Thursday, January 20, 2011

Financial and Physical Fitness… More Similar Than You Believe

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

This is the time of year when traditional New Year’s resolutions are all the rage. Membership departments at gyms are humming. Personal trainers and nutritionists are booked solid. And weight loss infomercials, always popular, dominate the late night and weekend paid advertisement schedule. Who doesn’t want to look and feel better in the New Year? And isn’t that the same thing with our finances? Most people strive for financial and physical fitness early in the New Year! Amazingly, there are so many similarities between the two.

For whatever reason, I have never paid much attention to making a list of resolutions. I could stand to lose a few pounds and get in better shape. I should strive to be a better husband and father. I could give more to charity. But as with most people, I am FAR from perfect! What I have done over the past five or so years is to pick one topic or project that is achievable and focus on it.

Last year, my goal was to become paperless. I wanted to reduce the filing cabinets in my office from three to one. I was so driven that I actually hired a woman whose primary function was this project. And I am ecstatic to report that we’re just about there. For 2012, my big picture goal is to increase our local business (within 25 miles of the office) by 25% through a variety of marketing initiatives.

Getting back to fiscally and physically fit, conventional New Year’s resolutions are usually very difficult to keep. When it comes to weight loss, “diets fail, people don’t” as my friend and fat loss guru extraordinaire Rob Nevins likes to say. I spent some time interviewing Rob just after January 1, by far, his busiest time of the year as you can imagine. Rob, with the energy of 100 people who never sit still, is the poster child and head cheerleader for fat loss through his Rob Nevins Living Lean company and has as many one liners as Rodney Dangerfield.

He shared that 65% of America resolves to lose weight and/or get in shape each year, but 97% fail. I would venture to guess that’s similar to those resolving to put one’s financial house in order. Also similar to my field, he urges people not to become another statistic. Generic diets yield generic results, something I wholeheartedly believe in the investment management business. The “one size fits all” plan rarely, if ever, works successfully. I have always espoused diversifying not only among asset classes, but strategies as well. Who do you know who has successfully retired using a cookie cutter investment plan?

Rob’s philosophy includes being able to enjoy a treat here and there, but starvation is the worst thing of all. Translate that into investing and I would say that taking a flyer every now and then won’t hurt you, but leaving your money in a bomb shelter earning nothing is a disaster. Just like with starvation, the CD or money market mentality allows inflation to eat away at your money day by day, bit by bit until you’re left with nothing but a skeleton.

I asked Rob for some of his “golden” rules for successfully cutting fat and your clothes size. He quickly quipped, “the scale lies, trust your size”. In investing, to me that means asset diversification (modern portfolio theory) isn’t the be-all, end-all. What good is being diversified if all those assets trend in the same direction, like 2008?

In the end, Rob Nevins said that all people should drink 8-10 glasses of water a day and enjoy three meals and two snacks. That’s a huge start, diet or not. It’s hard for me to just list two rules that everyone should follow. But here are two that are common sense enough. When you hear from the experts that “this time is different,” run away as fast as you can. Human emotion hasn’t changed in centuries and it’s never different this time around. Second is that when something seems so easy, so obvious, so universally accepted, the trend is about to violently change.

That wraps up a somewhat unconventional contribution this week. I hope to release my Top Shockers for 2011 next week. You can bet Apple’s fall from grace will headline the list.

Feel free to email me with any questions or comments at

Until next time…

Paul Schatz

Heritage Capital LLC

1 comment:

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