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A Personal Note from Cam – Dated October 14, 2020

A Personal Note from Cam – Dated October 14, 2020

October 15, 2020

A Personal Note from Cam – Dated October 14, 2020


It is starting to feel a little like beating on a dead horse, but we truly are living through unprecedented times.

Remember when the New York Times published a series of articles on President Trump’s tax records?  That seemingly huge story was only a couple weeks ago, though it might as well be a lifetime.  The president hosted a large gathering at the White House to announce his nomination of a new supreme court justice; then there was a presidential debate unlike any other in memory; then people in and around the White House, and others, including multiple US senators, started coming down with Covid-19; then the president and first lady announced they had Covid; then the president was hospitalized; then he returned home to the White House and resumed tweeting; then there was a vice presidential debate, and so on.

I am probably missing something.  Through it all, the pandemic raged on with case numbers spiking around the world, the media raged on, and the stock market vacillated.

Trevor and I understand how many of you are worrying about the direction of America.  Your America.  Our America.

Worry is largely a matter of thinking about things at the wrong time.  Our brains have amazing capacity to observe our own thoughts.  It is therefore possible to monitor your thoughts and make choices about them.  If you think about certain things at the wrong time—for example when you are lying in bed—it is all too easy to start worrying about them and that is why it is important to monitor your thinking.

Personally, we have cut way back on watching the evening news and what we read on social media.  We find the political noise—from all sides—overbearing.

Unprecedented Times

The pandemic is continuing to have a large effect on economic bottom lines—for individuals and families, and for governments, local and national.

Last week, “the Congressional Budget Office estimated that for fiscal year 2020, which ended September 30th, the US deficit hit $3.13 trillion—or 15.2% of GDP—thanks to the chasm between what the country spent ($6.55 trillion) and what it took in ($3.42 trillion) for the year. As a share of the economy, the estimated 2020 deficit is more than triple what the annual deficit was in 2019.  And it is the highest it has been since just after World War II.”[1]

Because of all the noise surrounding our government and the election, it is easy to lose sight of the bigger economic picture.  That deficit figure is astounding.  Federal Reserve Chairman Jerome Powell spoke to exactly how big of a hole we are digging for ourselves last week: “The US federal budget is on an unsustainable path,” he bluntly said, and “has been for some time.” He indicated that he did not believe anything would change on that front as long as the economy was dealing with the pandemic.[2]

On the federal level, spending is projected to continue rising and is far outpacing revenue. “Given the risks of future disruptions, like a pandemic, a debt load that already is outpacing economic growth puts the country at greater risk of a fiscal crisis, which in turn would require sharp cuts to the services and benefits on which Americans rely.”[3]  It is hard to say how far away from that we are, but, as CBO director Phillip Swagel recently summarized it, “as the debt grows, the risks become greater.”[4]

So, we are continuing to deal with heightened levels of uncertainty—and we have still have three weeks to go until the election.  Who knows what might come next?

The good news is we are well equipped to deal with times like this.  The fundamentals, such as diversification, are evergreen—good in just about any season.

Diversify, Diversify, Diversify

It is remarkable to think about now, but what today seems like the most obvious and important of all investment strategies—diversify—was not always obvious.  In fact, the principle of broad diversification mated to a client’s personal risk tolerance level and desired timeframe was not formally understood or elucidated until 1952, when a young graduate student in economics at the University of Chicago wrote a dissertation on the topic.[5]

That student, Harry Markowitz, unwittingly created the concepts of what we today refer to as Modern Portfolio Theory (MPT).  Instead of focusing on the risk of each individual asset, like a stock picker might, Markowitz demonstrated that a diversified portfolio is less volatile than the total sum of its individual parts.[6]

Markowitz created a formula that allows an investor to mathematically trade off risk tolerance and reward expectations, resulting in the ideal portfolio.  He worked from two basic ideas: 1) Every investor’s goal is to maximize return for any level of risk; and 2) Risk can be reduced by diversifying a portfolio through individual, unrelated securities.  “MPT works under the assumption that investors are risk-averse, preferring a portfolio with less risk for a given level of return.  Under this assumption, investors will only take on high-risk investments if they can expect a larger reward.”[7]

In other words, an investor can hold a higher-risk asset, mutual fund, or security, so long as this high-risk investment is minimized by all of the other underlying assets.  The portfolio itself is balanced in a way that its overall risk is lower than some of its underlying investments. Markowitz split risk into two separate categories: systematic risk, and unsystematic (or specific) risk.  Systematic risk refers to market risks than cannot be mitigated completely through diversification (for example, a pandemic).  Specific risk refers to the risks inherent to specific stocks (companies, how they are managed, the industry they are in, etc.).[8]  The art and science combine when the right assets are matched with an individual’s risk tolerance.


This simple, logical idea absolutely revolutionized investing.  The enduring importance of the principles of modern portfolio theory were cemented in 1990 when Harry Markowitz was awarded the Nobel Memorial Prize in Economics. Few concepts have contributed more to personal wealth creation—today, literally trillions of dollars in assets are managed using these principles—which are the same basic tools we employ at CTA in the management of our core portfolios when we are working with you.

I had the privilege of meeting Harry Markowitz at a conference a few years ago.  He was funny and approachable and extremely generous.  Very few people alive today have had a larger impact on our world, but you would never guess it considering how humble he is.

Diversify, diversify, diversify—that’s his idea, and it is a good one.  You have heard Trevor and me talk a lot about it over the years, and you will continue to hear it from us in the future.

Trevor and I will continue to serve you right where you are with intentionality.  Our goal is to help you never forget where you came from.  We hope you always embrace your past because that is what helped make you the person you are today.  We will also help you focus on what you have, not on what you do not have.  Struggles are a part of living.  Often, it is those struggles that helps put into perspective all that we should be truly grateful for.

On behalf of our entire team, I hope you and all of your loved ones are doing well and I want you to know how grateful we are to be of service to you and yours.

Yours truly,



The information provided is not a complete analysis of every material fact and are subject to change.

Securities and some investment advisory services are offered through Cetera Advisor Networks LLC, member FINRA/SIPC, a broker/dealer and Registered Investment Adviser.

Financial Planning and some investment advisory services are offered through CTA Wealth Advisors, Inc., a Registered Investment Adviser.

CTA Wealth Advisors, Inc. and Cetera Advisor Networks LLC are non-affiliated companies.

The opinions expressed in this letter are those of Cameron M. Thornton, CFP®.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  All economic and performance information is historical and not indicative of future results.  Past performance does not guarantee results.

For a comprehensive review of your personal situation, always consult with a tax or legal advisor.  Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.

A diversified portfolio does not assure a profit or protect against loss in a declining market.

Websites provided as a courtesy and are not under the control of Cetera Advisor Networks LLC or CTA Wealth Advisors, Inc.

Cameron M. Thornton, CFP® is a Representative with Cetera Advisor Networks LLC and may be reached at or (818) 841-1746. 


[1] Sahadi, Jeanne. “The US debt is now projected to be larger than the US economy.” CNN Business. October 8, 2020.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] “Harry Markowitz Biographical.” The Nobel Foundation. 1990.

[6] “Harry Markowitz’s Modern Portfolio Theory: The Efficient Frontier.” GuidedChoice.

[7] Ibid.

[8] Ibid.