Accountability is important. It is for this reason we have been disappointed by the media’s failure to hold their “experts” accountable for the recommendations and predictions that they issue. In the past, we have written about the underwhelming investment recommendations published by Barrons from their annual roundtable of experts. We have also highlighted the inability of Morningstar to publish rankings that accurately predict the future success of specific mutual funds. While we have emphasized the folly of following the predictions of others, until now, we have not critically reviewed our recommendations to clients that we have published.

As fiduciaries, Oak Wealth Advisors has a duty to act in the best interests of our clients and to always put our clients’ interests first. We take the accountability related to those obligations very seriously. So it is time to put our recommendations under a microscope.

What follows is our reflection on three major issues that we have covered in our articles over the past six years.

The end of the recession and the start of the current bull market was the single most important investment market transition in the six years of our existence. We now know that the bottom of the recession occurred on March 6, 2009. Our writings provided valuable guidance regarding increasing investments in the stock market during the beginning of the recovery.

For example, in March of 2009, we wrote that the United States stock markets may have hit the bottom and we might be witnessing the start of a financial recovery. We were cautious and indicated that we may not have hit the ultimate bottom, but we illustrated a number of results from prior major market declines and the very positive results that followed over the following twelve month periods. We indicated that we expected a volatile recovery as cash that had been withdrawn from investments re-entered the market. We also suggested that the recovery would likely be broad and lead to improvements in most, if not all, asset classes. As it turned out, most asset classes did begin to rally in March and April of 2009.

Further, in May of 2009, we reported on the 35% rally by the S&P 500 stock index from the bottom set in March. While the media still focused on negative economic news, we pointed out that robust recoveries like this are not unusual and that by staying invested in the stock market the opportunity existed for participation in further gains. In June of 2009, our headline read: “The worst is likely over!” Our headline proved accurate as the stock market has gone on to rise over 200% from the bottom of the recession and we have maintained full or over-weightings to the U.S. stock market during this period.

As the stock market has been rising over the last six years, there have been numerous reports of significant threats to the bond markets. All of the following crises were portrayed by the media as having the potential to do significant harm to investors and the investment markets:

Year Crises
2010 The Sovereign Debt Crisis warned of major defaults by numerous foreign countries, including many in Europe
2010 The Bond Bubble focused on the low level of interest rates and the potential for major losses due to rising interest rates and rising inflation
2011 Inflation Risk was touted as having a crushing impact on retirees and others living on fixed incomes
2011 U.S. debt downgrade by Standard & Poors which led to panic related to whether the United States might default on some of its bond obligations
2012 Municipal Bond defaults in Detroit and in some California municipalities suggested potential disaster for holders of tax-free municipal bonds
2013 Tapering, which was the term used by the Federal Reserve to discuss their decreasing purchases of bonds, was viewed by many as a sign of imminent inflation and increased market volatility

These crises gave us opportunities to remind our readers that smart investors avoid panicking. concern to the contrary, none of these crises led to major financial losses to bond holders. In fact, in almost every case, the noise about the crisis created a good buying opportunity. In each of these instances, Oak Wealth Advisors maintained the well-diversified investment portfolios, consisting of a variety of different types of bond investments, which we have structured for each individual client. While writing articles explaining the low likelihood that any of these threats would have significant impacts, we have continued to add diversification in client portfolios to further mitigate future risks to the investments.

Rising inflation and the damage it can do to a variety of investments in a portfolio was the third major theme we have addressed over the past six years. Inflation tends to move up and down with more volatility than it has in the past decade. Coming out of the recession in 2009, inflation has remained below its long-term average of about three percent with the exception of a handful of months in the middle of 2011. Oak Wealth Advisors has in multiple articles warned about rising inflation and outlined the measures we have taken to protect client investments from rising inflation. our May 2009 article, we made the first mention of our concern about the increase in inflation that would likely accompany the recovery due to massive amounts of stimulus supplied to the economy by the federal government. premature inflation fears are the biggest mistake about which we have written. Inflation has not risen much since the end of the recession and the near-term outlook suggests that it will remain low through the next year as well. While we admit we were wrong expecting inflation to impact portfolios in prior years, we are thankful that we didn’t overreact based on our inflation outlook as that could have led to investment underperformance. We will remain vigilant in watching for rising inflation but are comforted in the knowledge that client portfolios have defensive measures already in place to combat higher inflation when it eventually occurs.

In reviewing these major issues, we were two for three. While we have not been right about everything we have written, the vast majority of the articles have emphasized the importance of investment discipline, well-diversified portfolios, tax efficiency, minimizing expenses, ignoring the financial noise in the media, and taking advantage of planning opportunities as they arise. These principles will continue to shape our thinking and our approach to wealth management.

We look forward to maintaining our fiduciary duty to our clients and remaining accountable to all who read the material we publish.

This update is intended for the use of Oak Wealth Advisors LLC clients. This update should not be viewed as personalized investment or financial planning advice from Oak Wealth Advisors LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to their individual situation, they are encouraged to consult Oak Wealth Advisors LLC. Past performance does not guarantee future results and all investments should be scrutinized before being implemented in a portfolio.