2020 Annual Client Letter

Tom, Lindsey and Frank welcome you to our first Annual Client Letter. We are here to help you and your family preserve and grow wealth as well as achieve your most cherished goals, and we are excited to be able to inform, educate, and reinforce our values in this way.

We owe you a debt of gratitude for taking valuable time, as well as making a leap of faith with us last May. Our decision was not without thoughtful consideration for the impact it would have on you as well as how our practice could deliver what we
knew we were capable of. Partnering with Raymond James was the best fit for both client and adviser: in addition to superior resources and technology, we now enjoy a culture that supports advisers instead of bankers and clients instead of shareholders. We look forward to delivering our vision of a high quality financial advisory experience to you.

The root of joy is gratefulness… For it is not joy that makes us grateful; it is gratitude that makes us joyful.
– Brother David Steindl-Rast


It will be worth restating, even in the context of a letter primarily focused on the year just past, our overall principle of investment advice. It is goal-focused and planning-driven, as sharply distinguished from an approach that is market-focused and current-events-driven. Long-term investment success comes from continuously acting on a plan. Once we have a plan in place, and funded it with the most appropriate types of investments, we will hardly ever recommend changing the portfolio so long as your long-term goals haven't changed. As a general statement, we have learned that the more often investors change their portfolios, in response to the market fears or fads of the moment, the worse their long-term results. Thus, we make no attempt to forecast, much less time the market.

Our essential principles of goal-focused portfolio management remain unchanged:

  • The performance of a portfolio relative to a benchmark is largely irrelevant to long-term financial success.
  • The only benchmark we should care about is the one that indicates whether we are on track to accomplish our financial goals.
  • Risk should be measured as the probability that we won't achieve our goals.
  • Investing should have the exclusive goal of minimizing that risk.

2019 In Review

2019 was, in important ways, the mirror image of the previous year. 2018 was a dramatically outstanding one for the American economy—and for corporate earnings and dividends—despite which the equity market couldn't get out of its own way and ended on a terrific downbeat (a 19.8% peak-to- trough decline through Christmas Eve). This past year was the exact opposite: an exceptionally good year for the S&P 500—up 30.43%, plus a couple of more percentage points for dividends—even though the economy slowed somewhat, manufacturing went into decline and the earnings of the S&P 500 ended 2019 down slightly year-over-year.

In a simplified sense, the market's course over 2019 was a sequence of three important forays into new high ground. First, it made up all of 2018's drawdown and broke out at the end of April. It then corrected sharply, which we will return to in a moment. Another series of new highs followed in June-July and consolidated into the fall. The third and most dramatic breakout took place at the end of October and
continued unabated through the new year.

With all of those rather dry facts out of the way, let us return to the above-mentioned May-June drawdown, which lasted about a month and took the S&P 500 down about 7%. Technically, this can't even be classified as a "correction," as the Index didn't close anywhere near 10% down. It was, nonetheless, a full-blown panic attack, set off by one of President Trump's tweets regarding China.

It is the way investors reacted to this relatively brief, relatively shallow drawdown which captured our attention and which we commend to yours. Simply stated, net liquidations of U.S. equity mutual funds and ETFs—absolutely and especially contrasted with bond fund inflows—soared to levels not seen since the Great Panic of 2008. A one-month, 7% drawdown set off a flight from equities reminiscent of the existential financial crisis of our time! This, mind you, after 10-plus years of 16% compound annual returns
for the S&P 500. It is difficult for me to regard these data as anything but a powerfully suggestive contrary indicator.

We would invite you to focus on what seems to be the default setting of the investing public, which looks like pessimism verging occasionally into sheer panic. All of our reading and all our experience suggest that very meaningful market setbacks have not historically occurred during huge waves of public pessimism and fear.

This is not to be taken as any sort of market forecast. It is simply an invitation, as we look into the new year, to take some comfort from the rampant fear abroad in the land, even after a decade and more of stellar returns. There will be plenty of time to begin worrying when the stock market once again becomes cocktail party conversation and everyone around us has capitulated into bullishness and greed.

2020 may not match the returns of the past year. Few years ever do; that is both true and irrelevant. The truth is that we goal-focused, planning driven investors had an exceptional year in 2019. We did so not by forecasting this year's returns—nor by jumping into the market just in time to get them— but by patiently holding to our long-term discipline. That, to us, is the great lesson of this genuinely great year.

Looking Ahead

In other Acadium updates, we will be working with a marketing firm this year in order to further improve our website, www.acadiumfinancial.com, streamlining it to make it easier to use, faster to load and adding more interactive content.

We are excited to announce that our associate Dawna DuClau is a candidate for the Financial Paraplanner Qualified Professional (FPQP™) designation through the College for Financial Planning. She will be sitting for the examination near the end of February. This valuable designation is helping her develop a broad knowledge in all aspects of personal financial planning which will allow her to better assist you. We are proud of Dawna and excited she has devoted herself to a strong foundation for future credentials and education.

Please be invited, and indeed encouraged, to raise with us any questions. Or anything else that's on your mind. That is what we are here for.

We sincerely thank you for being our clients. It is an honor and a pleasure to serve you.

Frank Hujsa, CFP®, CLU®

Partner, Acadium Financial Partners 27499 Riverview Center Blvd, Suite 108 Bonita Springs, FL 34134

Lindsey Hansen, CFP®

Partner, Acadium Financial Partners 3601 PGA Blvd, Suite 301
Palm Beach Gardens, FL 33410

Thomas Udovich, CFP®

Partner, Acadium Financial Partners 3601 PGA Blvd, Suite 301
Palm Beach Gardens, FL 33410

Any opinions are those of Frank Hujsa, Lindsey Hansen, and Thomas Udovich are not necessarily those of Raymond James. Securities offered through Raymond James Financial Services, Inc. member FINRA/SIPC. Acadium Financial Partners is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc.