Your Financial Life is ALL about CASH FLOW!
Think about this - you can only spend your annual cash flow minus taxes. I have yet to meet anyone who desired to spend all their money. After all, who wants to run out of capital?!
Contrary to most everything you have heard and read from the financial industry - life is NOT about investments! Please do not misunderstand - investment positioning remains important. However, in our view, cash flow is King!
Taxes, like death, impact life in a very negative way! Taxes eat away at cash flow. In some instances, the proper word description is "devours" cash flow.
Therefore, we view your future in light of the cash flow you must generate in order to afford and enjoy your "ideal" lifestyle. If you think in terms like these, proper alignment of investments becomes clear and understandable. All investments may have potential, but not all investments achieve your success.
Every person tolerates investment losses differently. The financial industry classifies investors in typical pigeon holes with labels such as speculative, aggressive, moderate and conservative. You may have determined one of these labels for yourself or some combination that describes your personal uniqueness. We believe - labels are useless. We will explain this belief.
Our experience during 1987, 2000-2002 and 2008 taught us that labels may fairly describe an investor's attitude as long as investment markets provide gains rather than losses. However, when the proverbial "stink hits the fan" and significant price declines continue to eat away at capital, attitudes quickly change. During such periods, when markets produce more losses than gains or a major negative price correction has occurred, labels mean nothing. Everyone becomes "conservative" during those times.
Everyone wants a portion of the gains when markets experience positive returns, while no one wants to lose during periods of price declines. That is human nature. But can anyone expect both results?