In this series, we have discussed the foundations of what makes Telarray portfolios. Some of our principles include:
- Evidence-based investing that doesn’t rely heavily on traditional stock picking
- Extensive international diversification
- Rigorous rebalance routines to take advantage of market dislocations
- Consistent investment approach and process
- Reliance on public investing vehicles like mutual funds and ETFs
We take our portfolio construction and monitoring very seriously, so you might be surprised to learn it’s not the most important thing we offer at Telarray. Our investment process is extremely important, but investments are just one facet of the journey to your secure financial future.
Many firms will suggest that your investment choices are the most important aspect of your financial plan. We agree that the investments are critically important, and there are many pitfalls to avoid on the path to retirement.
However (and pardon the sports analogy), your investments are not the quarterback or even the head coach of your financial future. We would suggest the investment portfolio is much more like the strength and conditioning coach — critical to the success of the program, but not sufficient alone to win the game.
You and your Advisor are the quarterback and the head coach. The best investment portfolio in the world can’t save you from improper planning and bad decisions, and the strength of Telarray is what we offer in addition to our investment process.
At the end of the day, risk and return are correlated. We use our Observatory process to understand each client’s need and ability to take risk, and combine that with a discussion of your desire to take risk to settle upon an investment plan. What we can’t offer — and what nobody can offer — is an investment plan with attractive returns without the potential for losses.
These inevitable losses are, hopefully, short-lived, but drawdowns in portfolios which occur shortly after retirement can have serious consequences. That’s why we don’t try to maximize returns at all costs. We select an allocation we believe has a good chance of minimizing your risk of running out of money before you run out of years.
We can’t foretell the future. Nobody can. But we use history to educate ourselves and you on the range of results experienced in the past and apply those experiences to your circumstances to try to draw reasonable conclusions about risk and reward necessary to meet your goals. If you are scared, the one controllable factor you absolutely influence is to spend less. If you are really scared, spend a lot less!
We will never suggest you go to all cash when the market looks scary, inflation looms on the horizon, politics seem untenable, or any of the other evergreen reasons to be alarmed about the future. We will help you find a portfolio intended to be practicable in a wide variety of market environments, while continuing to take advantage of the long-term returns offered by the stock market.
The world’s stock and bond markets are a remarkable thing. For many decades, they have allowed us to retire without saving every penny we’ll need for the rest of our lives, and a decision to stay out of the markets becomes more painful the longer it lasts. As long as things like worker productivity, technology, and GDP per capita continue to grow, we believe the markets will support the path to your secure financial future, right alongside your Telarray portfolio and Telarray Advisor.