Category Archives: strategy

Space Between the Notes

I always listen to what I can leave out.
-Miles Davis

 A lot of art, a lot of life, is made better by subtraction. The sparing use of musical notes or brush strokes or words in a sentence lends greater emphasis to those that remain. The space between the notes is like a showcase, almost a stage of its own.

A garden will have better results with fifteen carrots in a square foot than it will with fifty. Fifty looks more impressive when they first sprout, but they quickly crowd each other out. The patient use of space pays off when it counts.

Most people will get faster results by lifting weights two or three days per week instead of every day. It’s not the lifting of weights that makes you stronger – it’s recovering from lifting weights that makes you stronger. Without space to rest and repair, the workouts will weaken you over time.

In the course of managing an investment portfolio, it is easy to fall into the trap of wanting to always make things happen. Chase from one market to another. From one strategy to another. To keep adding new screens, more complex rules and metrics. These efforts seldom yield good results. The more effective course for most would be to do the opposite. Subtract. Continue reading

What Is Your Plan B?

The first quarter of this year saw stocks, bonds and real estate all produce positive returns with real estate producing the best gains. The second quarter saw stocks, bonds and real estate all produce negative returns with real estate performing the worst. This is a good example of why it’s important not to get too caught up in month to month and quarter to quarter results.

Since 1950, the split between up and down days in the stock market is about 54%/46% ( Short term movements tend to not have much significance, but little edges add up over time.

Speaking of time and significance, I’m declaring the contest for “quote of the year” officially over. We have a winner:

“How can something like this happen without prior warning?” asked Angeliki Psarianou, a 67-year-old retired public servant, who stood in the drizzle after arriving too late at one empty ATM in the Greek capital.”



In Ms. Psarianou’s defense, she could have been trapped in a sealed mine shaft or adrift at sea for the last six or seven years. We don’t know her backstory. But there is one thing we can be pretty sure of, she didn’t have a Plan B.

Having a Plan B is simply an acknowledgement that things may work out differently than you hope. You don’t really think your house is going to burn down do you? Yet we carry insurance and keep working batteries in the smoke detectors just in case. Not because we think it’s going to happen, but because it could and, if it did, the consequences could be tragic.

Ms. Psarianou could have spent the last few years preparing for a financial disruption. Instead, she ignored the obvious possibility in exchange for, presumably, the fleeting comfort of pretending that bad things only happen to the other guy. This isn’t unusual. Some lessons take a dose of calamity to sink in.

The Plan B for our portfolios is an acknowledgment that, although we can’t know the future, we can predict that events and conditions will affect us as investors in four main areas:

  1. Economic growth
  2. Interest rates
  3. Inflation
  4. Investor sentiment

This makes things simpler. We don’t have to know why any of these factors will increase or decrease. Our job (my job) is to have a plan in place to deal with any combination of outcomes for these factors. Our default stance is to have a relatively standard portfolio that owns stocks, bonds and real estate. The reason that this portfolio appears standard today is because it is adapted to conditions that have been the standard here for the last few decades.

Today’s conditions have not always been the standard and they aren’t the standard in many other parts of the world right now. A Japanese investor has had to adapt to dramatically different conditions than ours over the last twenty years. Now that Ms. Psarianou has had reality thrust upon her, she will be forced to adapt. Which is unpleasant. Being prepared makes things so much easier.

Being prepared can also make things much more profitable. At some point, and it might have already started, conditions will change again in Japan and investors will be rewarded for concentrating their assets in their home country. A new standard will develop, just as new standards have developed in places like China and India. The future may look very dark to Ms. Psarianou, but it won’t always be that way. Maybe she’s working on a Plan B right now to capitalize on that eventuality. I really hope she is.

As for us, the story hasn’t changed much from a month ago. Trends are still in place, but they continue to weaken. This shouldn’t necessarily be taken as ominous, market returns ebb and flow. A protective exit is possible if conditions decline, but for now we stay the course.


Disclaimer: Past performance is not indicative of future returns. Information displayed is taken from sources believed to be reliable but cannot be guaranteed. All indices are unmanaged and investors cannot invest directly into an index. Ideas and opinions expressed in this article are the sole responsibility of Patrick Crook/PLC Asset Management and do not reflect any stated opinions of Commonwealth Financial Network, National Financial Services LLC or any other person or entity.

Interview With Corvallis Estate Planning Attorney Nadine Davison


Estate planning is a topic that often comes up in investment discussions. The complexity of this area and the potential ramifications of doing something wrong makes getting advice from a qualified expert (not me) crucial. Recently I had the opportunity to pass along some of your questions to a highly qualified specialist and expert in the field, Nadine Davison. Nadine is an estate planning attorney and shareholder with the Corvallis law firm of Smith, Davison & Brasier, PC.

Originally from Bethesda, Maryland, Nadine moved here twenty years ago when her husband accepted a position as an English professor at OSU. She has two teenagers, a seventeen year old son and a fourteen year old daughter.

Before moving to Oregon, Nadine practiced for eight years in Washington, DC, representing corporations and individuals in all aspects of complex commercial litigation. After moving west, she continued her litigation practice in Eugene for three more years, and then took a few years off to be home full-time with her children before joining Jeanne Smith and her practice in 2003.

Below Nadine answers many of the questions that have been posed to me over the years. Hopefully, this discussion sparks some thought in your household on whether or not your current plan is up to date and adequate to the task.

1. What’s the danger of not having a plan – let’s say I have fairly typical assets and I die? What’s the danger in terms of my heirs?

Actually, everyone already has a plan – Continue reading

You Are Lying To Yourself


We all do it. Consciously or not, we all lie to ourselves and it costs us money.

“The majority of your beliefs, particularly in business, are driven by what you want to be true.”    -Tom Asacker, author of The Business of Belief

We form beliefs about things based on experiences and perceptions that are often just fragments of reality. An initial impression or a bit of passed down wisdom that we’ve heard from a young age can have an enormous and long-lasting effect on our expectation of how things are supposed to work. This leads us to mainly see only what we already believe and discount things that challenge those beliefs. It’s called confirmation bias and it’s probably costing you money right now.

For example, let’s say you’re Continue reading

Conservative Investors Should Rethink Their Reliance on Bonds

Conservative investors need to stay vigilant

As I write this today, many of my clients who consider themselves to be conservative, long-term investors are holding positions in what most people would characterize as risky investments. Securities that represent commodities like coffee and natural gas. Foreign stock markets like Greece and Spain. Junk bonds. Foreign junk bonds. You get the picture.

These investments have been made on my advice. As someone charged with the responsibility of ensuring that the investments I make or recommend be suitable for that person, these are not decisions that have been made lightly. In fact, these investments are made precisely because of that responsibility.

Conventional wisdom says that a conservative long-term investor that is primarily interested in the preservation of capital should hold mostly bonds. History tells us that this approach may seriously underestimate the substantial, long-term risks of that advice. Continue reading