Bowers Capital Management
Can You Fund Your Goals?

What are your goals?

When can we retire?  Will we have enough retirement income?  Will we be able to maintain our standard of living?  Will we outlive our money or will our money outlive us?  How much can we travel during retirement?  Can we afford to pay for college?  Do we have enough life insurance?  Will my spouse have enough  income after I die?


FAQ - Frequently Asked Questions

"We had a bad ten years, so now we're going to have another bad ten years?  I'm overwhelmed by the emptiness of that idea.  The history of the market is precisely the opposite.  If you have a bad ten years, you're likely to have a good ten years."

~Jeremy Siegel

 

Submit your question here.

  1. How long does it take for my account to transfer to Schwab? 

  2. Can I access my accounts on the Internet?

  3. I forgot my Schwab Alliance password.  How do I reset it?

  4. How does online access to my financial plan work?

  5. What is the average return of the average Bowers Capital asset management client?

  6. My bank said they would manage my portfolio for less than what you charge.  May I assume that you will compete with their price?

  7. The last twelve months or so you haven't changed a thing in my portfolio.  I have a hard time seeing why I would pay anyone one percent if my portfolio's composition didn't change at all.  Why didn't you 'do something' with my holdings?

  8. The market is down 20% over the last 12 months.  Shouldn't I just get on the sidelines for a while and wait 'to see what happens'?

  9. What is your incentive for my portfolio to do well?

  10. Is it a good time to get into the stock market, or should we wait until it goes lower?

  11. I want you to pick for me the very best of 5-star mutual funds.  I want only the top investment managers.  You'll do this, correct?

  12.  I don't need a plan.  I just want you to manage the assets.  Will you do that?

  13. I'm thinking about investing in solar and wind power.  My neighbor's broker says there's plenty of money to be made in alternative energy sources.  Since I don't retire for another 20 years, I can afford to gamble with risky stocks with very high potential growth potential, correct?

  14. I don't want any risk.  I've had it with this stock market.  I'm thinking about moving all of my money into bonds and guaranteed bank CDs.  Doesn't that sound like a good idea considering the recession and all that's going on with the economy and the world?

  15. So when you manage my portfolio, you're going to just buy a lot of stocks and bonds, and hope for the best, right?

  16. What is the best family of mutual funds on earth?  I want to diversify my portfolio within that family of funds.

  17. Should I invest some money into an 'alternative investment' like a hedge fund?  They seem very popular and I've read numerous articles about how they compliment a portfolio.


 

1. How long does it take for my account to transfer to Schwab?

From the day that Schwab receives your transfer form, it usually takes about ten business days or less for your assets to arrive in your Schwab account.  We audit the account after the transfer for completeness.

2. Can I access my accounts on the Internet?

You will have your own personal Schwab Alliance website encrypted with a user I.D. and password.  Your site offers, among other features:

  • Live updates of your accounts;
    • balances
    • positions
    • market value
    • gain/loss report
    • transaction history, including transfers & payments
    • eDocuments:
      • monthly statements & trade confirmations are archived for 10 years on your site, ready for viewing, printing, and saving to your computer.
      • quarterly portfolio profile allocation report
  • Quotes & Research
    • markets
    • industries
    • stocks
    • mutual funds
    • fixed income
    • watch list

3.  I forgot my Schwab Alliance password to access my S.A. website.  How do I reset the password?

A Schwab representative will reset your password over the phone at (800) 515-2157.

4. How does online access to my financial plan work?

With your User I.D. and password you can access your plan 24/7.  You can run 'what if' scenarios, the Goal Wizard, and tweak your plan with new assumptions and scenarios at your leisure.

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5. What is the average return of the average Bowers Capital client?

We do not publish or quote an average return of our average client.  Even if we did, it would tell you nothing of value.  Since the goals, investment objectives, and risk profile of a 34-year old surgeon are quite different than those of a retired couple in their early 60s, quoting even an approximate average return would be meaningless and misleading.  The return we aim for is the one necessary to accomplish your financial goals.

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6. My bank said they would manage my portfolio for less than what you charge.  May I assume that you will compete with their price?

If great advice were a commodity, that might be a valid comparison.  I'm confident that your bank doesn't offer what I do.  Advice varies wildly in quality, as do advisors.  You will be hard pressed to find another advisor who will care more about you than I will.

In addition, most advisors render advice based on market and economic predictions and try to guess which funds and stocks will outperform the other thousands of funds and stocks.  Such an approach I believe is thoroughly discredited.  Your fee is the purchase price of a larger net benefit.

The extra few basis points I might cost when compared with your bank must be returned many times over to you in better long-term returns that progress from my behavioral advice at dangerous moments.  If you believe that great advice is a commodity, you have no other choice but to go with your bank.

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7.  The last twelve months or so you haven't changed a thing in my portfolio.  I have a hard time seeing why I would pay anyone if my portfolio's composition didn't change at all.  Why didn't you 'do something' with my holdings?

Over the last twelve months 'doing nothing' was precisely in your best interests.  At critical junctures in the market, 'nothing' is near impossible for most people to do.  You need an outstanding advisor to convince you to do nothing when it really counts.  Inside every tortoise there is a hare wanting to hop out, and I try to prevent that from happening.

You have a magnificently diversified portfolio, well-suited for your long-term goals.  Sometimes 'doing nothing' is doing something...the right something.

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8.  The market is down 20% over the last 12 months.  Shouldn't I just get on the sidelines for a while and wait 'to see what happens'? 

 During the late stages of a bear market many investors like yourself want to get completely out of equities and into cash equivalents.  It 'feels' safe.  Your feelings are normal but they usually result in a decisions that destroy your long-term return.

  • Your portfolio is magnificently allocated.
  • The U.S. economy is not facing Armageddon.
  • This time is never different.
  • Do nothing.

It is important to know that this is precisely what you are paying me to do for you.

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9.  What is your incentive for my portfolio to do well?

The financial incentive is that as the value of your account rises, so will the fee.  When the account value falls--as it certainly will sometimes--the fee will fall proportionately, which is my attempt at walking the walk.

10.  Is it a good time to get into the stock market, or should be wait until it goes lower?

The premise of your question is that it is possible to time the market.  First, let me set the record straight:  It is not possible to time the market with any semblance of consistency.  When you try to time the market once, you have to guess right TWICE--when to sell and then when to buy in again.  Emotional factors tell you to do precisely the wrong thing at precisely the wrong time.  If they do not, then you are not human.

For the long-term investor (is there really any other kind?), the best time to invest in stocks is when you have money available to invest.

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11. I want you to pick for me the very best of the 5-star mutual funds.  I want only the top investment managers.  You'll do this, correct?

Usually that's impossible to do because many mutual funds with the top managers are currently rated 1-stars, 2-stars, and 3-stars.

In fact, a recent study of the top quartile large cap managers for the 10 years ending in 2006 discovered that:

  • 92% had one 3-year rolling period in which they were in the bottom half in performance!

  • 58% spent at least one 3-year rolling period in the bottom quartile!

5-star funds do not necessarily have 5-star managers, and funds with less than 5-star ratings often have top notch managers.  The stars rating system helps Morningstar more than anyone else.

I have a group of what I view as 'top managers' that I use upon occasions to complete a specific allocation requirement.

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12.  I don't need a plan. I just want you to manage the assets. Will you do that?

I will manage your assets without a financial plan.  However, before you decide that you don't need a plan, ask yourself why you would want anyone to manage your assets without a plan. 

With a plan, our focus is to earn a return that will fund your goals and to not outlive your money. 

Without a plan, our focus is on earning the highest, risk-adjusted, return possible that you are comfortable with.

Donald Trump and Bill Gates need plans--and I suspect they have them--, and the farther below Trump and Gates you are in net worth, the greater the importance is to have a plan.  A financial plan helps you to accomplish your financial goals and not outlive your money.

13. I'm thinking about investing in solar and wind power. My neighbor's broker says there's plenty of money to be made in alternative energy sources and CNBC had a guy on who said it's great place to invest. Since I don't retire for another 20 years, I can afford to gamble with risky stocks with very high potential growth potential, correct?  (Note: The answer applies to any hot, trendy investment idea.)

Well, you may have a point when you say you have time to gamble and I suspect there is a ton of money to be made someday alternative energy sources, although I haven't a clue which companies will thrive and doubt that I ever will know how to pick the very best of the industry.

There is a hare that resides in us all wanting to get out, but we already know who wins that race.  For patient investors it's not just that they  can't pick the next Microsoft, it's that they don't have to.

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14. I don't want any risk.  I've had it with this stock market.  I'm thinking about moving all of my money into bonds and 'guaranteed' bank CDs.  Doesn't that sound like a good idea considering the recession and all that's going on with the economy and the world?

I would never recommend abandoning a beautifully constructed portfolio with an efficient mix of assets designed to give maximum risk-adjusted returns.  Changing an efficient plan results in an inefficient plan.

I would no more recommend that you 'load the boat' with bonds and bank products anymore than I would recommend you 'load the boat' with oceanfront property in Arizona.  Moving your money into bank CDs is not escaping risk.  It's putting yourself in a situation that 'feels' warm and fuzzy but which offers zero protection against loss of purchasing power.  In fact, reallocating a bank CD portfolio to a balanced stock-and-bond portfolio actually lowers risk and increases long-term growth potential.  Building any portfolio around one central idea--fixed rate bonds and CDs, in this case--is a profoundly bad idea every time.

Being in the market during the next 25% decline is not the risk; the risk is in being out of the market during the next 100% move up.  Both will happen, this we know; although I suspect the latter will occur before the former since the market of 2008/2009 has presented us with prices many of us may never see again.

Some great investment thinkers even see bonds as the next bubble.  As one of the great investors of all time, James O'Shaughnessy, wrote in Yahoo Finance article dated March 17, 2009, when talking about the 40-year real rates of returns for T-bills and long-term government bonds:

"Note that, unlike stocks, both (T-Bills & long-term government bonds) have had negative 40-year returns, and long-term government bonds returned losses in 32 percent of the 40-year periods. Indeed, at current yields I believe that Treasuries are the next bubble and that ten years from now, people will rue the day they fled the volatility of the stock market for the "safety" of government bills and bonds."

Bonds have their place in a balanced portfolio, but loading the boat in anything only puts you more at risk.

Your are about to shoot yourself in the foot.  Focus on goals, not short-term market movements.  Stick to your asset allocation plan.  Rebalance if your portfolio needs it, then let it grow.

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15. So when you manage my portfolio, you're going to just buy a lot of stocks and bonds, and hope for the best, right?

Not exactly.  I'm going to build a portfolio of some of the world's greatest companies; and allocate them efficiently, based upon your individual risk profile, financial goals and time horizons.

The intended result is a tailored portfolio that offers the maximum return for the least amount of acceptable risk; but more importantly keeps you on track to fund your goals.

 

16.  What is the best family of mutual funds on earth?  I want to diversify my portfolio within that family of funds.

I'm not exactly sure what they means but it doesn't matter.  The best is the family of funds in which you feel so comfortable with that your investing behavior remains the same through all market environments.  Since your most important job is to keep your emotions out of the process, focusing on the "best" family of funds, whatever that means, is wasted energy.  Just being efficiently allocated is at least 90% of the battle; selection and timing is the last 10%.

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17.  Should I invest some money into an 'alternative investment' like a hedge fund?  They seem very popular and I've read numerous articles about how they compliment a portfolio.

Non-mainstream investments like hedge funds, private-equity, managed commodities futures, might be fine if they stand the test of two criteria: (a) will such an investment help the client's portfolio in the long run?, and (b) does advisor and client alike understand the proposed alternative' investment, which will or will not keep you from bolting when it hits a performance speed bump.

More times than not, both of these criteria cannot be met.  If both criteria are met, then I'm all for allocating to such an investment, with the intention of giving it 10 years or at least a full economic cycle.  You should stay married to those types of investments a long time if you feel compelled to marry them in the first place.  Past performance absolutely does not even hint at future performance with these type investments.

 

Submit your question here.

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