Broker Check

November Newsletter

“Nothing Ventured - Nothing Gained”

So far 2020 has been a year of significant change, and while these changes are challenges and in some cases difficulties, some changes and challenges carry with them opportunities.  Unlike our friend at ACME Financial, Intelligent Investment Management is embracing   changes and challenges in 2020.   In the financial industry we are seeing this play out as Charles Schwab completed its merger with TD Ameritrade on October 6, 2020.  

Over the next 18 to 36 months the two firms will begin a combined venture harnessing the strengths of both companies to bring forth the opportunity for gain. So TD Ameritrade Institutional is now part of Schwab and this new venture is underway!  This merger provided the opportunity for both James and Laura to gain knowledge by attending the Schwab annual conference, “IMPACT” which was presented virtually this year. 

The message presented was welcoming to the many Registered Investment Advisors looking to partner with Schwab.  As we jump on the “transition bus” to join Schwab. Some of the discussions included what to expect in the way of technology related to trading and operations.  It was reaffirmed that the platforms used will continue to be industry leading technology platforms which we are already accustomed to at TD Ameritrade Institutional. There was a clear message during the conference; Schwab indicated that the merger was not about being the biggest but about being the strongest custodian with the highest level of integrity.

The conference offered many useful options for learning, from back office operations to marketing, client experience as well as forecasts on how the markets will react going forward.  The political landscape was also a hot topic and it was noted on more than one occasion that long-term investing is investing in fundamental business prospects not reacting to emotional political ideologies.  Certainly, the results of an election can impact markets in the short-term but ultimately when discussing the topic of politics, it was made clear, that no matter the results of periodic elections, our securities markets are always driven by economic fundamentals.

As we get through the results of the election and look back over this past twelve-month period from October 31, 2019 to today’s date, we have a positive total return of slightly over 3  percent for our aggregate managed portfolio, net of fees.  On the equity side it is 4.76% and on the income side 3.88%;  even after withstanding the virus impacted economic climate.

It appears as of the writing of this letter there will not be any significant shifts in the balance of the two chambers in Congress. If this proves to be true, our clients should not be immediately concerned about legislation which would increase their taxes.  If you are planning to speak to your tax advisor about year-end planning please let us know so we can provide you with your current income and gains reports.

The Schwab Impact sessions we attended on asset management painted a picture of lower returns for the traditional 60 percent equity, 40 percent fixed income portfolios in the next several years.  These sessions encouraged a strong allocation to alternative equity  investments, in addition to having some meaningful portfolio diversification.  This favorable nod to alternative equity holdings is consistent with what we have been working on recently as we add to this part of the portfolio.  We agree that investors should be realistic about the potential for lower returns in the near term as the economy gets back on track and deals with the increased debt load.  We remain focused on having a diversified portfolio, but we have greatly reduced our international exposure, moving away from a more global portfolio toward a more diversified “closer-to-home” portfolio. We do not diversify to increase return; we diversify to construct a portfolio that maximizes the chances of achieving a desired level of return at a risk level you find acceptable. The risk level of each client portfolio is always considered based on each individual client’s Investment Policy Statement.

In the age of ever evolving technology we have made significant strides this year to move our firm’s technology to a cloud-based environment. The financial industry embraces the cloud-based environment due to its significant benefits in enhanced security over the traditional server-based environment.  We are also in the process of transitioning our portfolio management software to a more modern reporting system that offers robust functions and will also be cloud-based providing more security to protect our client’s sensitive information. This new software will provide not only the traditional illustration of columns of numbers but also the opportunity to display data in graphs and charts, thus appealing to both methods of conveying data, concerning your portfolio.  We will work throughout the remainder of this year and into 2021 to make sure the transition of data is fully reconciled and consistent with what has been historically reported.  We expect sometime in the first quarter of 2021 we will be fully operational with this new software.  You will be able to see these new reporting features in the first quarter reports for 2021.

We are happy to incorporate tax planning strategies into managing your portfolio where it is not in conflict with your investment goals.  Concerning tax planning please reach out to your tax advisor to consider what year-end tax planning might benefit your individual situation.  As always we are here to answer your questions concerning your portfolio and planning needs.  We are also happy to help anyone you think might benefit from our style of investing. 

This year Intelligent Investment Management will  participate as a sponsor for the Community Connections 2020 Festival of Trees. This non-profit organization provides opportunities and essential services for children and adults with intellectual and developmental disabilities in our Southwest Colorado communities. By providing a decorated tree, which will be auctioned off during the festival, we are helping this group provide services as well as hosting a colorful, family friendly event in the Durango community.

As we head into the holiday season, we wish you and your family safety and wellness as you begin planning to spend time with family and friends. 



Intelligent Investment Management, LLP