The Legacy Perspective - July 2024
by Steve Wachs, CFP®
Investment Lessons from the African Plain
Deb and I recently completed a trip of a lifetime with two weeks on a photographic safari (believe it or not, the photos in this blog are actual photos we took!) at three different camps in Kenya. Growing up in South Dakota, our knowledge of the African plain was formed by reading National Geographic and World Book Encyclopedia. It was a vastly different experience with an early morning hot air balloon ride over the Masai Mara which has the highest concentration of wild animals in the world running right below us. While witnessing animals in their natural habitats along with great interaction with our three experienced guides, some thoughts came to me that have applicability to what we do from an investment standpoint with clients.
The Wildebeest – An Animal Created by Committee
The animals known in Kenya as the “Big 5” are the leopard, lion, rhino, elephant and cape buffalo. There is also a lesser-known list of the “Ugly 5” which is led by the wildebeest. As Martin, our guide shared, the wildebeest seems to be created from “extra parts that God had leftover.” With a head like a buffalo, a body of an antelope, a tail like a horse, and a gray beard like an older man, it has components of different wonderful animals. However, the sum of the parts is certainly not greater than the whole. I shared with the guide it seems like an animal created by a committee. In the investment management industry, there are many portfolio strategies composed of the “best ideas” of smart people who are part of an investment committee and purport to provide outstanding returns. Many times, return expectations are disappointing, and decisions to make changes take time to implement as individuals defend their ideas. Matt and I are your investment “committee.” We have access to a platform with a plethora of investment options, are not burdened by “proprietary” products, and have access to independent research tools. That does not mean all of what we recommend works out. However, when it doesn’t, we can pivot in a timely manner and make changes.
Lions, Giraffes, and Zebras Oh My!
We were in the Amboseli conservancy in Kenya in the midst of six giraffes - Deb’s favorite animal. Besides having a good view from above, giraffes have excellent eye site. Zebras were in the same area which in the animal world is called a “community.” Our guide then drove us 75 yards or so where a pride of lions was literally lying around – lions sleep almost 20 hours a day. Suddenly, two of the lions came to attention as one of the zebras we had been watching advanced toward them. A third lion began to circle behind the zebra. We all became excited as we anticipated what would happen next. Through the heavy grass, we could not see where the zebra and the third lion were. We then heard a loud sound. After a few more minutes of waiting, the guide drove back toward the giraffes and zebras. We then saw the lone zebra had turned back and was safe. The guide shared that the sound we heard was from one of the giraffes who had been watching this all unfold. This sound would be known by all animals as a warning call that they were in danger and to turn back. One of our main roles as advisors is to make “warning calls.” This could include letting you know if the amount of the distributions from your portfolio puts your financial independence at risk. Another warning call would be our concern if you asked us to overweight your portfolio with certain “hot stocks.” It could also include pointing out the danger of selling out of equities during a temporary decline. Just as we trusted our experienced guides to warn us about dangerous situations, we hope you trust us to do the same with your planning and investment decisions.
The Memory of An Elephant
One of our guides shared that elephants are one of the most “human” of all African animals. The bond between mother and baby begins at birth. This picture was taken in the early morning as mom and her young one got up to eat breakfast. One of the most memorable events we witnessed was a herd of elephants of different ages that the guide had thought were heading to get water. Instead, they formed a circle and were still. We were told that they were on top of a site that an elephant from their herd had died some years ago and were remembering and mourning the loss of one of their own. We also learned that elephants eat 300 lbs. a day – maybe a form of “Elephant Ozempic” is being launched that will address this issue. Sorry, I digress. With that type of food intake, planning is important to make sure a food source is available. We were shown a trail that went across a vast valley as elephants migrate during the rainy season to make sure they have access to food. This trek is governed by the elder female elephant leader who knows when they need to go, and where they need to go. She knows because of wisdom and experience. Together, Matt and I have over 60 years of experience navigating investment markets. Despite Matt’s youthful appearance and the fact he still plays soccer, he was actively involved with clients during the first decade of the 2000’s which was the worst decade in stock market history. I was in an investment trading room on October 19, 1987, when the stock market fell over 20% in one day. We learned when we helped clients through the dot.com bust, 9/11 tragedy, “The Great Financial Crisis,” and the terrible impact of Covid-19. Experience also helps us think about future opportunities - where the proverbial next food source is, and when to head toward them.
A Kenyan Family Gathering
On a personal note, you may recall Stephanie, my daughter, got married to Mark, her husband, last October. Mark is originally from Kenya and some of his family came to Atlanta for the ceremony. On our final day in Kenya, they had a wonderful reception with over 100 family members and friends celebrating Stephanie and Mark. Dancing, singing, eating (the best goat’s head soup I have ever had), drinking, and praying went on for hours. It was a great culmination of a trip of a lifetime.
Disclosures
Legacy Consulting Group is registered as an investment adviser with the SEC and only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.
Information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional advisor before implementing any strategies discussed.
All investments and strategies have the potential for profit or loss. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that an investor’s portfolio will match or exceed any particular benchmark.