Every Picture Tells a Story

Jalene Hahn |

 My last article featured a couple of sketches by Carl Richards, a Utah-based financial planner who uses a pencil to illustrate various financial planning concepts. I’d like to enlist his help again this week as I talk more specifically about investing.

As financial planners, we deal with our clients’ entire lives but it’s questions about investing that often bring people into the office for the first time. After the 2008 market correction, we met people who wanted assurance that such a thing would never happen again. Unfortunately, that’s a guarantee we can’t provide since it’s simply not possible to predict the future.

However, I do believe that many things, including stock market valuations, tend to move in cycles. These cycles obviously relate to the intrinsic value of the companies involved but there’s clearly more to it. In fact, the law of supply and demand plays a significant role. When a rush of buyers or sellers leads to a price imbalance, markets will adjust as much as necessary to accommodate the pressure and eventually achieve a new equilibrium at a different level. But what brings that rush of traders into the market?  I don’t think most people realize how many investment decisions are driven by emotion instead of logic. Warren Buffett, one of the most successful and disciplined investors of our age, has largely resisted this trap. He describes his approach as “being fearful when others are greedy and trying to be greedy only when others are fearful.” Here’s Carl’s version of that statement:


Warren Ward Associates’ approach to planning for our clients’ financial lives includes strategies intended to manage any risks we’re able to identify. This includes a review of each client’s insurance coverage along with encouraging them to wear their seatbelts. It also includes evaluating their tolerance for risk before making investment decisions for them. It’s always our intention to remain out of sync with the cycle Carl illustrates above by adjusting asset allocations to manage portfolio volatility. This tends to make corrections smaller, which reduces our clients’ urge to sell, thus lowering their overall stress level.

The familiar expression, “No pain, no gain” might as aptly be applied to investing as to athletic conditioning. While there’s no way to guarantee that investing will be pain-free we do believe it’s possible to structure our clients’ investments to maximize gain while avoiding the worst of the pain that accompanies the inevitable corrections. We believe all investors should always know why they own every investment and under what circumstances they would sell it. Anyone who doesn’t complete that exercise has probably switched from the classic “Buy and Hold” strategy to something slightly different:


No one has answers to all of life’s questions but WWA does have a range of proven strategies designed to help cope with many of them, including long term investment strategies.

We’ve purchased several copies of Carl’s book and have them here for anyone who’d like to enjoy his sketches while learning more about financial planning. Just stop by or call the office if you’d like to claim your copy.