Shaw Capital Management Factoring: Save Aggressively, Start Early, Adviser Says

http://www.tennessean.com/article/20110717/BUSINESS/307170013/Save-aggressively-start-early-adviser-says

Executive Q&A: Bill Spitz

Bill Spitz wants to offer some of us smaller guys the type of investment advice usually reserved solely for luxury clients and big institutions.

As a director of wealth management firm Diversified Trust, Spitz uses his home base of Nashville to help individuals, families and others with everything from managing investments to trusts and planned giving strategies.

With a sour economy and still-skittish consumer confidence clouding the economic landscape, Spitz thinks it is high time to redouble efforts to make sound investments.

Maintaining a diversified portfolio and standing up for sinking stocks are two central ways to maximize returns, Spitz said.

He said saving aggressively and saving early still rates as the most important piece of investment advice anyone can give to the average investor. Moreover, distinguishing between basic needs such as bills and food and extra cash is critical to minimizing risk.

In 2007, Spitz stepped down as chief investment officer at Vanderbilt University, a position he held for 22 years, overseeing the schools hefty endowment.

Spitz, 59, also sits on the boards of Acadia Realty Trust and London-based Cambium Global Timber Fund.

After graduating from Vanderbilt, Spitz attended the University of Chicago, where he earned a masters of business administration degree. He later wrote Get Rich Slowly: Building your Financial Future through Common Sense.

Business reporter Bobby Allyn spoke to Spitz about investingstrategies and how he expects the post-recession economy to evolve.

How did you get interested in managing money?

When I got out of graduate school, I went to work in New York and started managing portfolios for individuals. After 10 years of that, I came to Vanderbilt to manage their fund. Its a very dynamic lifestyle. You get a chance to try to understand whats going on in the world. Its constantly changing.

What sort of clients does Diversified Trust aim to attract?

Eighty percent of our clients are individuals and families. The other 20 percent are endowments and institutions. I think we act as a quarterback for financial needs; were very good at being the central point.

That said, we dont do everything ourselves. Some of our money management services are handled by outside managers. Our view is: Why should we think we have the best people in the world? We give money to some outside firms because when you look at the stock components of most of our clients, half of it is outside the United States.

How have the credit crisis and housing downtown affected the way people invest?

For one thing, people are much more conscious now about maintaining cash for emergencies. So, they dont have to sell securities that have declined. People are more careful about commitments they make. They are much more careful about being diversified.

Theyre thinking about the quality of the institutions with which they deal. This should have been a consideration before, but, Id hate to say it, people really dont learn. They go through a tough time, and everybody gets their house in order. When the markets get good again, people get casual and less careful with what they do and have riskier portfolios.

It will come back to bite them before they learn the lessons all over again.

What are some major problems with the way American consumers deal with money?

People arent saving enough. Its easy to get lost in the talk of federal budget problems, but we need to talk about providing for our own future needs. People are going to have to get more responsible about it, and if we can help (someone) better structure their portfolio, then its money well spent.

What was the idea behind Diversified Trust?

The original idea of Diversified Trust was to provide smaller and medium-size investors the same kinds of sophisticated portfolios as the big guys.

Making unique investments gave us an edge over other people. For instance, we bought raw land at the edge of cities expecting that cities would grow into it. We also bought buildings in airports that we leased to FedEx and UPS.

What are some investment pitfalls? How can they be overcome?

People have a tendency to chase what has been doing well recently. Well, the opposite is what you should be doing. Everything in the investment world is cyclical.

Its hard to have the courage to stand up and buy. But thats the way people have achieved the best returns.

With the high valuations of many pre-IPO Internet companies, are we approaching another dot-com disaster?

Its interesting to go back in history and look at similar breakthroughs like railroads and TV. What you found was that early adopters made a lot of money, and people who came to the party late got clobbered.

With the new wave of social media companies going public, I think theres been some hype. I remember having this conversation during the last tech bubble. Its a little bit of a feeling of deja vu all over again.

You sit on the board of Acadia Realty Trust, which is a firm concentrating in the retail market in dense, big-city locations along the Eastern Seaboard. What types of real estate do you see springing back to life the quickest?

Real estate is a very local thing. It depends on the kind of real estate and the location. Acadias occupancy rate never fell to anything close to what I had expected. Thats because of the type of retail they do. The luxury goods dealers are moving strongly, and the more essential grocery stores and drugstores are performing well.

Are there bright spots in the economy that stand out?

I think consumer spending has rebounded a little faster than what I thought. People are more optimistic and cautiously spending. Still, its going to be a long and slow period of grinding recovery.

One of the important messages that weve been giving our clients is: For at least the next five to 10 years, expect pretty moderate returns on stocks and bonds and other investments.

Any financial advice for recent college grads whove landed their first job?

The math for saving is really compelling. The earlier you start saving, the better your returns.

You ought to start as soon as possible in particular if you are concerned about the long-term viability of Social Security and Medicare. You cant control how the market will be (by) then. But you can control how much you put in over time.

by: Shaw Factoring

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