Week in Review

Is Your Current Budget Working For You?

With the tax filing deadline around the corner, many individuals might be wondering what they are going to spend their refund on. A more important question might be, “How much can I save?” With the COVID-19 pandemic continuing on, many companies have had to lay off or furlough employees with countless more experiencing reduced hours. While it might seem like a good time to splurge, we learned in 2020 that you can never be too prepared for the future.

As you’re preparing for your potential refund or if you’ve already received it, here are a few items you should also be evaluating:

  • Nonessential recurring expenses: Write a list of all nonessentials and decide which ones are important enough for you to keep and which items you can cancel. You can also see if you can pay off the ones that you want to keep. If you want to keep that gym membership see if you can pay for the entire year and potentially get a better deal!
  • Credit card balances: Look at what credit cards have the lowest balances and see if there is an opportunity to get some paid off with your refund.
  • Student loan payments: Do you have lingering student loans? Take a look at what you owe and plan to use your refund to make a dent in your debt.
  • Restrict online shopping: Unsubscribe from all retail emails, don’t save your card information online, and delete shopping apps off your phone to make it harder for yourself to shop online.
  • Prep for grocery shopping: Before you go shopping or place your delivery order, set aside a little time to create a grocery list. Not only will it help you stay on track to purchase only what you need, but it’ll also stop you from eating out as much.

The most important step is to have a plan. As soon as you know if you will be getting a refund, you should decide what to do with it. Setting time aside to prepare and plan will ultimately pay off in the long run. For help with determining how much you need to set aside in savings and how to build up that account, reach out to our advisors at https://pciawealth.com/contact-us/.

*Prime Capital Investment Advisors, LLC (“PCIA”) and its associates do not render any legal, tax or accounting advice nor prepare any legal documents.
Week in Review

March Madness Lessons for Risk, Ratings, and SPACS

March Madness is here, and it’s one of my favorite times of the year. Although my team, the University of Arizona Wildcats, will be missing the tournament because of a self-imposed postseason ban, I’ll still be spending my free time in the next few weeks, glued to the games.

March is the time of year when almost everyone becomes a basketball fan — cheering on teams, participating in office bracket challenges, and feverishly following basketball underdog stories. So, the ‘madness’ also makes for a great opportunity to help explain some investing do’s and don’ts.

Opening Tip: Emotions Won’t Help You Win

I’ve written about the parallels between March Madness and investing before, but given how volatile the financial markets have been this past year, there’s more to expand upon. Emotional investing – based on fear, greed or some other reason – can cost an investor dearly. Starting in March 2020 when there was a huge sell-off in the market and volatility was at all-time highs, there were a lot of knee-jerk reactions and emotional investing. But emotional investing only negatively impacts a long-term investing strategy. People who stayed the course with their long-term strategy were rewarded with gains this past year.

When strategizing for your team or portfolio, picking blue blood teams to win your bracket or blue-chip stocks for your portfolio, are typically safe bets. But as we all know from this pandemic-stricken year, who and what truly defines safe is not guaranteed, and sometimes changing strategy is necessary.


Duke and Kentucky, two of the most well-known blue blood basketball teams, did not make the tournament this year. And another well-known blue blood, UNC, is seeded lower than we’re used to seeing. In the markets, the big tech names like Apple, Amazon, Google and Microsoft, may not be where you want to allocate all your money right now either. We’re seeing a rotation out of technology, and this year may be the year you need to find other investments to help carry your portfolio, like high quality companies found in more cyclical sectors like financials, industrials, materials, and even energy. Just like you’ll have to find other teams to carry your bracket, such as more blue-collar teams like the Gonzaga Bulldogs, Villanova Wildcats, or even the Baylor Bears. While many topics from my previous March Madness blog still hold true, some things have changed, like a rotation out of tech, fallen angels and Special Purpose Acquisition Companies (SPAC). So, here’s how this year’s hot investing topics correlate to the madness of the single-elimination college basketball tournament.

Boom or Bust

In the past ten years, bracket participants are getting bolder. Every year more and more people are picking 16 seeds to upset 1 seeds in their brackets, which has only happened once in the history of the tournament. So picking 16 seeds to upset 1 seeds can very easily bust your bracket, just like buying a bankrupt and/or junk rated stock can very easily bust your investment portfolio. We saw this pandemonium play out recently with retail trading activity surrounding Hertz last year, and the ‘Reddit Revolution’ and frenzy around stocks like GameStop and AMC; some made a lot of money, others lost a lot. Building an investment philosophy around buying bankrupt stocks is not a sound principle, just like picking 16 seeds to upset one seeds to build your tournament bracket.

Instead of hoping for the slam dunk, picking the 12 and 11 seed upsets in your bracket is more calculated and similar to investing in a company that may not be profitable quite yet, but perhaps will be in the future. An example of calculated risks would be tactically overweighting asset classes in your portfolio relative to their long-term targets, to capitalize on the current and future expected market environment, such as overweighting small cap stocks, overweighting international equities (primarily emerging market equities). Historically, during the early phases of recovery, expansion, and reflationary periods, certain areas and asset classes tend to perform better as they capitalize on improving global growth and expansion. Because these asset classes typically carry higher levels of volatility or risk, making minor tactical changes to your long-term targets could be seen as calculated, despite exposing more of your portfolio to riskier asset classes over the short term. Other examples of calculated risks in the investment world might include renewable energy and Electric Vehicle (EV) companies. Just because they aren’t profitable right now, doesn’t mean they aren’t a good long-term investment. You have to be willing to accept the short-term volatility, as there are themes taking shape right now that will play out longer-term. The key, just like picking the right 12 and 11 seed upsets, is to spend time getting to know those companies and how they may benefit from trends just now starting to form.

SPAC Attack and Fallen Angels

Everyone loves a Cinderella team during the tournament because they have a great story that gets a lot of media attention and support from the masses. Special Purpose Acquisition Companies (SPACs) are an investment hot topic in financial media these days. With more than $80 billion being invested in U.S. SPACs in 2020, investors like Shaquille O’Neal, Steph Curry, Serena Williams and a number of others are buying in. But there’s still caution to be had because SPACs don’t have the same regulatory process as other companies going public through IPOs. With the level of risks accompanying SPACS, you don’t want to put all your money in one basket. If you’re going to invest in them, proceed with caution and look to make SPACs a very small portion of your portfolio, just like you would make a potential Cinderella team, a small portion of your bracket.

Building a team or portfolio strictly based upon rankings, has the potential for diminishing your long-term success, as we’ve witnessed this past year with bonds. If you build out your bracket just by looking at the NET and KenPom rankings of teams, your long-term success is going to be diminished. The same goes for picking bonds for your portfolio. The market witnessed a lot of ‘investment grade’ BBB-rated bonds downgraded to junk bond status as their credit ratings took a hit during the heart of the pandemic shutdown, making them ‘fallen angels’. Focusing solely a bond’s rating could lead you to adding bonds of companies on the brink of credit downgrades, which could cause you to experience large losses on what are perceived safer investments – ‘investment grade’ bonds. Conversely, fallen angels present attractive buying opportunities for high yield, or junk bond, managers; allowing them to add higher quality junk bonds to their portfolios, often at a discount. Given the amount of credit downgrades we witnessed in 2020, it’s no wonder about 50% of the junk bond market is now rated BB.

Ratings can often be misleading and adding, or even excluding, securities solely based on their ratings could lead to portfolio losses or missed opportunities. The same way picking your bracket based solely on the lowest rankings (NET or KenPom – lower is associated with being better) or seeding could leave your bracket susceptible to the ‘fallen angels’ of the tournament, those that were ranked highly, only to be upset in the first round, or even the round of 32. Conversely, identifying the pre-tournament ‘fallen angels’, or those that may have suffered a couple of losses leading up to the tournament, causing in their rankings to fall, could prove to be high-quality tournament teams that could result in some upset victories. In investing and basketball, it’s best to look beyond just ratings and rankings and think about the sum of all of the parts. Balance is key.

Throughout the tournament’s history, there has only been one Final Four where all top four seeds made it to the final, so why construct your bracket just with top seeds? A better predictor is the sum of your teams’ rankings. Typically, the sum of the Final Four teams tends to be between 8-11, so you’ll need some lower seeded teams for your bracket’s Final Four. Put this into the context of the bonds in your portfolio. If you’re aiming for an A average, you’ll want a mix of AAA and AA bonds (which can be viewed as the one and two seeds), BBB bonds (like a 4 or 5 seed), and some junk bonds (the 7 seeds or lower). By sprinkling in some bonds that have lower ratings, you give yourself the opportunity for higher yield while also maintaining some safety. Again, the key is balance.

It’s important to remember that investing should be done for the long-term. And while it’s fun to compare investing to basketball, March Madness only lasts a few weeks. You want your money to last for decades. Making smart, prudent choices for a long-term investing strategy is always the best bet. Remember, that if you’re going to include risk, you need to make sure it’s calculated and that the juice is worth the squeeze. Consider working with a trusted advisor who can help you take the emotion out of investing. Here are some tips for picking the right advisor for you.

Disclosures: The preceding commentaries are (1) the opinions of Chris Osmond and not necessarily the opinions of PCIA, (2) are for informational purposes only, and (3) should not be construed or acted upon as individualized investment advice. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal. Past performance is no guarantee of future results. Advisory services offered through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., 7th Floor, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management (“PCWM”) and Qualified Plan Advisors (“QPA”)

Week in Review

Should You Consult a Financial Advisor Before Buying a Home?

March is the peak season for house listings, which means that you, as a buyer, might be thinking about what your next step is for your living situation. This big decision could likely impact your life for years to come. It may warrant the question, “Should I consult a financial advisor before buying a home?”

Though you may have already gotten advice from your real estate agent and mortgage broker, they’re not prioritizing your complete financial situation. A financial advisor will take a comprehensive look at your entire situation before giving you advice.

  • A good advisor will help you build a strong financial plan to manage your current debt, giving you tips on how to budget and pay off loans, prior to looking at real estate.
  • A good advisor will help you start the conversation by asking you important questions before you buy a home such as:
    -What are your long and short-term goals? Knowing this will help you know how the home fits in.
    -Will you be able to make a decent down payment? (10 to 20% down) Your down payment will impact your budget and more than likely your savings.
    -What is your contingency plan if your job or family situation changes soon after buying a home?
  • After you’ve bought a home and have lived there a couple months, you’ll get a better sense of your actual budget, which may include items you forgot to factor in. Your financial advisor will be there to help you readjust your budget for unaccounted costs, while also monitoring the rest of your financial goals.

Our team at PCIA provide a wide range of products and services to meet the expanding needs of each individual client. Our financial experts are passionate about applying their knowledge and expertise to help you reach for your financial goals. To get started, you can contact us at https://pciawealth.com/contact-us/.

Week in Review

Building a Lasting Client-Advisor Relationship

Valentine’s Day is around the corner, and celebrations will look extremely different this year. Instead of a romantic getaway, you may be taking a virtual vacation! Instead of going to a favorite restaurant, you’re making dinner at home or ordering takeout to share with the kids. In any relationship, flexibility and understanding are essential when you encounter new situations, and the pandemic has reinforced the importance of working with those you trust most.

Professional financial advice is important for one’s financial future, and advisor selection – like a life partner – is just as important, because you typically invest in the person for the long-haul. Defining goals, understanding your economic situation, and hiring a financial advisor that you trust will allow you to stay committed to your investment processes, and can make a stark difference in portfolio returns and objectives. This latter point is especially true when there’s increased market volatility, as we’ve seen throughout the pandemic, specifically in March of last year.

Fear can be a big deterrent as clients watch volatile price swings diminish their savings and investments. An old adage and one conveyed by many of the world’s most renowned investors is, “Time in the market beats timing the market.” Fear and panic-selling and/or buying can change the course of one’s long-term financial well-being. Recent fads like the masses joining the ‘Reddit Revolution’ also pose issues for long-term objectives, where in typical short squeeze fashion, GameStop among other securities like AMC saw vicious price swings that were profitable for some, while others wanting a piece of the action, suffered dearly. During times of extreme volatility and uncertainty, investors should stay the course. They also need to be reassured and communicated to, that everything they’ve worked so hard for will be okay. Advisors should be in their clients’ corner to explain complex issues, which is why communication is crucial to every lasting long-term relationship.


Constant flow of communication in any relationship is necessary, particularly when it involves finances. In marriage, and dating, and any relationship, large purchases should typically be discussed. I wouldn’t bring home a new car any more than my wife would without discussing the matter, and in the same respect, clients expect purchases aka trades to be in line with their objectives and/or some discussion to take place prior to a large purchase and/or new investment. When the pandemic first hit and stay-at-home orders were given, some advisors entered dark mode and weren’t communicating with their clients. Fear set in, and whether advisor or client-driven, fear-based investing can be one’s worst enemy. No matter how the market is performing, advisors must have open and transparent communication to reassure their clients, and that what’s happening in the market now, is unlikely to alter their long-term goals if you stay the course.

Be Accessible and Proactive

It’s said that absence makes the heart grow fonder. That sentiment was certainly tested in 2020! Because of the advancements in technology – particularly in the Fintech space – there’s little excuse for clients to have to go weeks or months without talking to their advisor. Like dating, it’s okay to make the first move. We all have insecurities and want reassurances from our significant others. The same holds true to the relationship investors have with their advisors, and advisors need to be proactive for their clients; they have to understand what keeps their clients up at night and tailor communications to make sure clients feel comfortable and protected, especially as the desire for an urgent response was accelerated during the pandemic. Even though there was no safe way to meet with clients at the beginning of the pandemic when market volatility and fears were at all-time highs, we still had the ability to communicate via text message, phone and video calls. Many client fears and insecurities can be alleviated, when advisors are preemptive.

This proactive approach extends beyond communication and can even be applied to investment management. Prime Capital Investment Advisors strives to take an active approach to investment management so we can be proactive in positioning portfolios appropriately, rather than simply being reactive due to market volatility, or simply incorporating a buy and ignore approach, also referred to as set-it-and-forget-it. Like our personal relationships, we want to know our partner is thinking about us and taking appropriate measures to protect our well-being, rather than merely acting when something is wrong, or not giving the relationship the effort it deserves.


I mentioned it in my blog post from February of 2020, and I’m mentioning it again here. “The bedrock of any relationship is trust. The same premise should be applied to investments because clients entrust their capital to investment professionals in the same way we entrust our hearts to loved ones. Many advisors study and work hard to perfect their craft, and while schooling and certifications do wonders in teaching practical application, it is a combination of real-life, on-the-job-experience combined with practical knowledge that allows us to make optimal decisions and build trust. As an investment manager, I have to trust my analysis and thesis and remove bias and emotion from the decision-making process. But advisors are still human, and while removing emotion is easy in theory, it is often harder to practice, especially when the market is acting irrational and selling off for unexplainable reasons. Conviction to our process and trust in our analysis is necessary to avoid giving into emotions, overreacting, and panic selling. Like personal relationships, cool heads prevail. Take a step back, relax, and ask yourself, what has changed?”

Trust is key. In the short term, there are a variety of things that can happen in life, causing investors to second-guess their long-term saving strategies and goals. In the end, if a solid relationship is forged with transparent communication, the client and advisor work as a team, continuing to monitor financial positions as compared to the overall goals, everything should work out as planned.


Securities offered through Private Client Services, Member FINRA/SIPC. Advisory services offered through Prime Capital Investment Advisors, LLC. (“PCIA”), a Registered Investment Adviser. PCIA: 6201 College Blvd., 7th Floor, Overland Park, KS 66211. PCIA doing business as Qualified Plan Advisors (“QPA”) and Prime Capital Wealth Management (“PCWM”). PCIA and Private Client Services are not affiliated.

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