A Wealth Advisory Practice


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Recent Posts:

I’ve avoided discussions in general regarding Bitcoin given that I have not viewed Bitcoin as investable option for a long-term investor’s portfolio. Saying that, there has been a wave of interest, one might call a bubble, in Bitcoin. A year ago, Bitcoin was priced at approximately $1,150. In late December 2017, the price of Bitcoin topped at $19,206. Bitcoin is priced approximately at $9,950 as of the time of writing.


Welcome from Smith Patrick Financial Advisors. This is our new home on the web. We have moved from a more complex web design to a hopefully much simpler creation. The goal will be to be able to deliver the usual information like «who we are» and «how to contact us» while also providing our views on current events and more timeless topics. Enjoy and keep checking back for new content.

Estimating future returns on equities has been somewhat vexing in recent times given the impact of share buybacks. Share buybacks by companies in the S&P 500 have exceed the payout in dividends for 12 of the past 16 years (2000-2016). The challenge is separating what cash return is received now and what the growth of those cash returns will be in the future. If we were to only to use historical returns it wouldn’t matter the mix, but when forecasting based on projected payouts, growth in payouts, and current valuation levels, it becomes very valuable to estimate the different drivers of returns.

Bitcoin and associated blockchain technology has been a growing topic of interest for several years. This year it has become more in focus as the price of a Bitcoin (BTC) in US dollars has both risen and fallen dramatically this year stirring up conversations of a Bitcoin bubble and whether Bitcoin can be viewed as an investable asset. (For the record we do not currently believe Bitcoin is something to invest in for prudent investors.

In 2015 I worked on a risk questionnaire that was designed to expand on the more simplistic risk scale that I use as well as is the industry standard. The idea came from a journal article co-written by Dean LeBaron from Batterymarch and published in 1989 in the Financial Analyst Journal.1 As part of introducing the questionnaire, I used what was called the Litterer Perception Formation Model. The idea being that it is important to understand how we process information and make decisions, rational or otherwise.

Here at Smith Patrick we have migrated our financial planning process to MoneyGuidePro. A major reason is the ability to be more interactive with clients in the planning process. This interactive and iterative process is very beneficial in our opinion. Which brings me to this blog post. One of the first changes to our past method is switching from a cash-flow method to planning using a goal-based method. The reality is that when discussing financial planning based on cash flow analysis or by setting goals, it is more about selecting an appropriate method to achieve a plan.

Market Observations for March 2017 After strong post-election moves, the financial markets continue to tread water. For instance as discussed in our November observations that the US 10-year treasury yield jumped to 2.37% at the end of November. The yield was 2.40% at the end of March. This is clear evidence of how informational efficient the capital markets are as they adjusted expectations given the US election results in November.

Market Observations for December 2016 November was a very active month. The biggest movement came from the jump in interest rates. The 10-year US Treasury jumped from 1.83% to 2.37% in the month. This was a trend that had begun back in July when the 10-year dropped below 1.4%. Much of the movement however was post presidential election. The US dollar index also jumped in November, which makes imports cheaper, but is a headwind for overseas investments.

When we look at developing a financial plan or investment strategy, we are interested in determining a household’s savings and spending profile. This in turn helps us generate a cash flow profile which along with current savings is one of the major cornerstones of developing client investment strategies. We find however that client’s often need some help with determining their budgets and more importantly – how to structure a budget.