As we mentioned last month, we are going to discuss risks everyone is aware of – yet very few investors are actually prepared for. 

So, we going to start off with a question which may make you feel a bit uncomfortable, yet which is important to ask – and to have answered.  

Are you prepared for an unpleasant future to become a reality which we all fear?   

If your answer is no, why not?  Are you sure this unpleasant future will not happen?

In our discussion today, we are going to discuss several risks everyone is aware of – yet no strategist, portfolio manager, or analyst is actually prepared for. 

These risks we are referring to are not new.  They are well-known risks standing right in front of us and staring us right in the face.  Yet, because these risks have not happened during our lifetimes, very few have prepared their investment portfolios for the possibility that these risks will happen.

Today, we want to discuss some of the alternatives available to intelligent investors and remind Family Office members what the signals are telling us, while answering several of the questions we hear most often.

June’s “First Friday” meeting discussed the prevalence of illusions.  Illusions combined with clever narratives frequently charm the best of us.  And when you mix market appreciation with narratives focusing solely on the positives, realities surrender to perceptions. 

Over the course of history, prosperity has discouraged demanding work.  Lax behavior goes unpunished.  Eventually this behavior leads to the downfall of every great civilization.i  And while this discussion is not insinuating America’s decline, it focuses on the “recency-bias” created by prosperity, and the lack of due diligence and critical thinking prosperity encourages.