Here in Gaia Capital Management's Viewpoint you will find a selection from our weekly commentaries and from our quarterly Strategic Insight publications. Just contact us if you would like to receive these publications on a regular basis. They're complimentary, free of charge.

Strategic Insight

Brushing aside worry closets of concerns, stocks and bonds – particularly those in the U.S. – have soared past their 2007 peaks. Stocks have done their two steps forward, one step back dance for over eight years now, the back step getting scary only twice (in 2011 and in 2016). The wheels are in motion for all the good times investors have had to endure an autumn, followed by a winter before seeing another spring, so to speak.
Eating snails? Yep, the French consider the escargot (sea snail) a delicacy. Flavored with enough garlic, they really aren’t too bad. And dividends? You don’t have to flavor nor cringe when you hear their name. Given that dividend income and growth forms the core of our investment strategy, we thought you would like to know more about these little building blocks of permanent wealth.
Most of us have seen our income from dividends and interest drop in the five years from 2011-2015. We have been touting growing income as a major objective of ours. Read on to find out why it can temporarily drop.
When we begin investing it is wise to think about the outcome we want to receive and the volatility or uncertainty we are willing to accept as our investment progresses toward our desired outcome. To illustrate outcome and investment experience, Michael Kitces, a noted financial planning thinker, ran a study of three retirement income strategies, each with thousands of investment observations over a 50-year period.
Diversification reduces risk, a widely known fact. But few agree on exactly how to diversify across investment types to achieve the promised low-risk land. The diversified model has the advantage of offering excellent risk-adjusted returns year after year, though one or more of its components may have soared or crashed. This is diversification in action. Read on...
If investing were only about accumulating an account balance, we would all go nuts as investment accounts wind to a peak, then give back some before rising again and repeating the process - with the effect that we are notably higher after some years of the back and forth movements. Those back and forth movements represent uncertainty more than anything else, as markets try to be predictors of the next six to nine months.
How do we get the high long-term returns stocks offer without the worry they cause when they fall hard every few years? Furthermore, how can we build a high, sustainable and growing income in our retirement years? Read On...
Our emotions are wired so that we smile when we make money per the report of a statement and growl, moan, shriek, cry or otherwise express anguish when we have had what seems like a serious paper loss. How can we keep our emotions from flaring up when we have suffered one of investing’s inevitable setbacks?

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When I was 21 and a sailor in Japan, I received a check for $300, a distribution from the Federal retirement plan in which I was briefly enrolled. I spent it. But now as I look back, what did I trade off for a few days of fun and games in Yokosuka?
We are happy to send you our first issue of Pursestrings, a (usually) weekly note whose aim is to promote financial well-being among our retirement plan participants. Feel free to send us comments or suggestions for future topics around money, happiness, spending and saving as they relate to your sense of well-being and material comfort.

Saturdays With Jim

Diversification reduces risk of total loss but what is the impact of diversification on account returns beyond avoiding total loss? When markets rise, they are usually led by a vanguard – a few companies or industries that catch extreme investor interest. Concentration at the top can really get out of hand when an investing frenzy grips the populace.
Why do people hire investment advisors? Many use advisors to invest wisely for them with the edge coming from professional training and experience that holds them to a well thought strategy through market ups and downs. Are advisors always better investors than individuals?
John Bogle, the founder of Vanguard, says, “Invest you must.” Why? Because if you don’t you are not making the best use of your resources. What about the risk of investing? Ben Carlson of A Wealth of Common Sense noted, “It’s not only framing but our perception of risk that matters.” A positive view of risk would embrace risk as a benefactor. It’s in the eye of the beholder, as they say...
Throw out the yardsticks because the current bull market is older than all but one, which preceded it in modern history. But one day we will pay for excesses created in the magnificent run up in our account values. What might we do to ameliorate the crushing blow to stocks experienced when month after month the trend in stock prices is down, down, down?
It started with one cell, which grew into two, then four, then eight and so forth until it overwhelmed its host. In nature we can find the very force which makes time the most critical element in building a high, sustainable and growing retirement income. In nature, it’s called cell mitosis. In finance, it’s called compounding.
Last week we wrote about Sally, whose IRA gained 4.3% annually over 17 years through two wars, two bear markets, the worst terrorist attack on the U.S. in a century and the greatest financial crisis since the 1930’s Great Depression. Today we discuss how cash dividends helped it retain some equilibrium while providing some growth.
I first met Sally in the early 80’s and she became one of my first clients. We did employee benefits for her social service agency and, in the mid 90’s, she began an IRA under our management. What follows is a look at her account’s results from age 65 in 2000 to age 82 in 2017.
The Prudent Speculator (no, we’re not plugging it) shows the wisdom of buying cheap, unloved stocks and holding them for years. Currently written by John Buckingham, the Prudent Speculator gained an average of 15.1% a year (16,937% overall) from the mid 1980’s through December 2016. The Wilshire 5000 (5000 stocks representing the entire U.S. market) gained 11.3% ($4,952% overall) in the same period.

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Gaia Investment Process

Why invest in funds of securities rather than the securities themselves? To mitigate the “business risk” inherent in one company or a few of them, professionally managed funds were created. The fund investor gets instant diversification to reduce business risk, the buying power of a larger portfolio and professional management of their invested money.
“The Market” is common parlance for the stock market, or the place(s) where stocks are originated, bought, sold and (sometimes) die. But what is “The Market” really and why is knowing important to investors like us?

Getting Ahead

Today we continue a new series called Getting Ahead Financially. Should everyone who can qualify own a home? Do the benefits of owning a home outweigh the benefits of alternative uses of the significant chunk of money that must be committed to owning a private residence? The bottom line – maybe, for some. Read on...
Financial planning for most people seldom proceeds successfully when planning steps and outcomes are dependent on goal setting at the outset. Today we discuss an alternative framework which is more process than goal oriented, in which goals flow in a natural, unforced way.

Uncommon Knowledge for the Common Good

Accumulating a pot of money for later use involves 1) saving, setting aside money from current income, and 2) investing, putting the savings to work earning a return. What we earn on our money is far more important than how much we save; however, the amount we save is also a key component to long-term wealth.
Looking beyond such obvious requirements as having adequate savings for emergencies and health care, enough retirement capital to meet at least our minimum retirement income requirements and our expected longevity from the date of retirement, there are three investment-specific drivers of our retirement income. Read on...
Reaching for maximum returns magnified timing risk, the risk that markets would be overvalued when we begin our program, resulting in perhaps a large initial loss for us as markets return to normal valuations. Here we discuss how we can moderate the risk of underperforming our potential returns.
This is the first in a series which discusses how the interplay of savings rate, investment return and investment time horizon should be considered as we set out to invest. We will examine how the three factors work in a long-term (35 year) program. Afterwards, we will consider how they combine in a shorter program (15 years).

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All material presented in this section is for the enrichment of the viewer and is not meant to be a solicitation to purchase or sell any security or service that Gaia Capital Management, Inc. may offer.

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