Merry Christmas. Lessons learned by Mr. Potter

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When I was young my family would often watch Frank Capra’s “It’s a Wonderful Life” at Christmas time. Many years have passed since the last time I saw the movie. But this year, with it showing free on Amazon Prime, I let the kids stay up late one night and we watched this Christmas classic, popcorn and all.

As the story unfolded, I found myself seeing George Bailey differently than I ever have. In many ways I saw myself in him, and I saw many of you. Trying to do the right thing. Trying to meet the demands and expectations of life. Trying to run a small business. Trying to raise a family. Trying to balance the expectations and dreams of a life of adventure and charm with the realities and humdrum of the daily grind. As the pressures mount, George breaks down and loses it. With this viewing, instead of being amused by George, I felt compassion for him.

I love this story for the rich messages of love, kindness, hope and forgiveness. And I love it for how this movie beautifully teaches the value of a human life, even the “worth of a soul.”

Clearly George is the star of the show. But there is another lesson to be learned that is applicable today by Mr. Henry F. Potter, the old miser and George’s arch enemy. Mr. Potter is mean, heartless and sour. He is the embodiment of greed and the antithesis of the Christmas spirit. He gives a great example of how to end up unhappy and alone.

But he is a very wealthy man. And what if, with his wealth, he were good? We don’t identify with Mr. Potter’s motives or his character, but that doesn’t mean we won’t learn from him.

In one scene George and Potter are arguing about what happened during the market crash of 1929 and how Mr. Potter “stole everything,” during this time. During this scene, Mr. Potter says these magical words: “I’m the only one who kept my head.”

And he did. As people were dumping stocks and selling everything they owned at fire sale prices and making runs on the bank, Potter was buying.

As I write this, the market is down 16.6% from its high on September 20, 2018, exactly three months ago. As the market falls, the worrying starts for many. This may be a time of testing for you—will you “keep your head?” Or will you line up with the many who don’t and sell what you have at sale prices?

What you do is your choice; our advice is to stay the course with the plan you have. Here are some of the reasons why:

  1. In my life I have witnessed many, many people squander wealth and bring upon themselves financial ruin through a multitude of poor choices. I have never, not even once, seen a person lose their way by following a well-designed financial plan with discipline.
  2. Almost everyone reading this will invest much, much more between now and when you retire compared to what you’ve already invested. As such, a market crash would actually help you buy more “on sale” (stocks are on a 16.6% sale since the price 3 months ago).
  3. If the first point doesn’t apply to you, and you’re nearing the end, remember that your distribution plan will occur over the rest of your life, and these events are baked into the plan and your probability of success. You don’t write a check for retirement on the day you retire. If you look at any 30+ year time horizon, what difference does the latest zig or zag make?
  4. Don’t forget what you actually have—ownership in real companies. These companies, in the aggregate, aren’t disappearing. And if you want to “touch them,” go to Costco, or go buy gas, and touch away, kick the bricks, and perhaps even boss a few people around like Potter would.
  5. Market price ONLY matters if you’re buying or selling. If you’re buying a new TV, you wait until Black Friday (or right before the Super Bowl). If you’re buying groceries, a sale is your friend. But most investors get this wrong on stocks; if you’re buying, wouldn’t you hope for a sale there too?
  6. The phrase “the market is falling” is misleading, as it implies that the market will continue to fall in the future. The person who says this is thus implying that he/she can see the future. I’m not saying that the market won’t continue to fall (if it does, consider yourself lucky, see #4). What I am saying is that when the market turns, it will race off like a locomotive but without waiting for passengers to get back on.
  7. Regardless of what the market price does, those who own stock are always recipients of the quarterly dividends paid by most companies and the earnings made by all companies (even when“retained” to grow the company).
  8. If you just can’t take it and decide to get out, remember that you’ll have to time the market right not once, but twice. You need to know the precise time to get out and the precise time to get back in.

With this volatility, others become less enchanted with “the market,” and may be tempted to invest in other ventures that are less “crazy.” But remember, any asset in the history of the world—from Christmas trees to baseball cards to shipping boats—has its own market and fluctuating prices. But what these pseudo safe haven assets don’t have is often a live ticker symbol and they aren’t the focus of the national news.

As a reminder, our office will be closed until after the New Year, opening again on January 2, 2019.

Until then, don’t forget to channel your inner Mr. Potter and keep your head. And please have a very Merry Christmas.

Nate WilliamsMerry Christmas. Lessons learned by Mr. Potter

Repost: Investing Strategically, Not Emotionally

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This article is featured in the fall edition of our 360 Insights Quarterly Client Newsletter.

By J. William G. Chettle

While many of us understand that our emotions can compromise our long-term financial goals, it isn’t always easy to ignore media hype. But letting emotions guide our investment decisions can have a real impact on our portfolios.

Sometimes what seems like a reasonable investment strategy is actually emotions in disguise. We believe these emotional strategies can be particularly harmful, because at first glance they may seem like good, even rational, ideas.

  1. Emotional strategy: Waiting for the “right time” to invest. Timing the market is almost impossible to do successfully, even for most professional money managers. Many investors after the Great Recession sat on the sidelines as U.S. markets went up and up, almost tripling in less than a decade. In 2016 and 2017, some financial experts predicted an imminent stock market decline. If you had invested according to their predictions and taken money out of your portfolio (or stopped investing), you would have missed out on a 12% total return in 2016 and a 22% total return in 2017 in the S&P 500. Eventually, a bear market will happen, but it is almost certainly riskier trying to predict it and avoid it than to ride it out. Smarter strategy: Ignore the pundits (and your own emotional impulses) and invest for the long term.
  1. Emotional strategy: Buying the stocks of popular, innovative companies that are generating buzz amongst your friends. While it is fun to feel like you are part of a cool club and are investing in the future, innovative companies are not always the most successful investments. Take Google and Domino’s, which both went public in 2004. Google, which continues to make incredible inventions and technological advances, returned 1985% through the end of 2017. Meanwhile, Domino’s, which makes pizza and breadsticks, returned 2720%.1 Whenever you invest in a limited number of companies, you become susceptible to what is called idiosyncratic risk, or risk that applies only to one type of asset. For example, a company’s miracle drug could turn out to be a bust, or the CEO of another company might make embarrassing public pronouncements … and suddenly you are faced with major losses. Smarter strategy: Own a broadly diversified portfolio, so that troubles with one company, or sector, or country, have less impact on your overall portfolio.
  1. Emotional strategy: Investing in products or managers that purport to have some special “edge.” This is almost the entire premise of the hedge fund industry, which claims that its proprietary algorithms and cutting-edge research make it well-positioned to deliver outstanding performance. Over the past decade or so, the reality has been much less impressive, with hedge funds, as a whole, significantly underperforming the S&P 500. Because hedge funds are not subject to the same investor protection regulations as other types of investments, they may provide less transparency about their strategies. Smarter strategy: Invest in products, such as mutual funds, that are highly regulated … and avoid any product or manager claiming a “secret sauce” or applying untested methodologies (or tested methodologies that don’t generally work that well).

Your financial advisor can help steer you away from fads and emotional decisions and toward rational strategies that are based on decades of academic research and insight. As the money manager Jim Rogers noted, “People are too quick to accept conventional wisdom, because it sounds basically true and it tends to be reinforced by both their peers and opinion leaders, many of whom have never looked at whether the facts support the received wisdom. It’s a basic fact of life that many things ‘everybody knows’ turn out to be wrong.”

1 Source: Yahoo Finance as of 12/31/2017

Nate WilliamsRepost: Investing Strategically, Not Emotionally

A Summary and Commentary of Warren Buffett’s “2018 Letter to the Shareholders”

Nate Williams Financial Planning, Investments 1 Comment

Each year Warren Buffett, the greatest investor the world has ever known, writes a letter to the shareholders of his company, Berkshire Hathaway.

This letter has become somewhat of a “secret scroll” for investors and business geeks alike, with Mr. Buffett pouring out wisdom and wit in his typical style of brutal honesty. I have been reading this annual letter for years and recommend it to you if we share this interest.

(Last year, I summarized Buffett’s 2017 letter on this blog, which you can read here:

For those of you who want the summarized version of this year’s letter applied to doctors, keep reading….Read More

Nate WilliamsA Summary and Commentary of Warren Buffett’s “2018 Letter to the Shareholders”

The Looming Market Downturn

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As the second longest bull market in U.S. history continues, many investors are worried about when the inevitable downturn will occur. While few investors enjoy market “corrections,” long-term investors understand they are inevitable, can be expected every couple of years, and are part of the necessary tuition to participate in the stock market.

We hear concerns about the market often and its inevitable future downturns. One specific worry we hear is that “the market is at an all-time high.” This is concerning to some because they fear that if the market is at an all-time high, then it must be at its tipping point, ready to turn at any moment; what goes up, must come down, right? Not always. The price of the “market” is a representation of the health of the current (and expectation of the future) overall economy; the reason the market goes up over time is that the economy grows and improves. For example, compare the iPhone X to the very first iPhone. To say that Apple has improved is an understatement. The reason the market is at an all-time high today is because the average standard of living is also at an all-time high and most likely always will be. To argue that the market will fall and stay down is akin to arguing that the iPhone XX will be an inferior product to the iPhone X. Possible, but not likely.

So, what do you believe about the future? Do you think humankind will be better off 20, 50, or 100 years from now? Will technologies continue to improve? Will our ability to provide healthcare improve? Will our ability to grow food and feed people improve? Or will we as a population decline? If you believe that the future will be better than the past, then, apart from the latest zig or zag, you can expect that the market will always be at an “all-time high.”

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Nate WilliamsThe Looming Market Downturn

4 Charts Every Investor Should Know

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(This blog post, 4 Charts Every Investor Should Know, was compiled and revised from a newsletter sent out by Loring Ward, our investing partner).

Sometimes a picture really is worth a thousand words. In this post, I’ll share four charts that I believe every investor should understand. These charts focus on some of the basics of investing, like focusing on the long term, diversification, and not letting emotions drive your portfolio.

#1: Let Markets Work for You

Good things come to those who wait—and to those who don’t let short-term news events scare them out of staying invested for the long-term. Every generation of investors has had its reasons to worry and pull out of the market from the Great Depression, World War II, and Vietnam of earlier generations, to the more recent Black Monday, dot com bubble, and Great Recession. But if you had invested $100 in the U.S. stock market back in 1972 and left it alone all those years, that $100 would have grown to $11,086 by the end of 2017. Decade after decade, markets around the world have been significant generators of long-term wealth for patient, diversified investors.

(see footnote #1)

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Nate Williams4 Charts Every Investor Should Know

How to Become a Decamillionaire Doctor, Part II

Nate Williams Financial Planning, Personal Management Leave a Comment

In last week’s blog post, I discussed the first two essential phases of becoming a decamillionaire doctor, which are:

  1. Become a clinical expert
  2. Learn to make money with your clinical expertise by:
    1. Learning to lead
    2. Establishing systems in your business
    3. Learning to sell
    4. Doing your work fast

This week I’d like to discuss the third phase of this process:

3. Learn to manage your money like a decamillionaire

One of the key takeaways with phases 1 and 2 is that you will be far more successful with good help. The most successful practice owners get professional help from consultants to learn how to run their practices in addition to the daily help they get from their staff.

In our complicated world, it is virtually impossible to know everything you need to know about every area of life for the decisions you need to make. For example, in your practice do you know how to run payroll? Are you also an expert on search engine optimization? Do you also know all the employment laws in your state and are you 100% in compliance with those? If your goal is to succeed in your practice (and in life), you need help from those more skilled than you in that area of expertise. To do this, you’ll need to find good, trustworthy help.

Likewise, when it comes to managing your money, you need help. Can you increase your financial intelligence by reading books on the topic? Absolutely, and you should. I will never say that someone will fail if they DIY their finances; but I do say – and will say again – that you will have a much greater probability of success with good help.

Year after year, I am surprised at how few doctors are good at this critical part of the process. Why is this? How can people who are so good at making money (I’ll assume that you’ve mastered steps 1 and 2 if you’re still reading), be so bad at keeping it? There are a lot of reasons for this answer. I’m going to highlight three main problems you face as to why it will be difficult to hang onto your money and get it working for you.

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Nate WilliamsHow to Become a Decamillionaire Doctor, Part II

How to Become a Decamillionaire Doctor, Part I

Nate Williams Leadership, Practice Management 1 Comment

Who Wants to Be a Decamillionaire?

For over a century in the United States, “millionaire” has been the ultimate standard for financial accomplishment. Unfortunately, millionaire doesn’t carry the same “ring” to it as in decades past. Although it is always fun to see our clients’ net worth pass the 7-digit mark, to sustain a lifestyle that most doctors become accustomed to, they will now have to far surpass the millionaire mark.

At Practice Financial Group, we have been preaching for years now that the ideal financial status is to be debt free with a $5,000,000 to $10,000,000 in retirement investments. This number excludes your practice, your building (if you own it), and your house.

Does this sound lofty? Although we are optimistic by nature, we only set achievable goals. This goal of being debt free and having $5-10 million in the bank is quite achievable, but most doctors will not reach this mark.

To become a decamillionaire doctor, there are at least three aspects to this process in which you must succeed. If you fall short in any of these areas, you’ll fall far short of your financial potential, guaranteed.

  1. Become a clinical expert
  2. Learn to make money with your clinical expertise (i.e. run a profitable business)
  3. Learn to manage your money like a decamillionaire (i.e. get out of your own way!)

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Nate WilliamsHow to Become a Decamillionaire Doctor, Part I

Article Share: “What if Rip Van Winkle Invested in the U.S. Stock Market?”

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The following article was written by a friend and colleague of mine, Sheldon McFarland, from Loring Ward. I thought the article was well-written and useful on a very important topic – to help us maintain a long-term investment perspective. I hope you too find the information relevant.



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Nate WilliamsArticle Share: “What if Rip Van Winkle Invested in the U.S. Stock Market?”

Success in Practice Podcast Event Invitation

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Hi Everyone,

I wanted to invite you to join an exciting and informative podcast event I’m participating in beginning Monday, July 17th.

My friend Jill Parker, Practice Advisor, is the creator and host of this Success in Practice Event which brings to your inbox 19 dentistry experts over 19 days. Jill’s goal in creating this content is to provide valuable, free education to dental practice owners.

Some of the experts and topics covered during the event include:

  • Nate Williams, CPA, CFP® (The Future is Yours! Build It Now.)
  • Dr. Howard Farran (Build Your Legacy!)
  • Dr. Chris Salierno (Gross Profit Margin)
  • Gary Takacs (Embrace 3 Easy Systems to Produce More!)
  • Dr. Bruce Baird (Get Off the Dental Rollercoaster)
  • Dr. Doug Carlsen  (Get Out of Debt & Plan Your Future)
  • Adam Zilko (The How to for Internet Marketing)
  • Laura Hatch (Front Office Rocks!)

If you’re interested, click to learn more and register.


Nate Williams, CPA, CFP®

Nate WilliamsSuccess in Practice Podcast Event Invitation

“I Hate Paying Taxes…”

Nate Williams General, Taxes 1 Comment

Congratulations to those who survived the tax deadline and thanks to the IRS for extending the deadline to April 18, 2017! I specifically want to acknowledge Chad Rogers and the rest of the tax team at PFG (Josh, Sara, Kate, Ryan, and Naomi). Most of you who are reading this benefited personally from their tireless work, laser-like attention to detail, and unnaturally high level of ownership. I wish each of our clients could see the inner workings of the well-run machine that Chad and his team have created. We’re always striving to get better, but wow! Good work guys. We’re all better off now that I’m not running that part of our business.

After delivering the final news of how much one client owed to the IRS, he responded via email with this phrase:Tax

“P.S. I absolutely hate paying taxes, about more than anything!”

This year we found this sentiment to be quite prevalent. Did you feel this way?

On the other end of the spectrum, a dental resident called me in a panic on April 10 saying that he had earned a small income ($24,000) and hadn’t withheld any federal or state taxes. He was scared at the thought that he would owe a small fortune. We quickly prepared his return and I delivered the news that he would get a refund of almost $5,000 due primarily to the Earned Income Credit (gov’t welfare delivered via the tax code). This guy was happy to be an American on that day.

Overall, we too feel our clients carry a very heavy tax burden with many of you paying over 40% of your income (that means you work almost to the end of May for the government, then June through December for yourself). I don’t know what to tell you about this – um, vote?Read More

Nate Williams“I Hate Paying Taxes…”