Be Wary Looking for “Experts”

A quick read-through of any financial journal serves as a reminder of the unfolding of business at breakneck speed around the world.

Artificial intelligence, Blockchain technology, Cloud computing, Remote delivery services; for many investors, it is a daunting challenge to keep up with this dynamism, and then to integrate it within portfolios throughout a lifetime of investing. And so, they turn to experts – Wall Street authorities whose job it is to guide investors into the top-performing stocks, industries, and trends.

But do “experts” really exist, and if so, how should we rely on them for portfolio advice?

This question is especially timely considering the current portfolio performance of legendary bond “expert” Bill Gross.

For many years, Mr. Gross was Wall Street’s acknowledged bond “expert” heading up Pimco’s Total Return Bond Fund, the world’s largest fixed-income fund.

Following a contentious split with Pimco, Mr. Gross switched firms to manage Janus’ Unconstrained Bond Fund (JUCIX). Recently, Mr. Gross positioned this fund to take advantage of the almost certain rate increase in German bonds, especially in comparison to the already higher rates paid by Italian fixed income investments.

Unfortunately, with chaos unfolding throughout the Italian political system, investors began fleeing Italian bonds in favor of the more secure German funds. The result? Janus Unconstrained bond fund plummeted over 3% in one day and is now dead last in year-to-date performance for its Morningstar category.

Mr. Gross’ bad luck reminds us of another “expert” whose stellar market calls experienced a similar fate.

Infamous Bill Miller

For much of the previous decade, Wall Street’s favorite stock-picking guru was Bill Miller. His Legg Mason Value Trust’s (LGVAX) beat the S&P 500 index for 15 consecutive years from 1991 through 2005. But his streak ended abruptly in 2006, and over the next five and a half years, the fund he managed lost 36% while the S&P 500 gained 13%.

Investors holding positions in LGVAX were faced with the question, “Do I stay the course with what I own, or do I switch into another fund with hopes for a better outcome down the road?”

The problem with searching out “experts” and then attaching a portfolio’s performance to their insights, is that one starts to rely on tenuous external forces to reach lifetime goals, instead of turning within and focusing on financial planning decisions that actually matter in the larger context of reaching one’s goals.

Our Approach Matters

Soundmark’s approach to portfolio construction relies, not on experts, but on the efficiency and energy of global capital markets that have historically generated enviable returns. A side benefit is that it allows investors to focus on wealth management decisions that matter, and are sure to accentuate one’s chances of reaching their objectives.


Bill Schultheis is a Principal at Soundmark Wealth Management, LLC. Bill works closely with investors looking for a simpler, smarter investment philosophy to help them define their financial goals and implement an ongoing financial planning process.


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