September 05, 2018 in Five, Five, Five | by Scott Wood

September 5,5,5: Market Euphoria, Estate Planning, and Our Shareholder Celebration

Our latest edition of the 5,5,5 covers our take on the status of the market, things to consider when planning your estate, and our shareholder celebration. Enjoy!

Market Euphoria Seems Misplaced

There has been a lot of chatter in the market the last few weeks about all-time highs, and we thought it may be useful to put it in perspective.

The global equity markets are up about 2.6% this year (at the time of writing), a much more subdued number compared to the emotions reflected in the markets. The S&P500 is up about 8.9%, but that has been primarily driven by six stocks (Facebook, Apple, Amazon, Netflix, Google and Microsoft) that make up almost 19% of the index. Through the middle of the year, these positions accounted for all of the gain of the market, and this “all time market high“ rally is all about these six stocks in the US.  

In comparison, we strive to build diversified portfolios, and our value discipline takes us away from some of these expensive names. Despite that, our US equity allocation is broadly in-line with the US market so far this year.

As always, and consistent with our value discipline, we are staying emotionally grounded and not performance-chasing some of the more expensive names. We believe that is in our clients’ long-term best interest.

Research (Rather Than Past Performance) As a Predictor of Future Returns

Our research process is independent and strives to stay ahead of the curve. We try to invest in managers when we expect good long-term outperformance, and withdraw when we feel the prospects are diminished, regardless of past performance. There have been many strategies that we have invested in that were subsequently rated positively by Morningstar a year later. Earlier this year, we eliminated a manager that our research suggested was unlikely to sustain their attractive past performance. Just recently, we found out that the manager was fired by their fund company.

The above examples that we make decisions based on fundamental factors, and sometimes it takes a while for the thesis to materialize. Currently, we feel strongly about the future long-term outperformance of value vs growth and believe that our stance will be vindicated over the long-term.

Estate Planning Considerations

Whether you are aware of it or not, estate planning is important for everyone, regardless of the size of your estate. Estate planning seeks to answer questions like these: 1) Where do you want your assets to go after your death? 2) Who will care for your minor or disabled children? 3) Who will make medical/financial decisions if you are incapacitated? An estate plan can direct the flow of your assets, bypass probate (saving time, money and publicity) and ensure the efficient and orderly disposition of your estate.

The federal estate tax receives a lot of attention, despite its estimated 0.6% contribution to total federal revenue. Starting in 2018, the estate tax exemption nearly doubled to $11.18MM per person, or $22.36MM for a married couple. That means that estate planning for those with a net worth in excess of $22.36MM is extremely important. The current law sunsets at the end of 2025 and no one knows what the exemption limit will be reset to at that time.

Proper planning now could prevent future problems for your family and loved ones, and no one knows when they will need someone to handle their affairs. The federal government is your income partner, but they don’t have to be your equity partner. If you have questions, reach out to your Wealth Manager for more details.

Fulfilling Lives

Screen Shot 2018-09-04 at 11.17.07 AMTrue North Advisors core purpose is Fulfilling Lives. We recently enjoyed doing just that by organizing school supplies for Community Partners of Dallas Back to School Supply Drive. Our employees set a goal of collecting 1,000 school supplies for the charity and we tripled that amount by coming together to collect over 3,000 items! The power of putting Others First and Teamship (two of True North’s Core Values) is alive and well. We can’t wait to see what we can do next year, and we hope you will join us in our efforts!

True North Celebrates New Shareholders

True North Advisors is pleased to welcome our newest shareholders: Will Sharp, VP of Finance; Matt Borowski, VP & Sr. Wealth Manager; Dhruv Maniktala, VP of Global Investment Strategy; Tara Scottino, VP & Sr. Wealth Manager; and Brian Heider, Portfolio Manager. We are proud to now have 10 employee-shareholders!

 We recently held an employee celebration to welcome these newest partners, who have all expressed and demonstrated a commitment to being an instrumental part of True North’s long term strategic plan. These team members know how important it is to cultivate an environment of ownership where we work together towards a common vision and goals. Please join us in congratulating these new owners when you see them.


Screen Shot 2018-09-04 at 11.17.15 AM

Left to Right: Scott Wood, Brian Heider, Will Sharp, Tara Scottino, Dhruv Maniktala, Mike Anderson, Paula Davis, Matt Borowski, Mark Gehlbach


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