"… there are certain structural advantages that founders may have … The social capital and moral authority that comes from being the founder and having built many of the company’s key products means that on balance people trust you more and give you the benefit of the doubt more when you make tough calls ... Everything is easier with social capital.” - Mark Zuckerberg, Founder/CEO of Facebook People matter. A lot. Wouldn’t it be great to invest alongside leaders who ... have a track record of success? have significant “skin in the game”? have incentives that are closely aligned with shareholders? The person who gave birth to the company is often best equipped to nurture, lead, and inspire the people who comprise the company. This can lead to better products, happier customers, and even better capital allocation decisions. Research suggests that this can result in better long-term stock returns. For instance, a recent study by Bain & Co. found that within the S&P 500, the companies whose founder was still deeply involved performed 3-times better than the other companies over a 25-year period (1990-2014).* Intrigued, we began to explore how we might invest in a passive (index) of founder-led companies. Ultimately, we found a solution that did this (an ETF). However, we did not like its cost structure or portfolio selection methodology. This led us to design our own. We are thus pleased to announce Fielder’s Founder-Led strategy. It is not a fund or ETF but rather a basket of ~50 individual stocks of founder-led firms. Passive (index) investing should not be mindless investing. We believe our Founder-Led strategy is a way to invest passively in a more “mindful” universe of companies. For more information, you can download a report on our Founder-Led strategy HERE. Yours in the Fielder, Frank Byrd, CFA *Zook, Chris. “Founder-Led Companies Outperform the Rest — Here’s Why”. Harvard Business Review. March 24, 2016. Disclaimer: The Founder-Led strategy may not be appropriate for all clients. Please consult with your financial adviser. The Founder-Led strategy is comprised of smaller and more volatile stocks, and as a result may involve a higher degree of risk. While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Amen of the Week “… nothing is more important or more difficult than getting the culture and the people right. Whatever successes we’ve had at Bridgewater were the result of doing that well… That might sound odd, because as a global macroeconomic investor, one might think that, above all else, I had to get the economics and investments right, which is true. But to do that, I needed to get the people and culture right first.” Ray Dalio, founder of Bridgewater Principles by Ray Dalio Our New Partners I’m proud to announce that Peter Cook, a Certified Financial Planner (CFP®), has joined Fielder as a Partner. I’m also proud to announce that Jonathan Frazer, who has worked with Fielder since 2014, has also been named a Partner. Together, as partners, we will continue building a new type Wealth Management firm. We reject the traditional “sell-side” model, which looks like this … In this traditional model, the “adviser” is a salesperson for a financial institution(s), such as a bank, insurance, or brokerage firm. They are paid by these firms for selling you their products. Fielder, on the other hand, acts as a “buy-side” adviser, which looks like this… As an independent, “buy-side” adviser, Fielder sits on the same side of the table with you. Under this model, we are contractually beholden to serve one master: you, the client (acting as a fiduciary at all times, not just sometimes as with sell-side advisers). Our incentives are better aligned with yours. Since we are not beholden to any bank/brokerage/insurer, we are freed to help you choose the “best of breed” solutions among many firms. We are also motivated to help you reduce your all-in costs paid to these financial firms (as much as practical). To learn more about Fielder’s new partners and how we can serve you, please visit Fielder’s website. Yours in the Field, Frank Byrd, CFA *According to Cerulli Associates, US Advisor Metrics 2015. Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

A Founder Exits Uber just fired its founder, Travis Kalanick. The $68 billion question is: Will this ultimately prove a good thing – or a bad thing – for Uber’s investors, drivers, and customers? Research suggests that it is likely to lead to a less innovative and thus less successful Uber. Kalanick may be a “bad person”, or maybe he’s actually a good person who needs to grow up. (I do not have any insights on whether he deserved to take the fall for the awful things that happened on his watch.) Either way, the venture capitalists and board surely agonized over the pros and cons of firing him. Perhaps they were encouraged by research that finds that replacing founder-CEO’s can be a good thing for pre-IPO companies. An academic paper by Ewens and Marx found “evidence” that venture capitalists can actually improve the performance of companies by replacing founders.* Uber, however, is not the typical pre-IPO company. It is the dominant player in a global transportation niche that it created. And it has a $68 BILLION valuation. That's a scale more akin to leading public companies. Hence, let's consider how S&P 500 companies have fared with and without their founders at the helm. Recent research by Bain & Company uncovered that founder-led companies within this universe have out-performed non-founder-led companies by as much as 3x over a 15-year period.** Bain attributes that success to an “owner’s mindset”, a drive to “change the world”, and an obsession with knowing their customer. Another academic study by Lee, Kim, and Bae showed "a significant drop in innovation performance" in the years following the departure of a founder-CEO from large public companies.*** Travis Kalanick, for all his flaws, does deserve this acknowledgment: He created Uber from nothing. Within just eight years, he built a $68 billion global company from scratch. It’s an extreme example of “zero to one”. Kalanick discovered spare capacity that no one realized existed. Who knew that so many people were willing to get off their couch and drive me to a meeting? More astonishingly, who knew that I’d be comfortable with all these strangers picking me up in their cars? Kalanick's Ted Talk: "getting more people into fewer cars" More than once has a desperate Frank Byrd said, “God bless, Uber.” Two years ago, I was in Singapore and couldn’t hail a cab. I panicked, realizing that I’d be late for a meeting. In desperation, I pulled out my phone to see if Uber worked in this small country on the other side of the planet. I was shocked and relieved that it did. It was magic. My iPhone (created from another founder-led company) showed me an Uber was around the block. I made it to my meeting within seven minutes - and plenty early. A couple of weeks later in Hong Kong a similar incident occurred. Uber saved me there too. Some will argue that Kalanick was just lucky to come up with the right idea at the right time. These skeptics miss the point. As Michael Dell says, "Ideas are a commodity. Execution of them is not.” It took a force of nature to take Uber from an idea to reality. Where on earth is Uber’s board going to find someone in that league? Odds are they won't. My only hope is that they find someone capable of preserving the business that has given me so many "God bless, Uber" moments. Amen of the Week: “The people who started this company were not just involved but lived what we talked about. We weren’t just preachers. We went out and practiced it. And rightfully so. If this thing didn’t work, we were broke, out on the street again.” “Founders are hard to replace.” Bernie Marcus and Art Blank, founders of Home Depot Built from Scratch (1999) Yours in the Field, Frank Byrd, CFA *Ewens, Michael and Marx, Matt.“Founder Replacement and Startup Performance.” October 11, 2016. **Zook, Chris. “Founder-Led Companies Outperform the Rest — Here’s Why.” Harvard Business Review. March 24, 2016. ***Lee, Joon Mahn; Kim, Jongsoo; Bae, Joonhyung. “Founder CEOs and Innovation: Evidence from S&P 500 Firms.” February, 2016. Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Can New Research Help You Avoid the Same Fate? As a young boy, I was very close to my grandparents – to my grandfather especially. I really looked up to him. He had sold his business, a cotton seed oil mill, in 1960 at the age of 53. The sale netted him enough money that he figured he could retire young(ish). That gave him the freedom to spend lots of time with me. Some of my earliest memories are of playing in the tree house he built for me in the yard of their beautiful home. When I was 6 years old (1974), he and my grandmother moved from their nice home into a nice apartment. Losing my tree house was not cool. Several years later, they moved again – this time into a smaller, less nice apartment. By the time I was in high school, my widowed grandmother moved yet again into an even smaller, not-nice-at-all apartment. This was when I learned the ugly truth that their money was all gone. How did this happen? What could have prevented it? Those questions ate at me. It all seemed so unfair. After college, I joined Merrill Lynch as a financial adviser and dedicated my practice to helping retirees avoid my grandparents’ fate. At Merrill I worked with over 100 retiree clients. Most considered themselves “old” and “rich”. That gave them a false sense of security that they’d never be “old” and “broke” one day. I’d explain to many of them that they weren’t really that old. After all, a 65-year old couple has a joint life expectancy of 23 years. (This means there’s a 50% probability that the surviving spouse will live LONGER than 23 years.) My grandmother passed away 40 years after my grandfather sold the business and retired. That’s enough time for inflation to deplete even a large portfolio without careful planning. Most importantly, I learned that managing portfolios isn’t ultimately about numbers. It’s about the quality of a life. Watching someone you love slowly downgrade their comforts/freedoms/dignity year by year is painful. Fortunately, there’s a growing body of legitimate academic research that’s helping advisers and their clients make better decisions. One notable eyebrow-raiser is a recent paper published in the Journal of Financial Planning by Jack DeJong, PhD and J.H. Robinson.* Their research suggests that constantly rebalancing your portfolio may do more harm than good. It’s been practically unquestioned dogma that periodic rebalancing to maintain a constant asset allocation is the most efficient way to manage portfolios. This assumption is thus embedded in conventional retirement planning forecasts. DeJong and Robinson, however, contend that investors who depend on their portfolio for income may be better off not rebalancing. One alternative is a “Guardrail Strategy”, in which stocks are not sold after negative return years. An even better option might be a “Bonds/Cash First” withdrawal strategy, in which retirees draw income first from cash and bonds. Both alternatives result in an increasingly unbalanced portfolio, yet may substantially lower your odds of running out of money. The following hypothetical shows how dramatically this simple change can improve your portfolio’s sustainability. Switching to a Bonds/Cash First withdrawal strategy lowers the risk of going broke in retirement from a 65% probability to a mere 3% probability: Fortunately, DeJong and Robinson have turned the software they used for their research into a tool for advisers and their clients called NestEgg Guru. I’ve licensed the software and made it available so that you can run your own scenarios HERE. It’s super easy to use and literally takes less than a minute to enter your assumptions (confidentially – I don’t see your data). I’ve used it to run a lot of “what ifs” (including the ones in this example above) and have been shocked by some of the results. Though Dr. DeJong is an academic, Mr. Robinson is a seasoned financial adviser. I salute this combination of theorist and practitioner, since such a pairing can yield real world conclusions that help real world people. Their paper covers a lot of ground; I only touched on the most unique conclusions above. Even if subsequent research finds fault with or reaches different conclusions from DeJong and Robinson’s paper, their work has contributed to our profession’s search for truth. As with medical science, even failed R&D produces learning and thus progress toward ultimate truth. My salute, then, to both of these gentlemen for their contributions. Please reach out if I can help you or someone you care about design a plan that maximizes their odds of success and minimizes the odds of the fate my grandparents endured. Yours in the Field, Frank Byrd, CFA * DeJong, Jack C., and John H. Robinson. 2017. “Determinants of Retirement Portfolio Sustainability and Their Relative Impacts.” Journal of Financial Planning 30 (4): 54–62. While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in this email or any attachments. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein.

Last week Steve Pomerantz, CFP interviewed me on his nationally syndicated radio talk show "On The Money!". Here are the highlights: Steve Pomeranz: So, you started in the brokerage world; you were very, very young, I understand, and you worked for Merrill Lynch... Then you discovered Warren Buffet, I guess, relatively early on. How did that change you? Frank Byrd: I had been at Merrill Lynch for about three years… I had been the cold-call cowboy. I made 40 cold calls a day for two years. That’s over 11,000 people. That obviously introduced me to a lot of real people. These were typically older investors (because) it takes a while to accumulate wealth. And what I saw had worked for them was that they had bought and held shares of companies that they understood … like a Federal Express, Procter & Gamble, Schering-Plough, Coca-Cola. And having bought several dozens of these over the course of many years – decades – they wake up with, many of them, very large portfolios. I’m talking a million dollars, and that’s in the early 1990s in Memphis, Tennessee, mind you. So, I knew that that worked. And, to be clear, these weren’t high-income professionals. Many of these were people that had never made over $50,000 a year. So, I knew what worked. I saw it. And, unfortunately, everything I read with the typical Wall Street research didn’t really sit with me because I couldn’t tie it to reality. And one day, accidentally, this broker (my mentor) said, “Hey, I’ll bet you’d like this.” I picked up the Berkshire Hathaway report. I took it home that night, and it changed my life. For the first time, I read something that made sense: Buy shares of great businesses run by great people at good-to-great prices and hold them a long time… That works. I can sell that because it’s the truth... Steve Pomeranz: So, you went to Columbia because Buffet …well, that was Buffet’s alma mater, and that’s where he worked with Ben Graham and followed the Graham and Dodd philosophies of investing. You actually went right to the source; that’s really pretty commendable…. What are your colleagues saying … now that he’s touting the S&P 500? Frank Byrd: … This is going to surprise you. Most of my friends – and I am proud to say that I know people that I think of as some of the best in the industry – would tell you that if they were looking over the shoulder of their financial advisor of, say their father … and they saw that that advisor had them in an index fund, most would say, “Whew!”. I think they’d have a sigh of relief. (That’s an) acknowledgment that most of the industry is guilty of closet indexing… (which) basically means that a money manager has a portfolio that is constructed so closely to resemble the index in terms of a large number of companies and very close in terms of mix of industries that, in essence, it basically looks like the index. Steve Pomeranz: With one major difference and that is the index that you buy costs next to nothing but these people are charging, what? Frank Byrd: … Roughly in the neighborhood of three quarters of one percent. However, what those numbers often don’t capture is that on top of that, there is a 12b-1 selling fee that is typically another 25 basis points -- or a quarter of a percent. Then there is this hidden cost that nobody talks about: … that’s the enormous tax that high turnover, meaning a lot of buying and selling in a portfolio, extracts from the returns of an account. Now there are several studies on this, and they all reach slightly different conclusions, but the studies, some of them, conclude that the buying and selling friction costs could amount to as much as one percentage point additional drag (on returns).* … I believe Buffet’s big attraction to the S&P 500 is, at least, he knows it’s low turnover. And that means not just a low management (but) on top of that, the S&P 500 is not engaging in a lot of activity. And that means less friction costs and less taxes…. Frank Byrd: ... Buffet knows active management can work… If you read his written statements carefully, it really focuses on this idea that the typical choice (available) to most people is a large money manager. And (Buffett) is very explicit that size is the enemy of performance… the more money you manage, the worse your returns are going to be… So, he’s not saying that there aren’t some good money managers out there, but it’s typically going to be the small ones. And for the typical person, even professional investor, to be able to identify in advance the small manager, that they can get into – (and who) will have the integrity to remain small, meaning, keep themselves closed to new investors past a certain size – (Buffett) knows that’s not going to happen. You can listen to the 17-minute interview HERE. Yours in the field, Frank Byrd * Blanchett, David M. 2007. “The Perils of Portfolio Turnover.” Journal of Indexes, vol. 9, no. 3 (May/June): 34-39. Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Last week Bloomberg Businessweek profiled my path from hedge fund manager to personal financial adviser. You can read the article HERE. The focus of the article is Warren Buffett’s complaint that most money managers and investment consultants aren’t worth their fees. Naturally, I’m pleased that Fielder is recognized in the article as advocating for a better solution for clients. This, I believe, is a natural extension of our fiduciary duty to ensure that our clients' interests come first. Of course, the cheapest solution is not always in the client's best interest. Often it is, but not always. Having worked in the active management industry for 15 years, I clearly know that active managers can add value (“alpha”). But it’s so hard to find. Trust me. What I see is an industry of closet indexers (effectively mirroring the market’s holdings). They are, in effect, passive investors masquerading as active managers. They're more interested in building scalable business models than in generating superior returns. The reason is not stupidity. Rather, they shrewdly understand that generating above-market returns requires having a differentiated view. That means a portfolio that doesn’t look like the market. That means a portfolio that will at times under-perform the market, which in turn means they will lose investor assets. Although they may later outperform, it will be on a smaller asset base (since investors will have yanked their money during the earlier period of under-performance). Hence, strategically, it has long been a more profitable decision for a money manager to “closet index” and run with the herd. Better to fail conventionally than succeed unconventionally, as Keynes famously quipped. For decades their clients have tolerated this. Why is the world all of a sudden waking up? Why are investors, after decades, finally abandoning the closet indexers? Here’s one underappreciated reason: the rise of fee-only Registered Investment Advisers (RIA’s)*, who are required to act as fiduciaries (at all times). In the old days, most people relied on their stockbroker for advice. These brokers earned fat commissions selling high-fee funds. Over the past decade, however, investors have been leaving commission-based brokerage firm advisers to work with independent fee-only RIA's, who have been growing in numbers. (Fielder is one such RIA.*) Fee-only advisers do not accept commissions on the investments we recommend. That removes the incentive to recommend high-fee funds. In fact, as fiduciaries, fee-only RIA’s are obligated to find the best value for our clients. In effect, we are “buy-side” advisers who sit on the same side of the table with our clients. As RIA's have gained share from commission based advisers, this has helped drive the shift of funds away from high-fee closet index funds and into low-fee index funds. For the record, I have no bone to pick here either way. We will use passive indexes for our clients where they make sense and active managers where they make sense. I do, however, yearn for a world in which it is easier to find active managers who generate significant value net of their fees. The active management industry will not go away. But closet indexers will. Unfortunately, that’s most active managers based on my research. Those managers who will survive - and thrive – will be those who have portfolio structures and cultures that optimize the potential for market-beating performance. Amen of the Week "Ask for money, and get advice. Ask for advice, get money twice." - Pitbull (Feel This Moment) Yours in the Field, Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Amen of the Week “Driving back to Portland I’d puzzle over my sudden success at selling. I’d been unable to sell encyclopedias, and I’d despised it to boot. I’d been slightly better at selling mutual funds, but I’d felt dead inside. So why was selling shoes so different? Because, I realized, it wasn’t selling. I believed in running. I believed that if people got out and ran a few miles every day, the world would be a better place, and I believed these shoes were better to run in. People, sensing my belief, wanted some of that belief for themselves. Belief, I decided. Belief is irresistible.” – Phil Knight, founder of Nike (Shoe Dog by Phil Knight, 2016) Bad for Your Wealth It’s a different world. No doubt. Nevertheless, many advisers will advise “staying the course”. For most, that means maintaining the “market portfolio,” a broadly diversified “pie chart” of all asset classes. This agnostic “own a bit of everything” strategy has been smart since the early 1980’s. But now is the time to become VERY skeptical of what has worked well the past few decades. Three decades of falling interest rates created double-digit returns in stocks and high single-digit returns in bonds. Owning a broad mix of many equity and fixed income “asset classes” has thus enabled an investor to earn high-single-digit returns well in excess of inflation. A not-insignificant portion of this return was generated from bond prices generating positive real returns as interest rates fell. But looking forward, if interest rates rise toward historically normalized levels, long-term bonds could generate negative real returns. For this reason, pie chart portfolios with heavy allocations to bonds could erode investors’ real wealth going forward. What’s a better alternative? Warren Buffett’s advice makes the most sense to me. You’ll never hear him recommend an “own-a-bit-of-everything” pie chart portfolio. In Berkshire’s 2014 annual letter (back when equities were near today’s lofty valuation levels), Buffett wrote, “Stock prices will always be far more volatile than cash-equivalent holdings. Over the long term, however, currency-denominated instruments are riskier investments – far riskier investments – than widely-diversified stock portfolios that are bought over time and that are owned in a manner invoking only token fees and commissions… It is true, of course, that owning equities for a day or a week or a year is far riskier (in both nominal and purchasing-power terms) than leaving funds in cash-equivalents. That is relevant to certain investors … whose viability can be threatened by declines in asset prices and which might be forced to sell securities during depressed markets. Additionally, any party that might have meaningful near-term needs for funds should keep appropriate sums in Treasuries or insured bank deposits… For the great majority of investors, however, who can – and should – invest with a multi-decade horizon, quotational declines are unimportant. Their focus should remain fixed on attaining significant gains in purchasing power over their investing lifetime. For them, a diversified equity portfolio, bought over time, will prove far less risky than dollar-based securities… (They can assure) themselves of a good income for life by simply buying a very low-cost index fund whose dividends would trend upward over the years and whose principal would grow as well (with many ups and downs, to be sure).” In other words, Buffett is saying that you should have as much stock as your circumstances allow. (Note his emphasis of “purchase over time“. You’re better off dollar-cost averaging into stocks rather than jumping in all at once). For those of you who need to draw an income from your portfolio, you may need to set aside a reasonable amount in fixed income. How much exactly? That depends on your specific circumstances, and it’s where a fee-only fiduciary adviser like Fielder can add legitimate value. Another way we can add value is in suggesting optimal ways to index. Some methods are smarter, cheaper, safer, and/or more efficient than others. As always, please let me know if I can help you or anyone you care about navigate the path ahead. Yours in the Field, Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Amen of the Week “We create restaurant owners, not waiters… If you’re a restaurant owner, and a new restaurant opens across the street serving the same food, how do you feel? You feel like someone is putting your livelihood at risk, threatening you, threatening your family. It’s personal because the restaurant is your dream. But if you are a waiter, and a new restaurant opens across the street, how do you feel? At best, indifferent. Actually, there’s now competition for your services. Many companies inadvertently create waiters. We work tirelessly to create restaurant owners.” – An unnamed AB InBev manager (The Founder’s Mentality by Chris Zook & James Allen) Do you have FOBAS? Confused? Stocks are up post the Trump surprise. It’s totally natural to have “FOMO” – the fear of missing out. You’re likely tempted to jump on board and invest more in stocks. But you are likely frozen by “FOBAS” – the fear of being a sucker. You’d hate to invest more at today’s higher prices and lose money if investors wake up pricing stocks more pessimistically in a few months. FOMO and FOBAS are both dangerous to our long-term wealth. The good news is that if you’re a truly long-term investor, you can free yourself from the anxiety of either affliction. There’s no question: Stocks are expensive by historic standards (the cyclically adjusted price-earnings multiple, or CAPE, is over 27x today, compared to a historic average of ~16x). This matters. What you pay for something today determines what return you will earn on the investment. The following shows this has indeed been the case with stocks: So price matters. But so does your time horizon. The longer your holding period, the less important price paid becomes. In other words, the longer your time horizon, the lower your odds of a big mistake (as well as being tortured by FOMO or FOBAS). Consider the following hypothetical stock: If its Price/Earnings multiple declines from 20x to 15x next year, your downside is 19%. If, however, you held the stock for 10 years, your total return would have been 74% (or ~6% annualized). And if you held it for 25 years, your return would have been 517% (or ~8% annualized). The key is your time horizon. If it is long enough, owning shares of a diversified portfolio of good businesses is your best defense – and offense. It’s win-win. But you’ll need the right temperament too. Do you have a strong enough stomach to hold through the inevitable and unpredictable ups and downs? If the market’s multiple returns toward its historic average, stock prices could decline by 20% in the near term – or worse. But that’s the near-term. The good news is that the longer-term your horizon, the higher the odds of your being right … and preserving your hard-earned wealth against the theft of inflation. This is not to suggest that you should be cavalier and insensitive to the price paid. If you draw income from your portfolio, this is ESPECIALLY important. A retiree’s long-term financial health can be devastated by short-term market declines if they’re too heavy in stocks and/or long-term bonds. (See my note on Sequence of Return Risk.) It’s all about balance. Would you like some help thinking about your own optimal balance? Give yourself the gift of Peace of Mind and reach out. Happy Holidays from the Field! Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Given how many experts misjudged the Trump surprise, I thought these recent words from Amazon founder Jeff Bezos were particularly appropriate. “Good leaders are right a lot… I do think that with practice, you can be right more often. I’ve observed people who are right a lot, and I’ve noticed a few things about them. The first thing is that people who are right a lot, they listen a lot. And people who are right a lot change their mind a lot. And people who are right a lot – they seek to dis-confirm their most profoundly held convictions, which is very unnatural for humans. Humans mostly, as we go about life, are very selective in the evidence that we let seep into us. And we like to observe the evidence that confirms our preexisting beliefs. People who are right a lot work very hard to do that unnatural thing of trying to dis-confirm their beliefs. And by the way, changing your mind a lot is so important. You should never let anybody trap you with anything that you’ve said in the past… Life is complicated; the world is complicated. Sometimes you get new data and you should change your mind. By the way, sometimes you don’t get new data, and you just re-analyze the situation and you realize it’s more complicated than you initially thought it was, and you change your mind… It’s frustrating to watch politicians because they’re almost not allowed to change their mind. As soon as they change their mind, they get accused of being flip-floppers. But reality is – anybody who does not change their mind a lot is dramatically underestimating the complexity of the world that we live in.” -Jeff Bezos, Founder and CEO of Amazon Here’s a link to the video interview. It’s only 10 minutes and is really a must-watch for any entrepreneurs or managers trying to build winning teams.] There are inflection points in history, and this is one of them. A changed world calls for a changed outlook. Now would be a great time to seek to dis-confirm our most profoundly held convictions. Old frameworks and old lenses will give us a distorted perception of how our new world is evolving. We’re here to help if you’d like to explore a looking-forward investment plan. Yours in the Field, Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Last week I gave a lecture to Columbia's Student Investment Management Association at Columbia Business School. The topic: Why is Warren Buffett, the world’s greatest active investor, suggesting that investors forego active funds in favor of passive index funds? Is stock picking a fool’s game? This question is top of mind for these aspiring young investors. Their hero's advice has many questioning their career aspirations in active management. Here's a video of my talk in which I explain how they should and should not interpret Buffett’s remarks. In my speech, I also explain how enterprising investors and entrepreneurs can capitalize on the zeitgeist of these times. The investment advisory business is in the early innings of a badly needed structural overhaul. Sadly, most of the established players will be reluctant followers rather than leaders in this overhaul. Their incredibly profitable legacy business models are a barrier to change. Therein lies the opportunity for entrepreneurs to build a new type of firm. My advice to students is to work for - or build - the kind of firm that Buffett would admire, for that's our future. [If you’d like a written transcript, you can request one HERE.] Amen of the Week: “The lesson that is continually reinforced in me is that to take advantage of unexpected opportunities, we must leave ourselves available… Many successful people I know set magnificent goals for themselves… I don’t engage in that kind of long-range planning. Instead, I leave myself and my company available to take advantage of opportunities as they arise.” - Truett Cathy, founder of Chick-fil-A Doing Business the Chick-fil-A Way Yours in the Field, Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Amen of the Week: “If there is a silver lining to bad times, it is this: When facing severe challenges, your mind normally is at its sharpest. Humans seldom have created anything of lasting value unless they were tired or hurting.” -Jon Huntsman, founder of Huntsman Corp. “Winners Never Cheat” (2011) A Quiz: There are two investors, John and Jane, with several things in common. They both retired at age 65 with the same sized portfolio and withdrew the same amount of income out of their portfolios during retirement. They experienced the exact same compound annual growth rate and volatility over the 30 year period. John, however, ran out of money by age 85, while Jane’s portfolio grew ultimately to 2.4x its original size. How could this be? Hint: the sequence of returns matters. Jane and John experienced the exact same returns, yet the order of these returns was reversed. John endured the negative returns early in his retirement, while Jane experienced those same returns late in her retirement. Same numbers, different order. Advisers often say that “volatility doesn’t matter to long-term investors”. Hogwash. Volatility can obliterate the portfolio of an investor who draws an income from their investments. This is especially important today given the high valuation levels of stocks and bonds. Looking at history, we can see that periods of high valuation levels have tended to be followed by periods of low or negative returns. This is why proper portfolio structure is CRITICAL for retired investors. One of the most important things I do for my clients is to create a customized portfolio design based on their personal cash flow needs and risk temperament. The objective is to maximize the odds that the client’s portfolios will provide a lifetime inflation-adjusted income for the duration of their entire lives. Please reach out if I can provide more information on this subject to you or anyone you know. [To request my spreadsheet with details of the above scenario, please email info@fieldercapital.com and type "How can this be?" in the subject line.] Yours in the Field, Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Amen of the Week: “It became very clear to me sitting out there today, that every decision I've ever made, in my entire life, has been wrong. My life is the opposite of everything I want it to be. Every instinct I have ... It's all been wrong.” - George Costanza, Seinfeld, “The Opposite” episode, 1994 Try this for fun: At the next cocktail party you attend, survey the room and think to yourself, "What’s the dumbest thing that I could say to each person in this room?" In 1999, that would have been predicting that the S&P 500 would be lower in ten years’ time. If that weren’t enough to brand you the moron in the room, you could have topped it by predicting that Yahoo! and AOL would wither. (For you youngsters, those were the Google and Facebook of olden times.) In 2007, it would have been that housing was not a good investment. In 2009, it would have been that stocks are a good investment. Not only is this a fun way to entertain yourself at a stuffy party, it’s an instructive lesson in successful investing. It reminds us to be skeptical when everyone else believes something to be a definitive truth. Simultaneously, where others are skeptical, we should seek opportunity. This is why investing confounds some of the smartest people. They expect logical thinking to be rewarded. It is, but with a caveat: it cannot be popular logical thinking. In every other field besides investing, if you follow the crowd of smart thinkers, you will almost certainly achieve great results. This is because in fields like medicine or engineering, the popularity of an idea does not negatively affect its outcome. If anything, the more popular an idea becomes, the more it is refined and vetted, which can lead to improved outcomes. With investing, just the opposite is true: the more popular the idea, the worse the outcome. If everyone agrees a company is super great and buys the stock, that drives up the stock price to the point that future returns are diminished – if not erased. For logical thinking to reward an investor, it must lead to a differentiated view. Even George Costanza discovered this in the greatest Seinfeld episode ever filmed. Which leads us to the question: what is the dumbest thing that you could say at a New York cocktail party? Surely it is that you are unequivocally bullish on stocks. How dumb would that sound! Warren Buffett doesn’t frequent these kind of parties, but he’d be the one guy in the room who’d agree with you. In Berkshire’s 2014 annual letter (published when stocks were near current levels), he wrote, “The unconventional, but inescapable, conclusion to be drawn from the past fifty years is that it has been far safer to invest in a diversified collection of American businesses than to invest in securities – Treasuries, for example – whose values have been tied to American currency... To one degree or another it is almost certain to be repeated during the next century. Stock prices will always be far more volatile than cash-equivalent holdings. Over the long term, however, currency-denominated instruments are riskier investments – far riskier investments – than widely-diversified stock portfolios that are bought over time and that are owned in a manner invoking only token fees and commissions.” The paradox is that stock prices today are richly valued.* This traditionally would imply lower real returns in the future, which is precisely why so many professionals, myself included, are so cautious today. I remain open-minded, however, that today’s caution might win the battle but lose the war. Specifically, the war against inflation. Today’s stock prices imply lower future returns in real terms. Yet, in nominal terms, stocks could rise substantially in the decade ahead if we were to experience a surprisingly high inflation (as all past high inflations have been – a surprise). Predicting inflation is perhaps the most absurd thing you could suggest today. Even George would have trouble believing that. Keep in mind, though, that governments in every major country are coordinating to create inflation – in large part to deflate their crushing debt burden in dollar/euro/yen terms. If they succeed, stocks will be one of the best ways to preserve wealth in real and nominal terms. Today we are all faced with a cruel paradox, one that we should deeply resent policy makers for having created. Millions of retirees find themselves forced to pick a poison: accept greater risk today (buying over-valued assets) in order to reduce the longer-term risk (and the greater risk) of outliving the savings they’ve worked a lifetime to accumulate. Fielder can help investors navigate this cruel paradox by helping them thoughtfully plan their cash flow needs, custom tailor their portfolios accordingly, and reduce unnecessary costs/fees/taxes. Yours in the Field, Frank Byrd, CFA *Based on stocks’ CAPE and Q-ratio in comparison to historic levels. Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.