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Date Night in Santa Monica

Ok, so it wasn’t really a date night. I was actually in Los Angeles for a one-day conference sponsored by Dimensional Fund Advisors. However, since it was pretty much an overnight getaway, I thought I’d ask my wife Valerie if she wanted to have dinner in LA as a change-up to our weekly, “go out to dinner” routine in the Portland Metro area. Of course, she jumped at the chance. We both adore our children but … you probably get the picture.

We arrived in LA late Tuesday afternoon, with our flight back to Portland scheduled for the next day, after the all-day conference. So we had to make the most of it. We spent the evening strolling down the 3rd Street Promenade, people-watching and window shopping, and took in a happy hour dinner at one of the local restaurants. Then we went for a short hike to the Santa Monica Pier to watch the sun set over the Pacific and note how busy it was for a week night. We awoke the following morning to a couple of guys yelling at each other outside our hotel window at 5:00 a.m. sharp, prompting my wife to go into mother mode and tell them to knock it off, which they did. Welcome to summer in Los Angeles!

That morning I asked Valerie if she wanted to come with me to listen to a room full of really smart guys discuss the economy and investing. She pleasantly declined, opting for a long bike ride on the beach.

The conference was well-attended with about 100 independent investment advisors mostly from the western half of the country, including a few of us from the Portland area. One of my favorite parts of these events is to collaborate and compare notes with other like-minded advisors, so during the lunch break, I was happy to find myself sitting with a fellow Portland advisor I’d not yet met. It always surprises me at how much my respect and admiration grows for advisors who seem to be in agreement with our academic investment approach.

My favorite speaker of the day was Nick Murray. Nick has been a respected figure in the advisor community for nearly 45 years, so he has seen a few market cycles, and a bear market or two (to say the least). I’ve read a number of his books and I consider him one of the voices of reason in the world of misguided opinions and market speculations. His thoughts are evidenced in his investment book, Simple Wealth, Inevitable Wealth, recently updated to reflect the 2008 sub-prime market meltdown and the ongoing economic challenges we face.

Murray’s theme at the conference was similar to the message in his books: the average investor’s greatest risk is not losing money due to what he calls the “apocalypse du jour,” or the economic crisis of the time. Rather, it is the risk of outliving one’s investment portfolio due to subtle, but more dangerous enemies such as taxation, inflation, health care costs and above all, our own mistakes in failing to form and stick with a long-term plan. He loves to cite that a healthy (non-smoking) 60-year-old couple can expect to live another 30 years or more, so if they’ve only planned for retirement according to a 20-year time horizon, they may be in for an abrupt surprise in the end.

How does he suggest investors avoid running out of money? Build and maintain a well-diversified, globally invested portfolio of stocks that represent the businesses in the world. In other words, to avoid watching one’s capital slowly erode over time, an investor is better off ignoring short-term market volatility and remaining steadfastly invested in the expected long-term market growth powered by our inexorable human enterprise.

By the end of our overnight getaway, Valerie had enjoyed her bike ride along the beach and we’d both enjoyed our rare weeknight on the town. I left LA refreshed, reenergized and rededicated to helping my clients stay true to their investment plans. Overall, it was a great “date.”