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2018 Q2 Newsletter

By the time I signed my rookie contract with the Green Bay Packers in 1991, hundreds of millions of Wall Street advertising dollars had convinced me that true wealth could be created only via superior stock selection, nimble market timing, and feats of wizardry known only to seasoned professionals at the full-service brokerage houses. Determined to avoid the financial perils of so many other professional athletes, I confidently handed over my signing bonus to Chuck, my agent’s brother-in-law at A.G. Edwards, then one of the world’s oldest and most prestigious brokerage firms.

As much as I intrinsically trusted my agent’s recommendations, my father had always taught me to “trust but verify.” And after I monitored my account’s performance and fees for a few months, it became painfully obvious that Chuck was using the suitability standard to benefit his firm and himself rather than the fiduciary standard to benefit me. So I liquidated the commission-laden municipal bond portfolio I had been sold, reinvested the proceeds into an S&P 500 index fund (shown below), and began a lifelong quest to uncover the true secrets of wealth accumulation.

Growth in Wealth

Armed with a master’s degree in engineering and a minor in statistics, I read every book I could find about investing, plowed through mountains of data, and ran countless historical simulations. Out of my empirical research evolved a remarkably straightforward investment philosophy and approach rooted in optimism, probability, common sense, and discipline that allowed me to achieve financial independence for myself and my young family. Toward the end of my NFL career, I stumbled upon Nick Murray’s revolutionary book The Excellent Investment Advisor, calling for a change to the traditional commission-based financial services model. Mr. Murray passionately advocated for a new breed of independent, fiduciary, fee-only, Registered Investment Advisers to educate and guide investors on their path toward financial independence. Thus, in June 1998, Disciplined Equity Management began listening to goals, crafting customized financial plans, and securing lifelong commitments to low-cost, tax-efficient, globally diversified equity portfolios. Most important, DEM brought discipline to the investing process by ignoring the noise surrounding every period of war, natural disaster, political turmoil, global unrest, economic uncertainty, and the ensuing temporary market volatility. Despite enduring the two worst bear markets since the Great Depression during the first ten years of our existence, DEM’s disciplined approach has rewarded its loyal Spartans handsomely.

Over the past twenty years, many of you have invited us to celebrate life events such as children graduating from college debt-free, paying off your mortgages, caring for the people you love, donating to charity, and the sense of security that comes only from having achieved true financial independence. To thank you for sharing these delightful memories, we are inviting you to celebrate DEM’s twentieth anniversary with us at One Ocean Resort & Spa in Atlantic Beach, FL on Friday evening, August 3 at 6PM. Please check your email for a personalized invitation, RSVP as soon as convenient, and join us as we kick off DEM’s next twenty years in style!

Don Davey
Senior Portfolio Manager
Disciplined Equity Management
Plan Appropriately, Invest Intelligently, Diversify Broadly, Ignore the Noise



2018 Q2 Market Index Returns

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