“Economic freedom is available to every American.”
This is the positive message direct from the mind of my friend, colleague and former editor of the Weekly ETF Report, Doug Fabian. Now, long-time readers of this publication might remember that it was just about a year ago that Doug handed the reins over to me, along with the editorship of the Successful Investing advisory service.
Given the approximate one-year anniversary of my taking control of this publication, I thought I would give readers a treat by presenting some highlights of a conversation I had with Doug just this morning.
We start off with a discussion of the markets, including his thoughts on the recent bout of hyper-volatility. We then addressed how investors should approach the current market, and what they should be doing now with their portfolios.
Finally, we talked about Doug’s new project, a new podcast and website called The Science of Economic Freedom. I am very excited to tell you about this, as I think Doug’s uber-positive message has the potential to help millions of people define, and then achieve, their vision of economic freedom.
So, let’s dig in!
Jim Woods (JW): Doug, tell me what you think about the recent bout of market hyper-volatility. Is this something investors should be worried about, or is this all part of the natural ebb and flow in financial markets?
Doug Fabian (DF): We went through an extended period of low-volatility in markets. Since the presidential election, we went nearly 16 months without a single down month for stocks. I can’t remember a time we’ve ever seen that kind of constant, stair-step rise in markets, and that’s what was unusual.
Yes, we hit an air pocket in late January/early February. While there were plenty of reasons why, those reasons aren’t as important as the fact that markets normally ebb and flow. It also is my opinion that we are going to continue to see more bouts of volatility as the year unfolds, and that’s chiefly because we are in a rising-interest-rate environment, and because stock valuations have climbed to the higher end of their historical norm.
JW: What do you suggest readers do right now, in general, to prepare themselves and their money for a year of increased volatility and a rising-rate environment?
DF: I think people should make sure that they look at their money in terms of different “buckets.” You should have a safe-and-secure bucket where you hold cash and cash alternatives. Then you have your taxable account bucket, and your retirement account bucket. Depending on where you are age wise, you should define your risk profile, and then you should seek the highest returns associated with that risk.
If your time horizon and risk profile allow it, you should use bouts of volatility such as the recent market pullback to your advantage. That means adding capital to the best stocks, exchange-traded funds (ETFs) and mutual funds out there. Finally, we are in tax season, and that means we should be taking steps to minimize our tax liability. Taxes matter, and managing your tax situation with respect to your investments is an often overlooked, but critically important, part of your overall investment strategy.
JW: You have a new project you’ve just kicked off, and I love the title. It’s called The Science of Economic Freedom. It’s both a podcast and a website, and I am really excited to introduce it to my readers. Tell us more about this project, what its goal is and how readers can benefit from your wisdom on these matters.
DF: The Science of Economic Freedom is something that I’m extremely excited about, as I think it has the potential to positively affect thousands, if not millions of people if I do it right. You’ve heard me talk before about my personal passion in life, and that passion is to be a positive influence on the lives of the people I touch. With The Science of Economic Freedom podcast, I get a chance, thanks largely to the help of my partners at Mercer Advisors, to present a free educational initiative to the audience designed to not only educate, but also to help provide the requisite information and motivation to the audience to help them with their investing endeavors.
Much of the reason why I started this new project is because of the overwhelming lack of financial literacy in the country. I’ve read statistics showing that some 70% of people in the United States don’t know how to handle money. That’s an appalling statistic I’d like to improve, and one that this podcast and website is dedicated to changing.
More importantly, The Science of Economic Freedom is not just about investing. It’s also about basic money and personal finance concepts. Concepts such as how to manage taxes, estate planning, insurance planning — and, yes, investing concepts such as asset allocation are covered as well. Just about everything that contributes to achieving economic freedom is a topic of conversation.
And yes, economic freedom is available to every American, but few people actually achieve that freedom because they haven’t been taught how. Many people unknowingly make the same mistakes over and over again, and this is a situation I feel compelled to correct.
I think that with the proper knowledge, and the proper motivation, every American can live out his or her own version of economic freedom — and that’s what the new podcast and website is all about.
JW: Thanks Doug.
I strongly encourage you to check out the great audio content, articles and resources at The Science of Economic Freedom website. You can start anywhere, but I recommend starting out with Episode 1 and listening to each episode in order. Doing so will provide you with the essential basic concepts or how to think about, and ultimately achieve, economic freedom.
I really think you’ll find it a valuable resource, and a great adjunct to what you read in this publication, and to the information you’ll find in my Successful Investing, Intelligence Report and Fast Money Alert advisory services, all of which can be found at JimWoodInvesting.com.
And once again, a big thanks to Doug Fabian for his wisdom and insights.
On the Importance of Communication
“The way we communicate with others and with ourselves ultimately determines the quality of our lives.”
— Tony Robbins
As humans, we face two alternatives when it comes to persuasion. We can have conversations, or we can employ violence. Fortunately, our world is dominated by the conversation option. Yet, that hasn’t always been the case. In fact, the historical record is basically a ledger of times when conversation failed.
Now, when it comes to individual relationships, the importance of communication cannot be denied. The better quality your communication is, the better quality of experiences you’ll have. And, the better your experiences, the richer and more beautiful your life will be.