As some of you may know, Apriem has been adding new staff. This week’s market update was written by one of our newest staff members, Kenneth Wolin. He serves on Apriem’s Investment Team as a Portfolio Administrator and is a member of our Investment Committee. Kenneth recently graduated from Cal State Fullerton where he studied Business Administration with a concentration in Finance. While at CSUF, he participated in the school’s prestigious Student Managed Investment Fund and the Titan Capital Management program. We are extremely happy to have Kenneth on our team.


At the beginning of this year, I had the luxury of traveling to Mammoth Mountain for New Year’s with my girlfriend and her family. It was my first time going there for the occasion and I thought it was timed perfectly. The drive out of Orange County was full of rain and had me worried we’d be driving into a storm when arriving. After all, I had a full car, two dogs, and just enough patience. However, the next day was full of clear skies and fresh powder. I’ve been aching to hit the slopes and I’m glad I have an Ikon pass because it’s really expensive to buy a day or weekend pass!

The company’s name is Ikon. You can buy multiple passes from there that give you unlimited entry into snow resorts and mountains all over the country and even in foreign ones. It’s kind of like Disneyland where one tier has blackout dates and the other one doesn’t, plus some extra perks and more mountains. A single-day lift ticket for an adult at Mammoth is $209… for probably 6 hours of shredding… if you can last that long and conditions are good. The pass I got was roughly $1000 (no blackout dates). But at Mammoth’s rate, I just need to go to the snow 5 times for it to pay off. Even Big Bear is $130 for one day on the weekend, and frankly, that’s more than I’d like to spend on a less than average mountain. I won’t even get started on renting gear… but back to my point, Ikon saves me a couple of bucks (since I’m an avid traveler in the winter) and pays for itself in 2-3 weekend trips.

My trip to Mammoth reminded me how much these lift tickets have gone up in prices from when I was a kid. It doesn’t take a hard look to see how inflation is impacting our lives, and investors without a doubt have it on their minds. It might even lead them to make adverse decisions on their portfolio. Because it is a new year, I think it’s appropriate to make some resolutions, not so much new ones, but some reminders of timeless advice. Especially after having a pretty great year in the markets, it’s easy to forget healthy habits that would otherwise give back those returns.

1.) Removing Emotion: You must remove emotion from your investment decisions. It is incredibly difficult to overhaul your way of thinking and convince your brain to think differently about your investments. Every day we consume topics and headlines meant to capture your attention. You subconsciously form expectations based on what you digest because humans are emotional beings and it’s easy to brush aside fact for emotion. For example, if you had $100 during March of 2020 and sold out of the market because your fear told you to and bought back in at the start of 2021, you would have $89 at the start of 2022. If you didn’t do anything you’d have $126! Remember, your only goal is to maintain or increase the purchasing power of your assets relative to the cost of living. Sticking to your financial plan is taking a look at how much “resources” your lifestyle needs today, and making sure you have that in the future. The markets will always be volatile and the latest news cycle might make you uneasy. Making sure your financial savings increase faster than your consumption happens as a result of sticking to a plan… and disregarding emotion.

2.) Think Long Term: “Nobody buys a farm based on whether they think it’s going to rain next year, they buy it because they think it’s a good investment over 10 to 20 years.” Warren Buffet said that on CNBC in 2018. When putting together a portfolio, we look at companies from a bottom-up perspective. Put simply, that means we dissect a company inside out to figure out why it’s worth what it is. If it’s less than what we think, we move on to evaluating what catalysts can take it there. The important part is making sure that catalysts are within their control… and long-lasting (this often is called a “moat”). The point being, you don’t buy a farm and expect a full cornucopia by dinner time – the action of planting a well-thought-out seed reaps bounties for many seasons. Thinking long term doesn’t just help pick quality stocks, it allows for quality investments and decisions to bloom.

3.) Discipline: Navigating the course of the coronavirus was nothing short of unprecedented. Inflation is expected to remain while the Federal Reserve is upbeat on raising rates –  then 2022 is sure to have its own surprises. Sometimes the things that feel most definite aren’t always as clear as they seem. Consequently, this can lead investors to making decisions that later on lead to regret. I was reading a WSJ article talking about the history of interest rate decisions made by the Federal Reserve. In the 90s, rates were raised and lowered in ways that were surprising and contradictory to expectations. Currently, we are expecting three rates hikes from the Fed, yet investors are acting like it has been written in stone. Left and right you might see people overhauling their portfolio based on the Fed’s statements, when in fact it’s entirely possible they could be in trouble if something else happens. From 2019 to 2021 we saw double-digit returns from the market, and just like from 1995 to 1999 we also saw double-digit returns before the correction in 2000. Changing course based on short-term thinking can derail a well-constructed plan… which unfortunately can leave you off worse than you first thought. You don’t need good timing or gut feelings, you need the discipline to survive.

“The market can stay irrational longer than you can stay solvent”, this is one of the few quotes I remind myself of during unclear times. While I’m not the most seasoned investor my mental fortitude is strong, and times like this are reminders that good ideas don’t make returns – good habits do. Removing emotion, thinking long-term, and having discipline are characteristics of investors who survive all markets.

– Kenneth Wolin

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All charts and data from Bloomberg unless otherwise indicated.

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