Pawleys Financial Vault

Several years ago, a client approached us and asked for help. She was worried that if something happened to her it would be difficult for her family to organize her affairs and close her estate. To further complicate her situation, she had only one child who lived out of state. In response to her needs, we created the Financial VaultTM, a comprehensive review and electronic archival of her complete financial and legal picture. We captured all of her sources of income, expenses, assets, liabilities, legal documents and other important information. Not only does the service provide peace of mind resulting from getting financially organized, but also from the fact that we have a complete duplicate inventory that is stored in secure, encrypted files. If home damage occurs from flood or fire, we have a complete record of everything.

So how does the Financial VaultTM process work in detail? The first step involves completing a full personal profit and loss statement (budget). We capture all sources of income such as earned income, pensions, social security, and rental income. We also capture expenses, including all monthly bills, insurance, real estate taxes, and any other costs. For items that occur semi-annually or annually, we adjust those amounts to a pro-rated monthly figure so we have a comprehensive budget that includes those one-off items. We collect and scan copies of all paper accounts for income and expenses, and inventory any online account information. The next step involves compiling a personal balance sheet (net worth statement) that captures all assets and liabilities. Assets include cash and investments, real estate, business interests, and personal property. Liabilities include any debts, outstanding loans or mortgages. Again, we complete a full snapshot and calculate personal net worth, in addition to taking inventory of all paper and online accounts. As part of the service, we also provide an overview that shows the asset allocation of all investment accounts. This ensures that the client is on track to meet their financial goals based on their situation and prevailing economic and market conditions. Basic asset titling is one of the most important aspects of estate planning, so we review how each account and real estate deed is titled in addition to making sure beneficiaries are current. Generally, we recommend using TOD (Transfer on Death) and POD (Payable on Death) features on investment and bank accounts. To complete the Financial VaultTM, we conduct a full inventory of important legal documents, and will refer clients to their attorney if needed. These documents normally include a Will, Living Will, Health Proxy, Trust Agreement and Power of Attorney. We list any important contacts and, if desired, last wishes information and letters.

Several clients have taken advantage of the Financial VaultTM. This year, we have added a new feature where, in addition to the personal p&l, balance sheet, asset allocation and legal inventory, clients receive two flash drives with encrypted copies of all the files and documents we have scanned. So now you have three protected sources – any paper files you have at home, the secure Financial VaultTM with Pawleys Investment Advisors that houses duplicate digital copies, and your own electronic safe. Please e-mail us today at to learn more. It’s time to fill your Financial VaultTM and give yourself peace of mind!

10th Announced Buy-Out for Pawleys Growth Fund Holding!

On Thursday, Cigna announced it will buy Express Scripts, giving ESRX shareholders a combination of cash and CI stock. The deal, expected to close before year-end, will represent the 10th buy-out of a Pawleys Growth Fund holding at a significant premium for our investors. This is a stunning accomplishment for the fund, launched in 2010, given that we typically hold a concentrated portfolio of just 20-25 different stocks. We have a systematic process which strives to identify stock of companies with little or no debt, good earnings growth, and rock-solid cash flow. We never take a position in the hopes that it will be bought-out, it just happens that our methodology has identified stocks that others deem to be very valuable. The initial Cigna offer represents a 31% premium for ESRX shareholders.

Click here to see the take-overs and performance results:
Pawleys Buy-Outs

© 2018 Pawleys Investment Advisors, LLC. All rights reserved.

No Sleeping at the Wheel II

For only the second time since 2011, the equity markets have sold off more than 10%. Typically in a rising stock market driven by a growing economic cycle, we experience a 10-15% pull-back once every year. We view this type of market action as a healthy exhale. From historical highs set on January 22, the Dow Jones Industrial Average has dropped -6.72%, and the VIX, (CBOE Volatility Index) has spiked a dizzying 184%. We avoid making short-term predictions, but view this dip as what will play out as a very short-term technical sell-off. For the stock market to enter a sustained bear market, the underlying economy must first enter recession. Two things happen in advance of a recession – the Leading Economic Indicators drop for several consecutive months, and the yield curve inverts, which is a fancy way of saying short-term interest rates rise above long-term interest rates. Neither of these fundamental conditions currently exists, and we believe it will take at least 12-18 months for either of those two conditions to develop. Once the LEI’s drop and the yield curve inverts, it typically takes several months for the underlying economy to slow. We have gone on the record that the current secular bull market will last a minimum of 2 1/2 more years, and nothing in the markets or economy has fundamentally changed over the past two weeks to change that outlook.

The last time this happened was on August 21, 2015. The U.S. equity markets lost over 3% in one day, snapping investors awake from the lazy days of late summer. For the first time since 2011, the markets had dropped more than 10% from their recent all-time record highs. We published an article back then that we viewed the drop as a healthy exhale and a potential opportunity for investors to move cash into the market. Usually it takes 15% to get our attention, but a few key occurrences grabbed our attention that summer. That day, the VIX (volatility index) rose a dizzying 46%, and the breadth of declining stocks represented well over 90%. The yield curve was normal (upward sloping) and the Leading Economic Indicators were rising, so we viewed the sharp sell-off as short lived. A year later patient investors were rewarded with a 6% rise in the market.

© 2018 Pawleys Investment Advisors, LLC. All rights reserved.