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What to believe? What is KW Wealth's focus?

Updated: Apr 11, 2023

I have traveled to the East Coast and completed much quality research to prepare for my next Blog release. While traveling, I have seen some prominent Wall Street investment moguls circulating fear while preaching comfort on the television. During interviews, I also see some foremost world leaders creating chaos while preaching peace. It is so outlandish. Seriously, who to believe? Anyone who has followed my Blog for the past few years will learn that KW Wealth Management is not one of the investment management firms that buy into any single headline from any media firm or government body.


Nevertheless, let's recap the top four most illogical headlines for the past couple of months.

  1. The economic data indicates that GDP shrank in the last two quarters, and the market has reacted as it entered into a recession. Yet, employment is high, and consumer demand remains while production growth slows.

  2. The Federal Reserve is raising interest rates and reducing its balance sheet, both actions which fight inflation. Yet, inflation still went up during the past three months.

  3. The House of Representatives passed the Inflation Reduction Act, with all Democrats voting in favor of spending $737 billion. The selling point is that this spending will raise future revenue and create more capital spending on climate change, prescription drug reform, tax enforcement, etc. Yet, we have to spend money to save money in the future.

  4. The market fall in June was almost 10%. Yet, one article by Barron on August 11, 2022, stated that NASDAQ had entered a bull market. The higher interest rate caused pending home sales to slide by 1% in July. It is a second straight month of decline and is expected to decline another 3% next month.


Wow! It ought to be the most confusing and frustrating experience of choosing what to believe or what not to believe. So, what does KW Wealth Management plan to do for our clients?


Our principal investing focus has not changed. Our approach is to hold deep respect for each person's unique experiences and perspectives and take calculated risks. Here are the nine investment philosophies we use:


1. We do not expect all stocks to go up, and we do not panic about the noises in the market. We try or aim to buy undervalued companies during stock market declines.

2. We invest for the long term. When we customize our clients' portfolios, we spend hours or months in the interview process to understand their risk tolerance, time horizon, and financial situation. We prepare our client portfolios to target long-term success.

3. We do not day trade to speculate for short-term profit/loss. Client portfolios may hold high cash allocations from time to time as part of our risk management strategy. Having cash on hand is essential, and we don't want to hurry and spend it.

4. We don't make concentrated investments and diversify our portfolios across asset classes with a solid allocation of individual stocks, ETFs, and low-expense mutual funds.

5. We don't want our clients to borrow on margin to invest because we cannot time any given stock to deliver a high return when the loan comes due. Using borrowed money to invest is not our philosophy. We can't borrow time.

6. We don't want our clients to invest with us without sharing their financial circumstances. We invest in our clients, and we need to know our clients well.

7. We don't solicit IPOs or penny stocks, and we don't buy stock based on an exciting story. We invest in stocks with a track record and a financial statement we can confidently evaluate.

8. We don't take over the management of private investments we have not recommended. Liquidity is one of the most important factors we focus on in our portfolios.

9. We don't use a sub-manager or outsource our portfolio management. Given their expertise in investing in specific market areas, we may use low-expense mutual funds or ETFs. This mindset allows us to take action and rebalance quickly and cost-effectively.


Furthermore, we are actively researching opportunities in Private Equity and non-supply chain-related business models and industries that benefited from the rising interest rate environment. As stated in my July Newsletter, I noted that lower energy prices would be an early signal indicating market improvement after researching the past recession periods. Indeed, it was the case; according to a government report ending August 19, 2022, U.S. commercial crude oil inventories decreased by 3.3 million barrels while the stock market went up. I believe the expectations of the recession were already priced in and handled by some of these mega companies. I also think more analysts will slash earning expectations in 2023, but it doesn't mean the free cash flow margin is low for well-run companies. The bottom line is that we will review others' investment studies, but we will also do our research to perform the due diligence process on behalf of our clients.




 

Disclaimer:


Since 1998, I have served as a useful source to those seeking financial education, guidance for life-changing events, or investment advice. I finally decided to own that role and be intentional about it. I started writing about my thoughts, my market insight, and curious wonderings about our world. I founded KW WEALTH MANAGEMENT with a mission to give others a taste of what goes on in my mind, and I have been at it ever since.

Kimmy is not registered with any political party. Any views or opinions represented in this blog belong solely to the blog owner and do not represent those of people, institutions, or organizations that the owner may or may not be associated with within a professional or personal capacity. Any views or opinions are not intended to malign any religion, ethical group, club, organization, company, or individual.


Past performance is no guarantee of future results. Any views or opinions expressed do not reflect the firm as a whole. Inherent in any investment is the potential for loss. The material is being provided for informational purposes only, and nothing herein constitutes investment, legal, accounting, tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors, or markets identified and described were or will be profitable. We believe that any statements regarding market or other financial information are obtained from our suppliers' sources to be reliable. Still, we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, lack of timeliness, or delay or interruption in the user's transmission. All information is subject to change without notice. KW Wealth Management is not a licensed securities dealer or investment bank.


All investment is subject to risk, including loss of principal. Investment in bonds is subject to interest rates, credit risks, purchasing power risks, reinvestment rate risks, and inflation risks. Investment in stocks is subject to country-specific, currency, business, financial, and market risks. Investors should carefully consider the investment objectives, risks, charges, and expenses of investing in funds and ETF


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