Friday, June 27, 2014

A Nobel Prize in Economics

Pathways Advisory Group, Inc.
David Williamson, CFP®

As an office, we like to keep everyone informed.  It’s an important part of our culture.  One method, we call “cycle articles”, is to share articles of interest (by the end, a cycle article should have everyone’s initials on it).  Recently, a cycle article about three recipients of the Nobel Prize in Economics came across everyone’s desk:

"David, who was awarded the Nobel Prize for Economics in 2013?  And why did you cycle the article?"

Eugene Fama (of the University of Chicago), Lars Hansen (also of the University of Chicago) and Robert Shiller (of Yale University) were recognized together. I cycled the article because I believe Eugene Fama deserves recognition at the Nobel Prize level.  The robust efficiency of markets is the cornerstone of our investment philosophy.  Markets work extremely well.  Those investors who try to “beat the market” do so at their own peril!

"When were you first introduced to the work of Eugene Fama?  And what was your initial reaction?"

About 1992.  The idea of market efficiency was beginning to appear on the radar of investment advisors. By 1994, I was convinced that picking the top (mutual) fund manager or trying to “time” the market was an inappropriate approach to building portfolios for our clients.

"Why should we care?  How has Eugene Fama’s work affected the average investor?"

Unfortunately, his work has probably influenced less than half of investors.  Most still believe in forecasting, timing and trying to identify tomorrow’s winners.  However, I suppose, just as the joint award suggests, the collective efforts of all three recipients raised the bar in economics.  This should impact all of us on some level. 

Why should we care?  Fama’s work lays the groundwork for a scientific, well-researched approach to investing that allows markets to work for the investor.  This evidence-based approach has been and will continue to be fundamental to the (efficient) success of our portfolios. 

Thanks David.  Congratulations Professor Fama on the recognition of your life’s work! 

Please enjoy a short video about the evolution of modern finance throughout Professor Fama’s distinguished career at the University of Chicago.

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Eugene Fama has been and continues to be an integral part of the academic engine that fuels Dimensional Fund Advisors (DFA). For the curious, here are a few additional links about Professor Fama’s work and Nobel recognition.

Tufts Magazine Article.
Eugene Fama and Robert Shiller discuss “bubbles” on NPR.
New York Times article regarding Fama’s Nobel recognition.

Friday, June 13, 2014

Bolts of Clarity

Pathways Advisory Group, Inc.
David Williamson, CFP®

In case you missed it from the September 2010 Newsletter…

Most clients, at one time or another, have experienced our Retirement Projection.  Dream a little, list all the goals, prioritize, figure out the future income, add in the assets, drum roll please…

At the drumroll, you may experience a catch in your throat, a flutter in your heart.  We sure do.  Suddenly, there’s that spreadsheet.  How much money is there at the “End of Your Plan”? 

We love to see the highly successful projection.  All goals met, with plenty to spare.  But, alas!  Not all results are pretty.

Believe me, we are rooting for you.

In our minds, though, a successful projection is one that brings clarity.  If you are falling short, better to know it as early as possible.  Then, let’s consider all of your options.  What changes can be made?  What actions can you take?  Let’s grab hold of this clarity – and make the most of it.

When the results turn out quite well, we sometimes have a different sort of clarity.  The confident realization that you are financially secure.  Those wonderful travel plans that you were not sure about…? Yes! Go for it!  That and more!  Grab hold of this clarity – and make the most of it.

Please know that when the drum rolls, from our side of the desk, we’re on the edge of our seats, too.  Either way, we’re along for the ride.  Let’s keep seeking that clarity. 

And above all, let’s keep on dreaming.

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Friday, June 6, 2014

Public Awareness Video

Pathways Advisory Group, Inc.

If you haven’t already seen it, take a look at the latest public awareness ad on behalf of the CERTIFIED FINANCIAL PLANNER™ professional.


What do you think?  Does it instill confidence in the certification or make you wonder how we spend our weekends?

Happy Friday!

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For more information about the CFP® mark, take a look at this explanation from our website.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and CFP® in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.