elect for Youth Services 2018 Blank Canvas, served on the executive leadership team for the 2017 American Heart Association’s Heart Ball and the Honorary Event Chair for New Hope Oklahoma’s Mardi Gras fundraising event.

Born and raised in Clayton, New Mexico, Tina moved to Tulsa after graduating from OSU in Stillwater with a BS in Marketing. “My first job out of college was as a field sales representative with Ernest & Julio Gallo,” said Tina. “I really enjoyed the experience because of the formal training and development program which provided accelerated management opportunities.” When asked what she likes about Tulsa, Tina said she loves the philanthropic nature of the community. “We have some of the most generous people, supporting so many deserving causes.”

Tina is the owner of Parkhill’s South Liquors and Wine in Tulsa. Warburton commented, “Like many of our clients, Tina is a business owner and faces the unique challenges of running and growing a business. Her leadership ability, business acumen and visibility in our community position her as an ideal Director to guide our enterprise into the future.

I’m confident Tina will make many positive contributions in actualizing our long-term strategic plans and helping us achieve our Core Value, which is To Help People! Please join me in congratulating Tina and welcoming her to our team.”




Jonathan M. Hall CFP®, WARBURTON CAPITAL MANAGEMENT

Thomas K. Warburton, Chairman of Warburton Capital Management announced the election of Jonathan M. Hall CFP™ of Tulsa to the Board of Directors of Warburton Capital Management and promotion to the position of Managing Principal.

Jonathan has been a member of the Warburton Capital team and a principal of the firm since 2013. As Managing Principal of Warburton Capital, he will manage day-to-day operations, lead the firm’s advisory and operations teams as well as direct efforts to attract and retain talent. As a member of the firm’s Board of Directors, he works with the firm’s Founding Principal and the Board of Directors to derive and implement strategic decisions regarding the direction of the firm such as mergers & acquisitions, new lines of business and business development.

Jonathan is a CERTIFIED FINANCIAL PLANNER™ and works with Warburton Capital’s clients to help them define and achieve their short and long-term goals as a fee-only fiduciary financial advisor. He is a member of the National Association of Personal Financial Advisors (NAPFA).

Jonathan earned a B.A. in History, a B.A. in Government, and an M.B.A from Oral Roberts University, where he served as President of the ORU Graduate Business Association. He further earned a Master of Science in Financial Services (MSFS) with an emphasis in Financial Planning from Saint Joseph’s University.

Jonathan is a graduate of Leadership Tulsa, Class 51, and serves as the Vice President of the Board of Directors for Emergency Infant Services. In 2019, City Councilor Phil Lakin appointed him to the City of Tulsa Sales Tax Overview Committee, representing District 8.  Jonathan often serves as an Adjunct Professor of Finance at ORU teaching Personal Financial Planning and Capital Markets. He served as youth pastor of First United Methodist Church of Jenks for several years and is currently involved in the children’s ministry at his church, Foundations Church.

Jonathan was recognized in 2016 as one of Tulsa’s “40 Under 40.” Active in politics, Jonathan was recognized in 2019 as Oklahoma’s “Young Republican of the Year.”

Jonathan and his wife Deanna Hall, a Registered Nurse, have two children: Adaline and Lincoln.

Warburton commented “Jonathan’s exemplary moral/ethical standards, vision, commitment to task, ability to manage multiple priorities and dedication to our clients and colleagues alike position him as an ideal candidate to lead our enterprise into the future, I’m confident he will succeed in actualizing our long-term strategic plan and achieving our plans for growth. Please join me in congratulating Jonathan.”

Warburton Capital Management was founded in Tulsa in 2006 and provides investment advisory and wealth management services to business owners, professionals, corporate executives, individuals, families, endowments and foundations. The offices of the Firm are located in First Place Tower at 15 East Fifth Street, Suite 3675, Tulsa, Oklahoma, 74103.

This Press Release may also be seen here in the Tulsa World:

https://www.tulsaworld.com/business/businesspeople/financial-jonathan-m-hall-cfp-warburton-capital-management/article_023906c4-c5c6-11e9-a7ea-a3ca173c013b.html




“Why Do I Own Bonds Again?”

Warburton Capital Management

“Why Do I Own Bonds Again?”

So… a buddy walks in and wants to grab a cup of coffee because he’s got some questions about the Bonds in his portfolio. At the first sound of the word “coffee,” we were happy to oblige. (If you’ve been in our office recently, you’ll understand why we’ve been described as “highly functioning coffee-haulics” …but that’s beside the point.)

“The stock market has been going up so much, and the bond market has been dipping as interest rates rise. Why do I own bonds again?” Well, buddy – we’re so glad you asked.

It’s been approximately a decade since the Great Recession began. By year-end 2008, the U.S. Federal Reserve (the Fed) had lowered the target federal funds rate to near-zero and embarked on an aggressive quantitative easing campaign, hoping to resuscitate the economy with a big booster shot of lending, borrowing and spending dollars.

Perhaps the economic recovery that followed was a direct result of these and other Fed initiatives. More likely, there were a number of contributing factors. Either way, the Fed has begun to reverse course, restoring its policies and targets closer to historical “norms” through quantitative tightening and gradually rising rates.

As an investor, what can or should our buddy do to prepare if rates do continue to rise? For that matter, what can or should our buddy do if they don’t? As usual, our advice may not be as action-packed as you might crave, but there are a number of solid, evidence-based strategies to guide the way.

Let Purpose Guide the Way – Invest in a Customized, Sensible, PURPOSEFUL Plan.

If there’s one principle that drives the rest, it’s the importance of having your own detailed financial plan. If you have a personalized plan, you have a touchstone for any and all investment decisions you make, including building and maintaining an appropriate balance between stocks and bonds, as well as determining what to include within your bond portfolio.

In the absence of a plan, you’re left with a continuous struggle to predict how, when and if it’s time to react to greater events over which we have no control. While there is no guarantee that your plan will deliver the outcomes for which it’s been designed, we believe that it represents your best interests and your best odds for achieving your personal goals.

At Warburton Capital, a keystone of our Purposeful Planning Process is to construct Currency Escrows and Long-Term Portfolios for our clients. For clients that are retired or about to retire, our professional opinion is that they should have 10-15 years of “Monthly Net Need” stashed away in Short-Term, Globally-Diversified, Investment-Grade Fixed Income, while the remainder of their portfolio is invested for the Long Term, and future replenishment of the Currency Escrow. With 10-15 years of Bonds set aside…an investor can typically withstand the vagaries and inter-period volatility of the Stock Market. (See the included chart below to observe the difference between Fixed Income volatility and Equity volatility.)

This is only a piece of the puzzle, of course. But it’s an important one. If you own Fixed Income, it should be for a Purpose, and perhaps that purpose is that you would like to Make Work Optional and Maintain That Status. We don’t typically recommend taking more risk than you need to by hoping Equities can sustain your income needs, or by dipping into Junk-Quality bonds in search for more returns. Rather, let’s set aside a certain amount of money that will help you maintain your lifestyle so that you don’t have to earn it again.

Of course, every client’s plan is different, which is why we would love to review or create your plan soon over a fresh cup of coffee!

Wishing you the very best as you balance the pressures of the present and the future, your professional goals and your personal goals, I remain

Warburton Capital Management