Our Blog

DWM is committed to learning for its team, clients and friends. In this changing world, it’s extremely important to stay current in all areas impacting your financial future.

We encourage all of team members to “drill down” on current topics important to you and contribute to our weekly blogs.  Questions from our clients and their families are often featured in our blogs.  

Financial literacy for clients and their families is very important to us.  We generally hold an annual wealth management seminar for all of our clients.  We encourage regular, at least semi-annual, meetings in person with our clients to review family updates, progress on financial goals, asset allocation and performance of investments.  We’re happy to assist younger members of the family as part of our total wealth management program.

Here’s our latest blog:

 

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The Other Side of the “Bitcoin”

Written by Grant Maddox.

 

bitcoin-bubble-dash-killer-app.jpgWith the rise of new technologies, each one more advanced than the last, a new form of electronic payment has emerged.

Bitcoin is a decentralized digital currency created for efficient electronic payments. It is run and controlled by what is known as a ‘blockchain’, a public ledger of all transactions in the bitcoin network. A ‘blockchain’ is essentially a company-wide spreadsheet that can be accessed by all. The purpose of the ‘blockchain’ is to determine legitimate transactions and deter attempts to re-spend coins that have already been spent.

Bitcoin works similarly to a check in that there are two different numbers per transaction: your personal private key (or account number) and a signature that confirms your transaction on the above mentioned ‘blockchain’. The digital currency can be spent in a number of different ways, but can only be held in two forms. A bitcoin user can hold an electronic wallet (e-wallet) via a web wallet or a software wallet by using a downloadable software. An e-wallet is essentially an online bank account that allows you to receive bitcoins, store them, and send them to others. A software wallet is a downloadable software that allows the consumer to be the custodian of their bitcoins. Often the latter leads to more liability for the consumer.

It all sounds pretty enticing, and maybe you are wondering if you should jump into this next innovative technological trend. But the rapid growth of bitcoin has many people concluding that it’s just another bubble waiting to burst.

Markets have seen many different financial bubbles over the years, and none of them have ended particularly well. A financial bubble occurs when market participants drive prices above market value. This investment behavior can be attributed to herd mentality, where people think that because everyone else is investing in a certain entity and seeing short-term success, that means it’s a good investment. Inevitably, these financial bubbles can’t be sustained long term and they burst.

The first documented economic bubble in history occurred in the 17th century, when Dutch tulips were all the rage. The contract prices of the newly introduced and popular bulbs grew to an outrageous high, eventually leading to a dramatic collapse or “burst” in February of 1637. Today this is known as “tulipmania.” More recent examples include the dot-com bubble of the late ‘90s and the housing bubble in the 2000s. I’m sure we all remember how those financial bubbles ended, and the repercussions that followed those bursts.

Looking back on all of these events, it’s easy to see now how these bubbles formed, so we can use these prior experiences to better predict financial bubbles. Today, the cause for concern is bitcoin, and it’s more the question of when the bubble will burst rather than if it will.

Bitcoin got its humble start six years ago at $2. Three years later it was at $300 and last week it topped off at $11,000. With a 1000% increase so far this year alone, it’s easy to see why many people are raising the alarm or joining the frenzy, depending on the person!

With its frequent surges and sharp price moves, bitcoin is as volatile as they come. In other words, if you think you want to give bitcoin a shot, it’s best to assume that you’ve already lost that money. Everything we’ve learned about financial bubbles over the past four centuries points to an imminent burst in this digital currency’s future, and you and your money don’t want to be caught in a tight spot when it does.

There is also speculation that regulators will step in at some point because of the potentially disastrous economic consequences associated with the runaway bitcoin prices. The first concern is as we’ve outlined above, the bubble will burst and cause devastating losses. Additionally, future contracts are opening bets for bitcoin, and some funds are set to take form in early 2018 to pitch bitcoin to more mainstream investors. The more bitcoin gets wrapped up in our financial system, the worse it will be for everyone when it bursts.

The other major consequence presents the other side of the “bitcoin”: what if the bubble doesn’t ever burst, and bitcoin becomes an alternative, or worse, a replacement for standard U.S. currency? We cannot see regulators allowing what to happen, so it’s safe to say that even if this bubble miraculously doesn’t burst, it will most likely lose traction one way or another.

As many of you know, at DWM we don’t try to time the markets, and when it comes to speculative investments that require you to do so, it’s best to avoid them altogether. 

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Plant the Seed & Let It Grow: How DWM is Helping Emerging Investors

Written by Jake Rickord.

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Coming out of college can be a very stressful time for an individual. One goes from the structured and carefree life of being a student to someone bewildered with what is often their first glimpse of responsibility, trying to grab the wheel and get some control on their future. For a lot of recent graduates, it’s not an easy transition.

Having graduated from Carthage College in Wisconsin last May, I understand what some of these sobering realizations feel like. Fortunately, my family relationship with DWM team member, Jenny Coletti, earned me an interview at Detterbeck Wealth Management and, fast forward a few weeks, I’m proud to be a new part of the DWM team!

Even though I majored in mathematics, as a young person fresh out of college, it is extremely daunting on how to get your hands around your financial wherewithal and start planning for your future. DWM is guiding me through that process and in the near future will be doing this for other “emerging investors”!

That said, we’d like to introduce you to a program DWM plans to roll out in the near future: DWM’s Emerging Investor (“EI”) Program, a program designed for young investors looking to kick start their wealth management future! One of the most common things you’ll hear people say when talking about investments is: “I wish I started earlier.” DWM agrees and decided it was time to help younger folks get invested and on their way to financial freedom at an early age.

Highlights of this EI Program include the following:

  • Automated investment management utilizing DWM investment strategies via the Schwab IIP Platform
  • Emerging Investor On-Boarding - Financial assistance geared directly toward an Emerging Investor needs, which could include the following:
    • Budgeting/cash flow planning
    • Debt Management
    • Asset Allocation including assistance with your employer-based plan
    • Assistance with other work benefit options
    • Access to nifty financial tools
    • Educational planning (for those with kids or planning to have them soon)
    • Access to the DWM Emerging Investor Relationship Managers
      • In Charleston: Ginny Wilson & Grant Maddox
      • In Palatine: Me, Jake Rickord!
  • The ability to graduate to DWM’s Total Wealth Management (“TWM”) Platform – the one that our current clients benefit from - when their account value reaches a certain level

This platform can serve many needs, but Brett and Les are very excited about this being a nice spot for children of TWM clients and other select younger people looking to grow their portfolios, where they become their own investor and spread their own wings!

It should be noted that this Emerging Investor Program is a different service package than our more sophisticated Total Wealth Management experience. Given that it is geared toward a younger audience, which have different – typically less complicated, but still important - needs, the areas of focus are much different. For example, my recently graduated college friends are more interested in cash flow/budgeting management and making sure that their 401k through work is getting the most bang for the buck, given the employer’s match and investment choices, and less interested in retirement, estate, tax planning, etc. The investment management portfolios are still constructed by the same team at DWM, but do not utilize the more sophisticated alternative investments. Also, from an administrative perspective, reporting is completely handled through the Schwab IIP Client portal – no custom Orion/DWM reports like our TWM clients receive. In fact, with this EI program, everything is on-line and paperless, which to a Millennial sounds fantastic, but may be daunting to the older generations. A co-browsing session between the new EI client and one of our team members can be scheduled to make on-boarding a piece of cake. And whereas this new EI program has many differences from our traditional TWM program, the main theme remains the same: we will help select investors make their money work harder by addressing the unforeseen landmines hidden within their financial plans by equipping them with education, knowledge, tools, and sound advice. 

Overall, I am extremely excited to be a part of the DWM family. I’ve learned a great deal and met some great people since joining several weeks ago. I look forward to meeting all of the clients in due time. And I cannot wait to help roll-out this new Emerging Investors platform. We still have plenty of work to do, but stay tuned for the official launch!

Jake Individual Photo

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Happy Thanksgiving!

 

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"Be thankful for what you have; you'll end up having more. If you concentrate on what you don't have, you will never, ever have enough". - Oprah Winfrey

We have so much to be thankful for here at DWM. It is an absolute pleasure to work with so many wonderful people and we appreciate each and every one of you. Our incredible clients make our job that much more enjoyable and for that we are truly grateful.

From our DWM family to your family, we wish you a very happy Thanksgiving!

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