Category Archives: 2013_Clients

Publication: Who is Gene Fama?

Who is Gene Fama?

You may have seen the news last week that Eugene “Gene” Fama was awarded the Nobel Prize in Economic Sciences. You might be asking yourself, “Who is Eugene Fama?”

The 74 year-old Fama, considered the “father of modern finance”, is a professor at the University of Chicago’s Booth School of Business. Unlike other Nobel Prizes, the Economic Sciences prize tends to highlight the work of those who aren’t often seen in the headlines – until they win a Nobel Prize that is.

Many in the financial community know Fama’s work, and it is the foundation for much of the work we do at Wiseman and Associates. For Fama, it is all about research and empirical evidence, not the headlines. Years ago, Fama demonstrated in layman’s terms that capitalism works, the capital markets are efficient, and that no one person knows any more about a stock than the next person. As Fama would say, “It’s priced in!” It’s quite difficult, if not impossible, to know which is a good stock or a bad stock. We just know that we want to own them all!

Fama’s research led to the development of stock index funds, which eventually lead to ETF’s. He has proven that it is highly unlikely that anyone can pick fund managers who will beat the market this year, let alone year in and year out. This research, and the passively managed, globally diversified, low cost portfolios that it led to has made a world of difference to the average investor. To our firm it is the foundation of our wealth management philosophy.

After 25 years in the investment management business, I have learned that whatever the headlines, Fama would tell you “it’s priced in” and you should own not just the US market, but the whole global market. If that is the foundation of your investment philosophy, as it is ours, you will find that you are no longer challenged by the latest “financial news” and you wont let it distract you from making smart financial decisions.

I hope you and your family are getting ready for the upcoming holiday season. As always, if we may be of service in any way in helping you reach your financial goals, please reach out to me or one of our team members!

For more on “Who is Gene Fama” See the video below!
Click here to view the 3-minute video

Our best to you and your family!

Sincerely,

Wiseman & Associates Wealth Management

Thomas R. Wiseman, II
President

Publication: 2013 Client Letter

June 3, 2013

Friends,

As the first half of 2013 comes to a close, we as a country have been through a lot. From the attack at the Boston Marathon, to the horrific fertilizer explosion in West, Texas, or through the unleashing of Mother Nature’s wrath by the tornados in Oklahoma; it has been a long six months.   We have all been united in grief and prayer for those in need whether or not we have been personally touched by these tragedies.  I am sure you will join me in praying for a second half of the year that is a bit more reserved.

Turning to the financial markets, the S&P 500 Index is up over 15% through May 31st!   The three-year average of the index is up just over 12% as I write this.  However, if we dig a bit further back into the five-year return to include the infamous year of 2008, our favorite index’s return drops to a respectable but much lower annualized return of just 5.81%.  This reminds us that what can go up can also go down.  We are starting to hear the pundits say that maybe this market is overblown, or the bubble is upon us again.   Just this past Friday, I had a prospective client in the morning tell me he had been on the sidelines for the last couple of years because he wasn’t comfortable with where the markets were going but is looking to get back in the game.   Later that afternoon, I had a conversation with a friend who was convinced that with all the turmoil it was time to get out.  A complete 180⁰ from my morning meeting!

Those of you who know me are well aware that I stand by the conviction that the globally diversified, passively managed portfolios we employ are the best way to obtain the returns we all seek.  In addition, we continue to focus on ways to reduce risk, reduce risk, and reduce risk!  After all, our job for most of you is to keep the money that you entrust us with, not to take unwarranted risks trying to hit the ball out of the park.

Thus, our approach is not to tinker with portfolios, time the market, or allow the pundits to sway our resolve.   Our job is to keep your money, and to keep you invested appropriately for your risk tolerance.  We take this job very seriously and appreciate the trust and confidence you have shown us over the years.

The attached article by Jim Parker applies a bit of Chinese “Taoist” philosophy to our passive investment management strategy.   In short, Jim says the same thing that Benjamin Graham and Warren Buffet have preached for years, get invested in a diversified way and leave it alone….

Our best to you and your families for a great summer and a fantastic second half of the year!

Sincerely,

Wiseman and Associates Wealth Management

Thomas R. Wiseman, II

President

    27 West Boscawen Street, Winchester VA 22601

4 West Washington Street, P.O. Box 2264, Middleburg VA 20118
   540-974-2039                                www.wisemanandassociates.com
   Securities offered through LPL Financial, member FINRA/SIPC