
VOLUME 17 | ISSUE 1
This year will mark my 18th year at Armor Investment Advisors. This is now the longest that I have ever worked at one company.
A tremendous amount has happened over the past 18 years, personally, professionally, and in the broader world. I have lost my parents as well as my in-laws and have seen my children grow from toddlers into fine young adults (which matters more than anything financial).
At Armor we have grown from three eager founders into an established firm with a deep bench of talent making a difference in the lives of more and more clients.
The population of Wake County has shockingly grown 43% from 831,915 to 1,190,275.
We have seen two recessions, three Bear Markets of 20%, ten corrections of at least 10%, and the US equity markets are still up nearly 500% (10.4% annualized) since the beginning of 2007.
In 2007, the first iPhone was released (as were Android and the Kindle), Facebook had just opened to those of us not in college and fracking began. We were oblivious to drones, 3D printing, and Bitcoin. Virtual meetings, ever present eSignatures, and Agentic AI were still over a decade away.
Eighteen years ago, it would have been nearly impossible to predict where we are now.
Where will we be in 18 years? I can’t know for sure, but I have high hopes.
In the practice of Financial Planning and as we build investment portfolios, it is necessary that we keep our focus on a long-time horizon.
It is easy to get caught up in quarterly projections and lose the forest for the trees. Most financial media can barely focus 18 months into the future let alone 18 years.
I see it as our fiduciary responsibility to align our time horizon with that of our clients and make decisions with a focus on the long-term.
Reflecting on the last 18 years, several key insights shine through and influence our view of the future.
Equities are a great (and safe) long-term investment
In the stock market, time horizons have a direct relationship with volatility. The longer a rolling time-period, the lower the volatility of the returns. Across all rolling 18-year periods going back 50 years, 90% of the periods had an annualized return between +6.97% and +19.27%. Of one year rolling returns over that period 90% ranged from -13.04% to +45.44%. A much broader dispersion.
It can be hard to stomach the volatility that is inherent in equity markets, and it is often tempting to try and time the market. With the equity markets up over 25% for each of the last two years, a Bear Market or correction would not be surprising in 2025, but taking a long-term view reminds us to stay invested.
Financial Planning dictates asset allocation
At Armor, we are Financial Planners first and embrace our role as Financial Stress Managers. An investment strategy derives from a financial plan which comes from listening to and understanding each clients’ unique situation.
A client’s time horizon and their need for distributions are critical drivers of a portfolio’s investment strategy and asset allocation. We create portfolios that meet client needs as investors rather than simply chasing the highest return.
Diversification is crucial to risk management
The Nobel Prize laureate, economist Harry Markowitz, is reported to have said, “Diversification is the only free lunch” in investing.
This assertion has stood the test of time over the long term and is one that we incorporate into our investment approach with an appropriate dose of humility.
Building a portfolio diversified to different asset classes, geographies, and market caps allows us to mitigate risks that can destroy wealth while still taking advantage of the power of the equity markets.
Technology is evolving exponentially
In futures studies and the history of technology, Accelerating Change is the observed exponential nature of the rate of technological change in recent history, which may suggest faster and more profound change in the future. Like ‘Moore’s Law’ which relates to computer processing power, Accelerating Change more broadly describes the exponential growth in technological progress.
As we look forward to the next 18 years, we want to be invested alongside those companies who are leading technological change.
Valuation and Rebalancing Matter
While staying invested in equities, especially technology, is critical. That does not mean that portfolios can be ‘set and forget’.
A disciplined rebalancing strategy and a focus on valuations are critical to managing risks within a strategy.
Costs Matter
Over the last 18 years, there has been dramatic change in investment vehicles. 18 years ago, all equity trades had a commission, now all equity trades at Charles Schwab and Fidelity are commission free.
The average expense ratio of a Mutual Fund in 2007 was 0.9%. By 2023, it had dropped to 0.42%.
At the end of 2007, $608 Billion was invested in ETFs, the amount is now over $8 Trillion. ETFs have a lower cost structure (2023 average expense ratio of 0.15%) and are more tax efficient than Mutual Funds and since they trade like equities, they now have no costs to buy or sell.
Armor has embraced these changes to reduce costs and increase tax efficiency for our clients. Costs cannot go below zero, but we will continue to optimize portfolios to remove drag on returns.
Tax Planning and Estate Planning have an outsized impact
While investment management gets most of the headlines, over the last 18 years, there have been numerous instances where Armor has made a material difference for clients through smart Social Security planning, tax planning and estate planning.
With major tax changes coming in 2025, Armor will continue to partner with our clients to make sure that their planning aligns with the new laws.
May your next year and your next 18 years be filled with joy and blessings, low stress, and a focus on what matters most!