Broker Check


January 26, 2021

A Taoist story tells of an old man who accidentally fell into the river rapids leading to a high and dangerous waterfall. Onlookers feared for his life. Miraculously, he came out alive and unharmed downstream at the bottom of the falls. People asked him how he managed to survive.

"I accommodated myself to the water, not the water to me. Without thinking, I allowed myself to be shaped by it. Plunging into the swirl, I came out with the swirl. This is how I survived."(1)

Think back to March when the government shutdowns were starting. Think about the forecasts and predictions being made. By late March, the S&P 500 had sold off over 30% of its value from its high in the middle of February, and small caps had sold off even more.(2) Looking back on the markets and the dreary expectations, would you have expected global markets to post double-digit returns for the year? Would you have guessed that emerging market stocks would perform in line with the S&P 500 for the year, with both markets up over 18%?(3) What about small caps? Would you have expected U.S. small cap stocks to return 20% for the year when there was so much uncertainty around whether many of these companies could survive the pandemic?(4)

The changing landscape from COVID benefited companies like Amazon and Zoom, so their growth during the year made sense, but would you have expected Tesla to post such extraordinary gains? The stock closed 2019 at less than $84 per share, but by the end of 2020, it was trading over $700 per share.(5) Tesla was added to the S&P 500 in December with a total market value of over $600 billion, making it the largest stock ever added to the index.(6) Looking back, we would like to believe we saw it coming (or at least that the signs were there), but if we are honest - doubling down on Tesla in January 2020 looked like a bet against the ‘smart money.’ At the end of 2019, roughly one out of every five shares of Tesla were betting on the stock price falling, not going up!(7) 

When we look at 2020, we are reminded that whether we are talking about industries or individual stocks, predicting the market is extremely difficult. Some people get lucky, but the skill to have repeat performance is rare. A recent study performed by S&P Dow Jones found that the top performing funds from June 2010 through June 2015 were more likely to liquidate or change their investment style than to continue to outperform over the next five years.(8) And that is the smart money – these are funds managed by professionals that invest millions in trying to be the best and have the edge.

We call this the loser’s game, and we choose not to play it – you have worked too hard to accumulate your wealth. Instead, we have designed your portfolio to flow with the markets, not to time or try to predict the markets. We invest across hundreds of stocks, dozens of countries and all sectors. In 2020, amidst the uncertainty, we rebalanced your portfolio to take advantage of lower prices and tax loss harvested to offset capital gains in other areas of your portfolio – we focused on what we could control. We continue to balance the stock risk in your portfolio with high quality fixed income to dampen changes in your total portfolio value. We stick with the strategy that we decided upon before the emotions took over. In other words, we plunge with the swirl, and we come out with the swirl – this is how we help you progress towards a successful retirement.


  1. Taken directly from:; Cross reference:
  2. From Morningstar Direct. From 2/20/2020 (the market peak) to 3/22/2020 (market bottom), the S&P 500 Index lost 31.8 percent and the Russell 2000 Index lost 40 percent.
  3. From Morningstar Direct. From 1/1/2020-12/31/2020, global markets, as measured by the MSCI ACWI IMI index, returned 16.3 percent (with net dividends reinvested). The S&P 500 Index returned 18.4 percent compared to 18.4 percent for the MSCI Emerging Markets Investible Market Index (with net dividends reinvested).
  4. From Morningstar Direct. From 1/1/2020-12/31/2020, the Russell 2000 Index returned 20 percent.
  5. Source:, historical prices.
  6. Source:, retrieved January 4, 2021
  7. Technically, this is called ‘short interest,’ and it is a measure of the percentage of outstanding shares that are sold short in the market. In December 2019, the short interest in Tesla ranged from a high of 20.1 percent at the beginning of the month to 18.3 percent at the end of the month, meaning that roughly one of every five shares were sold short. Source: Morningstar Direct.
  8. Of the top 50 percent of performing funds from June 2010 to June 2015, 38.6 percent remained in the top half over the next 5-year period, 13.4 percent were merged or liquidated, and 28.1 percent changed their style. Source: U.S. Persistence Scorecard Mid-Year 2020, published December 8, 2020, retrieved January 4, 2021.