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It Depends

One of the first pieces of advice that I got in this business was also one of the best: It depends. Those simple two words are a starting point to answering a lot of questions regarding investments, personal finances, economics, etc. Those asking the questions may perceive it as a form of punting, but it is essential to be nuanced in such matters. Harry Truman once famously said, “give me a one-handed economist” as he was no doubt frustrated with receiving nebulous advice about the direction of the economy. It is not a coincidence that our firm name contains the word continuum since we realize that we don’t live in a black and white world.


For starters, a continuum represents the space between two extreme or binary values. For our purposes, this means determining the best path forward for a client based on their preferences and situation. “Should I pay off my mortgage faster or invest the money?” is a common question that financial advisors get. The answer of course starts with, “it depends.” Mathematically, with rates being where they are and with what one might expect out of his or her investments, it probably makes more sense to keep the mortgage and invest. Life does not exist on a spreadsheet. The comfort of being debt-free might outweigh the potential gains one might receive by investing that money. It is also important to point out that there isn’t a “correct” answer. When your time comes, there will be no ledger to score your cumulative decisions by netting investment gains versus debt paid in your lifetime. The best we can hope to do is be aware of all the implications and the known probabilities.


Another example would be the question of whether or not to buy a certain stock. There is no doubt that I will write more on this in the future, but the answer is not so simple. What are your thoughts on the future prospects of the company? What does the rest of your portfolio look like? Are you willing to sell if things don’t appear to be working how you had planned? Again, it’s not a black and white decision. I recently heard investor and author Jim O’Shaughnessy on his podcast say, “we are deterministic thinkers in a probabilistic world.” I couldn’t agree more. We want the clear-cut answers in a world where they don’t exist. Will this stock make me money? People don’t like hearing “maybe” but that is the appropriate response without being flippant.


This being my first blog since joining the firm, it felt a little like writing one of those essays from middle school titled, “What X Means to Me.” As silly as it may sound, one of the things that drew me here was, in fact, the name of the firm. As an advisor, I’ve always felt that good advice resides somewhere on a continuum so this was a natural fit. One’s journey to achieving financial success is filled with many questions that require more than a yes or no response and we are positioned to help.

Author: David Rath, CFA

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