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July 27, 2010 at 08:00 PM
In the independent advisor world, few are as respected by his peers, industry officials, and the press as Harold Evenksy, the chairman of the wealth advisory firm Evensky & Katz. On July 20, Evensky sent a letter to the firm’s clients and other interested parties in which he takes a comprehensive look at the current state of the economy and the markets, explores how we got to that current state, and peers into the future.
In typical ‘Harold’ fashion, Evensky describes in a thoughtful, calm way about how we arrived at the current state of affairs, always with the long view in mind. However, he begins his epistle by writing that while “I I wish I could say it’s silly” for investors to be concerned and confused about the markets, “unfortunately, with the last decade seeing some of the most dramatic markets in living memory, I can’t. It is disturbing.”
While making the case for a -slow-but-steady-wins-the-race approach to investing, Evensky then delivers a thoughtful and precise pr?cis of what the issues were that led us into the crisis of 2008-2009. Avoiding laying blame, he discusses the housing bubble, securitization, and government policies, providing a timeline of the key events during the crisis, then brings us up to the present, delivering abstracted prognostications of a Barron’s market guru panel. He then warns, however, that “the future is never clear in spite of the confidence of the guru. Long term investing based on short term vision is dangerous to your financial well-being. Even worse is trying to develop your investment strategy based on the current headlines.”
Evensky then advises investors to “turn off the market news and avoid the Jim Kramers of the world,” quoting Warren Buffett in an 1986 letter– “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.–and a 1992 Buffet note: “Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient.,” before Evensky says simply “We agree.”
