Time to Reflect

time-to-reflect“One of the best things to do when confronted by a major surprise is to see what there is to be learned from the experience.”

The above quote is from Bloomberg columnist and best-selling author Barry Ritholtz, in an article titled “Trump’s Win Yields Investing Wisdom.” Definitely worth the read, the article talks about flawed forecasting, how we all read in a biased way that simply confirms our prior beliefs, random factors and luck, hindsight bias, and more. 

What do we at Carlisle Financial have to add?  That sound investing is for the long term and this is why we believe diversification in a portfolio is so vital. And that the most important decision you can make for yourself is understanding your own tolerance for risk. Once you appreciate that, you will not be swayed by the emotion of the moment.  

Over the long term, investing in the stock market has been a good strategy to growing wealth. Your risk tolerance leads to a reasonable asset allocation so that you can sleep at night and take advantage of market swings as they come along –– like during election season.

For the entire article, go here. And if you’d like to review your risk tolerance, feel free to contact us at

Deficit Day


November 4th is Deficit Day — the day when the U.S. government no longer has the funds to pay for all of its expenses and starts living on borrowed funds — yet agin. The federal debt had the third largest increase in history in the last fiscal year bringing total debt close to $20 trillion (by comparison, debt was $10 trillion in 2009). Imagine if the average American household operated in this manner, spending all of the year’s income a full two months before the year ends –– year after year after year. Truly an urgent problem.

More on the subject here:



Diversification. It’s really just a big name for the idea that when it comes to investing, all of your eggs should not be in one basket.

You’ve most likely heard of diversification and understand that in investing, it’s an important concept. What you might not know are the hows and whys it’s so critical in the long term.

Don’t put all of your eggs in one basket simply means that should you trip and fall, all won’t be lost. In investing, putting your money to work in different baskets –– diversification –– reduces your risk of being left with nothing if one area of the market trips or stumbles.

The purpose of diversification is to reduce your risk of loss and to increase your total long-term return. This is done by building a portfolio of investments that are allocated among various financial asset classes –– such as stocks, bonds, real estate, commodities and cash. It’s also smart to further diversify by size of company –– small, medium and large, and by geography –– US, Europe, Asia, Emerging Markets.

When you own a diversified portfolio, you not only lower the risk that all positions will experience the market decline at the same time, you benefit when an area prospers at a different time than the others.

At Carlisle Financial Group we highly recommend diversification. If you would like to understand more, please feel free to contact us at

Fiduciaries and Why They Matter

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(pictured above: a recent “Last Week Tonight” segment by John Oliver on fiduciary duty)

Following is a Q&A with Linda Taylor, Portfolio Manager at Carlisle Financial Group, on the term fiduciary, why you’re probably hearing it used a lot lately, and the one question you cannot afford to skip.

1) What is the meaning of the term fiduciary and why should I care? The word fiduciary comes from the Latin word fiducia for trust. Simply put, a fiduciary puts their clientsʼ interests first, always acts with the utmost good faith to provide full and fair disclosure of all material facts, never misleads clients, and fully discloses any and all conflicts of interest. This provides a significant level of protection for a client as a fiduciary must never act in a way that unfairly benefits them at the expense of their client.

2) But aren’t all financial advisors looking out for their clients’ best interests? Not necessarily. It’s important to know that financial and investment advice comes from two different types of professionals. Registered Investment Advisors already meet a fiduciary standard. Almost all the others — stockbrokers, broker-dealer representatives and people who sell financial products for banks or insurance companies are held only to a “suitable investment standard.” Since many brokers or insurance agents now call themselves “advisors” this leaves a lot of gray area. Receiving commissions or other incentives to sell particular financial products means that a broker may be prioritizing their own commission or their company’s revenue which might not be acting in your best interest at all.

3) Why am I hearing the word fiduciary so much recently? Because this past April, the Department of Labor finalized a rule to address the many conflicts of interest by non-fiduciaries (such a brokers) who give retirement advice. The new rule states that these “financial advisors” must begin to uphold a fiduciary standard when the rule goes into effect in April 2017 –– they can no longer steer these assets into high cost investments, instead they must put their clients’ best interests ahead of their own.  Note: at the moment, this only applies to retirement accounts such as 401Ks and IRAs.

4) Why is this ruling so important? It will hold thousands of brokers, insurance agents and other financial advisors who have been operating under the suitability rules to a higher standard of care. Many firms will try to fight this new rule as this change will cause the income they receive to go down dramatically –– as more money stays in clients’ retirement accounts.

5) What’s the most important takeaway for consumers? Always ask the person giving you investment advice this question: Are you operating under the fiduciary standard at all times while giving advice and/or managing my money?

Carlisle Financial Group is a Registered Investment Advisor and has always operated under the fiduciary standard. As a value oriented investment firm, our mission is to help clients build and preserve wealth. Questions about this post? As always, please email us at or call us at 978-505-5799. And If you haven’t seen John Oliver’s show from last week where he talks about fiduciaries, check it out here. Just a word of caution, his language is at times colorful to say the least. If you’re easily offended, perhaps one to skip.

The Alarming Price of Debt

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This much I have learned about debt after 40 years of writing and study: It is better not to incur it. Once it is incurred, it is better to pay it off. America, we have a problem.

And that problem, according to James Grant in a recent issue of Time Magazine, is a staggering $13.9 trillion debt. Grant provides an alarming overview of the large US Debt and how we got to what Time calls “the United States of Insolvency.”

So how did the debt get so large? An excess of spending over taxes and bad fiscal habits of the past has left an unpaid tab for our future, our children’s future and their children’s future. As of the date of publication, the debt burden for each American (man, woman and child) stands at $42,998.12. This compares with a figure of $16,802 in 1990 (inflation adjusted dollars) and $8,348.23 in 1981. And this debt level is on its way to over $62,000 per citizen in 2020. (See image above)

Grant points out that “we owe more than we can easily repay. We spend too much and borrow too much. Worse, we promise too much. We conjure dollar bills by the trillions –– pull them right out of thin air. I won’t insist that this can’t go on, because it has. I only say that it will eventually stop.”

Why should we care? Because the price of debt is interest. And currently, interest rates are at an all time low and debt is at an all time high. When interest rates normalize, interest payments are projected to triple. As Grant points out, the government would pay more in interest (at a rate of 4.8%) than it spends in national defense. What then?

We encourage you to take the time to read this article, to understand the national debt and its impact on our future.  Send it to your friends and grown up children and start a conversation. This is our future. For the complete Time Magazine article, go here. For more from James Grant, go here. And for the live debt clock, go here.

A Smart Five Minutes

We invite you to take five minutes to watch a recent and compelling interview with David Stockman. His message about the current state of the world economy is worth hearing.

As you might remember, Mr. Stockman became Director of the Office of Management and Budget under President Reagan and after leaving the White House, had a 20-year career on Wall Street. He has a unique perspective on world markets and his message to us now is that we’re at the end of an era –– the end of a worldwide era where central banks printed money, injecting liquidity like never before. This led to a massive credit expansion and raised world debt levels from $40 trillion in 1995, to an alarming $225 trillion today. According to Mr. Stockman, everywhere is at peak debt and central banks are out of dry powder. He feels that a big pull back is overdue, which will result in a worldwide slowdown and recession with stock prices being mauled.

At Carlisle Financial, we believe this is a time to be patient. If you would like to discuss your current investments and portfolio, please feel free to contact us. For the interview with David Stockman, go here.

The Economic Machine

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With the global stock market volatility in January, now is perhaps the ideal time for an Econ 101 refresh. We recommend this simple and spot on 30-minute version by Ray Dalio, founder of Bridgewater Associates, the world’s biggest hedge-fund firm.

What are the most important takeaways? That downturns in the economy are normal and necessary. That the economy is cyclical: the short term debt cycle and long term debt cycle happen for a reason, and downturns are inevitable. That deleveraging, when done correctly, is a good thing.

At Carlisle Financial Group we’ve been prepared for this period of adjustment by holding more cash than normal to take advantage of lower prices and valuations. Questions? As always, please call (978-505-5799) or email us (

Following the Leader: Just Say No

It’s human nature to want to do what everyone else is doing, to be a part of the group, to not feel like you’re missing out. This is a topic we covered in our last post, where we zeroed in on the herds that go along with the cleverly manufactured shopping day known as Black Friday.

Picking up where we left off on the herd mentality conversation, we wanted to compare that thinking with investing. Because just like the herds that exist on a strategically hyped shopping day, investing has its own brand of herds –– which can often lead investors down unfortunate paths.

And this holds especially true in the current market, where artificially low interest rates have created an unfair environment for savers and a herd-like, follow-the-leader march into risky areas, especially for an older investor. Like stocks.

Wednesday’s Wall Street Journal op ed article (How the Fed has Warped the 401K) spells it out well. And as they wisely point out, “Older workers seeking returns have piled into stocks. When interest rates finally rise, watch out.”

Three important facts to consider:

1) A report from Fidelity Investments found that 11% of account holders between the ages of 50-54 have a staggering 100% of their retirement assets invested in stocks. This means that investors looking for  better returns have resorted to over investing in equities and high-yield corporate bonds (aka junk bonds which carry more risk) to generate the returns they need to avoid outliving their nest eggs.

2) Many investors are not buying based on fundamentals but rather they’re following the crowd. And it was estimated that “roughly $1.3 trillion in retiree assets are currently misallocated into equities based on the historic 16-year average price to earnings ratio for the S&P 500, resulting in stock price inflation that has kept equity valuations aloft.”

3) When the Fed does raise rates, watch out for “a steady exodus from equities, which will cause valuations to fall more in line with fundamentals which have not supported the high valuations we’ve seen over the past several years.”  In short, those closer to retirement need to de-risk their portfolios.

Following the herd as an investor is an easy habit to fall into and unfortunately, one that happens often. Many investors start putting money into the market in the middle of, or near the end of, a bull market only to suffer when that market declines. Now would be an ideal time to revisit portfolio allocation and ensure you are comfortable with the level of risk in your portfolio and preparing for the inevitable market pull back.  As always, please call or email us with any questions.

Avoiding the Herds

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REI’s announcement that they’ll be closed this Black Friday was impressive on many levels. It was a bold move and one that perfectly aligns with their mission that being outside makes our lives better. The news struck us as not just a brilliant marketing tactic but also one that’s very authentic to who they are: an outdoor company.

Perhaps most importantly, REI’s move emphasized the fact that they’re not following the herd. Which got us thinking about the herd mentality and the reality that it can lead us all down paths that we’re not even conscious of choosing –- ones very similar in nature to those on Black Friday. A research report from scientists at the University of Leeds found that it takes a minority of just 5% to influence a crowd’s direction, and that the other 95% follow without realizing it.

So how and why does that happen? It’s human nature to want to follow the herd, to do what everyone else is doing, to feel included, to be a part of the group, to not miss out. Whatever the cause, it’s always a good idea to think about what’s really motivating you.

But back to Black Friday and the herds. Originally, Black Friday was a day manufactured by retailers to try and drum up business during a very slow period, when families were at home spending time together. It began as a day with unparalleled deals meant to entice people out. And it used to be just that. Lately however, Black Friday has turned into a frenzy, an unruly day of herds. So who really wins? Mostly, the retailers who created the hype –– and not the majority of the people who find themselves shopping at 2 a.m. or fighting the crowds just to park the car.

This Forbes article provides some interesting insights about avoiding the herd mentality. And we’ll continue the topic in our next post where we’ll discuss the herd mentality as it relates to investing. Stay tuned.

Avoiding Complacency


Are you a complacent investor? If you’re not sure how to answer that question, read on.

A recent article in Bloomberg Business quoted Bill Gross saying, “The bull market ‘supercycle’ for stocks and bonds is approaching its end, as the unconventional monetary policies that have kept it alive since the financial crisis are running out.”

What does this mean for investors everywhere? It means you need to act. Pull out your latest statements from your 401K, IRA, Roth IRA and other brokerage accounts. Total the value of all accounts. Check your investments and total all your exposure to the stock market. Most statements show holdings divided by stocks, bonds and cash. What $ value or what percentage is in the stock market? In the Bond Market? Then ask yourself this: if you had 100% in the stock market, how would you feel if you lost 30% of that? And could you buy stocks if they decline?

So what does complacency have to do with all of this? Now is a time you simply cannot afford to be complacent. Period.

For more on the Bloomberg article, go here. And to talk about next steps, call or email us.