• Bluemound Asset Management
    Bluemound Asset Management A Kirk Spano company

A Better Way…

Kirk SpanoAccording to Warren Buffett, the top 2 investing rules are…

Rule No. 1: Never lose money. 

Rule No. 2: Never forget rule No. 1.  

What we can take from those rules is that the most important aspect of financial planning is having an investment approach that protects you from large losses and still gives you an opportunity to make money over the long-term. Very few people actually have that.

My name is Kirk Spano and I founded Bluemound Asset Management, LLC in 2010 as a response to what I saw the financial industry doing to people. I am widely published, including on MarketWatch.com of the Wall Street Journal network. I have also appeared on television and radio. Take some time to learn for yourself how I have helped people a lot like you. 

What I can tell you in short is this: if the way you have been invested has subjected you to large risks and not given you the returns you hoped for — there is a better way.

MarketWatch  Fox Business  WisBusiness.com  Seeking Alpha

Ever Feel Like Andy Rooney?

This is an archived article written November 21, 2003 

Ever Feel Like Andy Rooney?

I was in my office recently writing an article about why and how Americans were missing the boat on international investing.  An idea and practice that likely could increase their potential returns and lower their risk.  Then I talked with a couple of prospects, got correspondence from another and watched a little bad CNBC.  I decided that finishing the international investing article wasn’t as important as reiterating some points that I like to make to folks over and over again– if nothing else to remind myself of the points.
 
Making money isn’t always about making money.  Most of the time it’s about not losing money.  And in that vein, it’s about measuring risk versus potential reward.  That’s called “risk adjusted returns.”  Having a Margin of Safety when selecting investments is imperative to achieving strong risk adjusted returns over time. 
 
Building in enough margin of safety when investing is a lesson that I learned not in the hardest way, but in a hard enough way.  During the current bear market– I believe we are in a secular bear market, even if the past couple quarters have been good– I’ve done pretty well by most folks.  Bad luck, getting lied to by some companies, folks refusing to listen and my own misjudgments did lead to some losses however.  I think I’ve learned from my mistakes and am a lot more focused on investing with a safety net.  I hope you can use my experience to do the same.     

Now I know that I’m not the best in the world at this whole investing thing.  But boy oh boy, I study a lot, and from time to time, I find a gem of a company at the right price.  For folks with accounts appropriate for single stock investing, we usually buy stocks in addition to mutual funds.  Most importantly though, I work this Asset Allocation thing.  That is, I try to find the right mix of asset classes at the right prices for the right accounts. 

Keeping track of the general pricing of multiple asset classes isn’t that hard anymore.  Computers are pretty neat.  Knowing when asset prices are relatively high, low or about right is really tough though.  I cheat by reading and listening to a few multi-millionaires (the kind measured in hundreds of millions) and billionaires who have pretty good investment records.  You should cheat too, just remember to copy from the smart kids, not some loud flunkie.  After I get a bit of direction, I crunch numbers, consider the future and try to find asset classes with more upside than downside.  Not the sexiest way to pick investments, but it seems to make sense.  BTW (that’s “by the way” for those who don’t use online abbreviations) buying low and selling high, isn’t market timing, it’s smart.  And it pays to be super picky and cautious. 

We diversify among asset classes so that we don’t have to be perfect or clairvoyant– which we can’t be anyway.  Our goal is to create a good fund portfolio by focusing on undervalued asset classes and adding a few undervalued stocks (20 to 30 ultimately, for reasons I won’t go into today) over time for spice, and whoola, money stew– just allow 10 to 20 years to simmer. 

So why do I feel a bit like Andy Rooney?  Well, I’m concerned that the current round of Wall Street corruption is just going to be a distraction to the smartening up of investors.  A few months ago I heard somebody mention their concern over the weakening dollar, whether it could lead to capital flight and depress markets.  I heard somebody else wonder how tax policy would affect the economy and certain types of investments.  Seemed to me that until the recent stock market uptrend, mutual fund scandals and other Wall Street malfeasance, investors were starting to smarten up.  Now I’m not so sure.  I know that’s harsh, but it might be true. 

I roll my eyes in amazed consternation when I hear a prospect, a guy at the bar (yes, I like beer) or a broker (can you believe that) talk about this or that HOT idea, then hear that they have no idea what that company earns or what some mutual fund is invested in, AND, they never mention prices. 

I am also really baffled when folks who don’t trade securities full-time try to pick a good time to get into or out of stocks based on a guess of where the markets or a stock price are going.  That IS market timing– and it doesn’t work for about 90% of the folks who try it.  Folks, there is only a very small handful of traders who make money– and they do it by taking advantage of those who don’t do it full-time.

I’m bugged that many folks seem emotional (not the people I work for) about getting the best return this quarter or that quarter.  I’m bewildered that many people’s lust for a few extra percentage points of gains supercedes their willingness to manage risk– until of course they lose a few dollars.  I’m bothered that the media feeds into the Wall Street cult of personality over and over again.  I’m perturbed that the middle class seems to be getting squeezed again when they really don’t have to.  I’m concerned that so many people are focused only on American markets.  I worry that Americans are going to miss the growth of the world economy over the next few decades. 
 
I’m especially bugged when I start to feel like Andy Rooney, like I feel now.   So, I’ll stop worrying so much about all this stuff, and make some money in spite, or because of it.  Maybe you should do that too. 

We’ll talk about those international investments some other time.  Hmmmmmm?  Maybe we just did. 

I hope you read in Andy’s cadence.  If not, you might want to read this again.

 

Computers make it easier to do a lot of things, but most of the things they make it easier to do don’t need to be done.”  Andy Rooney

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Tactical Asset Allocation

The best offense is a great defense.

Tactical Asset Allocation

Are you utilizing the appropriate defensive strategies for your portfolio?

Today’s economic and financial climate are extremely dangerous and could lead to a large, fast drop in asset prices. Do you have a strategy to get out of the way quickly should that happen? 

“Set it and forget it” methods of investing like mutual funds, do not usually work. So-called “guaranteed” products, like annuities, are expensive, often lock people into low returns forever and aren’t always as safe as advertised. 

Tactical Asset Allocation using some of America’s top financial minds can offer protection that sales driven investment approaches don’t. Call today to find out how a tactical investment strategy can protect your retirement nest-egg and secure your lifestyle.

Punch Card Stocks

Buffett MungerWarren Buffett has famously said that investing in only twenty stocks, represented by a punch card, could improve your financial welfare. That is the impetus behind my “Punch Card” Stock Portfolio. These are the roughly twenty companies that I believe belong in the long-term growth portion of your portfolio and mine. 

Read my columns on MarketWatch, on my websites and elsewhere to see how a slow-handed and well thought out approach to stock investing can control risk and be profitable long-term. Learn more here.

 

Time for a Change

Do you want greater peace, security and freedom to pursue the lifestyle and legacy you really desire?

Do you want to avoid large losses in the next financial crash?

Do you want to take advantage of market opportunities when available?

Are you willing to take a few steps to secure your best future?

If so, call me today: 855445-4321

Monthly Investor Call

The first Friday of each month at 4pm Central. Open to the public.

My next call is on: October 3rd, 2014

To join, follow this link or call 262822-3677. No PIN needed.

Submit questions by email. Podcasts available.

Retirement Catch-up Plan

Behind on your retirement saving? Call us today to get back on track with a unique barbell approach to retirement saving.

Kirk’s Recent Quarterly Letters

Freedom to Unite and Invest in Tomorrow

UpWhen I was a kid I dreamed about being an astronaut, a baseball player, a rock star and the President. As I hit my teen years and I hadn’t done much musically, I dropped the Mick Jagger aspirations and focused on baseball. By senior year of high school I knew that baseball was fun, but that I wasn’t an elite player so I had to drop the Robin Yount dream too. 

When I got to college, I focused on having a good time and taking courses that might help me when I grew up. For awhile I thought I’d be a lawyer, but a great uncle gave me some guidance and I decided against that career path. I graduated from college with a degree in economics and a second in political science with a law certificate tossed in. That’s not what I dreamed about as a kid, but it has proven to be a good direction for me. I got there by taking one step at a time and just not stopping.

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The Great Retrenching Continues…

Total DebtIn September of 2008 I had coffee with a group of executives from local manufacturers, it was just after the financial crash had started. One company president in the group — a particularly political sort — asked me how long the economic slowdown would last? I said “until the middle of the next decade sometime.” He laughed at me.

Fast forward to today. What we know now is that the economy still has not recovered in real terms and that it will be a few more years until it does. The United States is just about in the middle of a demographic depression that can not be fixed with legislation or easy money. We must wait until household formation and spending by the very large millennial/ echo boom generation ramps up. Last year was the first year since 2008 that we saw an uptick in the birth rate, so that is a positive, however, it is only a baby step.

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2014 Another Crossroads

S&P 5002013 proved to be a profitable year for investors. The S&P 500 rose 29% and set new record highs. Global balanced indexes, more representative of most people’s portfolios, also did very well by returning about 20% despite a tough year in China which lost 9%.

The high return of the stock market had an expected effect on people. Many investors started to chase returns and look to be more aggressive after years of being risk averse. The result was that 2013 saw the most money from retail investors flow into stocks since 2000. I discussed this in a November article on MarketWatch titled “How Bad Will New Investors Get Hit.”   

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Volatility, Opportunity and the Next Crisis

Secular Bulls and BearsOver the past several years, I have discussed the monumental demographic changes that not only America is dealing with, but also that Europe, China and Japan are dealing with. The cumulative impact of national and personal debts, de-leveraging from the bubbles of the 2000s and the four largest economies in the world having aging populations has created global demand destruction that is not likely to end soon.  

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