Harvest Financial Partners

I thought I might take a moment and update you on our firm, Harvest Financial Partners. The firm was formed by John Fattibene and me because we love the investment business and want to help clients with their investment and financial goals. We began discussing forming a partnership about 18 months ago. At first, the conversations were preliminary and vague. But as the months passed, we both began to get more excited about the opportunity. To make matters easier, John and I have known each other for over 25 years (we were roommates together at Vassar College), we both have a “value” bias in our investment approach and we both understand the importance of dividends to an investor’s total return. We also felt (and still feel) that many investors are overlooked by the vast majority of investment firms and are often forced to go it alone. For some people, that is not a problem, but for many it may be beyond their interest level or expertise. Harvest was formed to help those people.

One of the most frequent comments that I hear when I tell people I have started a firm, is that I picked a tough market to start. I respectfully disagree because I believe at times like this, quality advice from a quality advisor can make a world of difference. In a great bull market, it is pretty easy to make money in stocks. But in times like these, it is difficult and investors need someone who has managed through some tough markets and can offer re-assurance and perspective. We certainly do not have all the answers and are as surprised as others by how far down some stocks have dropped. But we also know that if you have patience and discipline, you can survive just fine or even thrive. The worst thing to do is to sell indiscriminately, which is a natural reaction for many people. We can help them see the value of patience.

While helping investors with their investment needs, we can also assist them with the myriad of questions that come up on a daily, monthly, annual or generational basis:

Can I afford to retire?
Can I purchase a second home?
Should I refinance my first home?
How should I provide for spouse, children and grandchildren after I am gone?
Do I have enough life insurance?
Should I purchase long term care insurance?
Am I allocating my 401(k) investments properly?

These are not easy issues for anyone, but our experience can help our clients understand and answer these questions and the many others that will arise.

So far John and I have been working hard and having a great time. It is really very exciting to attempt to build something from scratch. We both have a lot of passion for what we are doing and enjoy working together. We are also fortunate to have some wonderful clients!

We will keep you updated on our progress. We know there will be some short term obstacles, but we are certain we can persevere. We are in this for the long run!

What a week!

I guess things must be a lot better in the world this week. I was just reviewing some numbers and see that many of the financial stocks are up over 35% or more (in Bank of America’s case it’s a staggering 81%) since July 15th. Are the companies really worth that much more a week later, or was the extreme and indiscriminate selling prior to the 15th completely divorced from underlying business value? I will leave that as a rhetorical question. One thing we did learn was that while the earnings for these financial stocks were not good, the expectations were so low that even ugly numbers looked attractive. I guess beauty really is in the eye of the beholder!

I am not going to tell you the volatility is over. We still have high food and energy prices, a weak dollar, a slowing consumer, weak housing, an unpopular war... We also have a presidential election taking place and all the uncertainty which it entails. So I am not sure we are out of the woods, yet. But as I have been saying, there are good opportunities out there, you just have to look and have some patience.

I wish I could tell you that we were smart enough to buy all our financial stocks last Tuesday, but we were not. But we owned some of these stocks that did very well, and will likely buy more. We think the worst may be over for the financials, but caution is still necessary. But for investors with a longer time horizon, there is money to be made in this market.

Making a list

What an ugly market! That may be the most obvious statement I have made today. That said, what may not be so obvious is that if you have some cash and patience, times like these can be very interesting. We are witnessing excellent companies, with strong fundamentals, being sold as if they have some kind terminal disease. There are numerous purchase opportunities developing and we are doing our homework. We have a list that we refer to as our “Farm Team” consisting of stocks we are considering owning, and this list of prospects is getting quite long.

I will emphasize that we are not going to deviate from our discipline of focusing on quality, value and dividends. This discipline has served us well in the past and will again in the future.

Keeping with our baseball analogy, I think we will be promoting several stocks from the Farm Team into the big leagues shortly. I am also pretty sure that we may have a future hall of famer or two on that list!

(Written on 7/11/08)

Planting for your future

This is the inaugural post in our blog. We have titled it “Planting for Your Future”, because we believe that investors can get too caught up in the short term noise and forget what is most important, their long term goals. Most of us invest today with some purpose. That purpose could be a comfortable retirement, to send their kids to college, to buy a house (or a 2^nd house) or to leave money for the next generation. In almost all cases, if you invest in the stock market, you need to have a long term time horizon. Stocks are great investments, when viewed over an extended time frame, but can be quite volatile in shorter periods. At Harvest, we only utilize equities for that portion of a client’s assets that are not needed in the next 3-5 years.

With these opening thoughts in minds, it was wonderful to receive this email from one of our first clients:

Jim, just to let you know that this market doesn't bother me at all and I'm not bothered by negatives on my performance reports. . When I see stocks like GM hitting 53-year lows, it brings back memories of Chrysler at $2 per share. As far as I'm concerned you can be as aggressive in buying equities as you see opportunities.

Why was I so happy? Simply, because this client gets it. He clearly understands that markets can be very volatile. But, if you have a long time horizon, we should be utilizing the weakness in the markets to be buying. If we purchase solid companies at today’s lower valuations and sprinkle in a little patience, we can make a lot of money for our clients. I am not calling a bottom, but I am looking at companies and asking whether they represent compelling values today. The answer I am giving far more often is “yes”.