How to Empower Your Life Story and Legacy
Written by: Flora Morris Brown
For years I frequently shared with my friends my plans to travel the world, visiting every continent (except Antarctica) at least once. I browsed through travel magazines, read travel books, and watched travel shows. I even considered signing up for retreats held in exotic locations as a way to travel.
My friends listened patiently to my daydreams. Then, when my youngest daughter was in her junior year at UCLA, she announced her plan to enroll in an Education Abroad program in Spain that spring. Part of me loved the idea and thought it was a wonderful opportunity for her. Another part of me rebelled. How could I agree to her making an international trip before I did, when it was my lifelong dream?
When I lodged my objection, my quick-thinking daughter fired back with a solution. Since I was still teaching full-time, she proposed that I plan to meet her in Europe when school was out for both of us. That way we could explore Europe together, and I would finally have begun my international travel.
Great! I was happy with that solution. We began deciding where we’d meet and what places we would visit. With excitement, I shared our plans with friends. Again, they patiently listened, but one of them asked, “Do you have a passport?” I let out an embarrassed gasp. After all those years of talking about traveling abroad, I hadn’t even taken the very first and doable step of applying for a passport. That was when I fully understood the Chinese proverb originated by Laozi: “A journey of a thousand miles begins with one step.”
That realization led me to get my passport and finally begin my lifelong plan to travel the world. Although I continued to teach a few more years and enjoy other activities, I traveled often. Now I’m almost finished; just one continent left to visit.
Too often we fantasize about what we’d like to do in our lives without realizing that we haven’t even taken the first step.
Other times we envy those who seem to be happily enjoying their lives, as if by magic, when in fact they are taking thousands of little steps.
There is no one right way to create your unique path, but here are three ways to help you find it.
1. Take full responsibility for your life.
If there is something you want to achieve, don’t wait for what you think is the right time or expect someone else to take the lead. Begin the smallest step you can take toward it, like I had to do by applying for my passport. As you begin this process, if you become disenchanted with the goal, modify or change it.
When things go wrong, don’t go with them. Seek a positive change that will move you away from what you don’t want and toward what you do want for your life. Avoid rubbernecking at events and activities that don’t enhance your life or bring you joy. You slow your own progress and risk your success.
There are many circumstances outside of your control, such as birthplace, genetics, and others’ behavior. Seek a positive way to manage the part of your life over which you do have control. This includes not only your reaction to circumstances but your choice of thoughts, words, and attitudes that fill your mind.
Avoid letting your inner critic drown out your intuition. It’s unlikely you’ll get rid of your inner critic, but learn to put her on timeout and get quiet enough for your intuition to develop and come through. For some, this results from meditation, prayer, and reflection; for others, it results just by allowing quiet time to open the way for intuition. Find out what works best for you and practice it.
2. Give yourself permission to say “yes” to your life.
This requires making choices that lead to your good. You are where you are this very minute because of all the tiny choices you made, minute by minute, throughout your life. Commit to making choices on purpose, not by default.
Sometimes you must say no to other people and situations to pursue your own goals. This is not selfish, it’s sensible. Think back to the flight attendant’s safety message to put on your oxygen mask first before you help anyone else. Only when you are living your best life are you available to help others.
Just as you wouldn’t knowingly stay in your home if you detected a gas leak, avoid allowing toxic people into your life. You know who they are. They enjoy complaining, griping, and pointing out the negative side of everything. They take pleasure in seeing others fail, and they sabotage their own success and blame it on someone else. It’s difficult to maintain harmony and tranquility with them around, and you can count on them to discourage and derail your goals.
3. Look for the lessons and blessings in your life.
Embrace happiness in all its dimensions. Happiness is not the absence of sadness or adversity. Happy people live here and now, allowing themselves to feel the array of emotions but not be crushed by them. It’s normal to grieve with the loss of a loved one or pet or to feel disappointed when something you worked hard to achieve is lost. When we accept and manage the inevitable so-called dark side of our lives, we build up our resilience and our confidence that we can handle whatever comes up.
Look for what is good about any situation and be grateful for that part. When my 40-year-old son died of a massive heart attack, I was grief stricken. But even as I tried unsuccessfully to resuscitate him, I thanked God that he had died at home and not as the victim of an assault in the street somewhere. I was also thankful that it was I, and not his sisters, who discovered him.
Look for what lessons you can learn from situations and make those lessons part of your toolbox for the future. In the days after my son’s death, I discovered how impossible it was to access his phone and computer since I didn’t know his passwords. Since then I’ve taken steps to ensure my daughters can access my passwords and other digital information. I also finally set up a trust I had until then neglected.
Where does this lead?
Following these three steps will help you create your unique path not only to serve you well during your lifetime but also to impact the legacy you leave for your family, friends, and many people you will never meet. Regardless of how your life is remembered, it is a story woven together by the tiny choices you made every day. Workshops to help you write your life story are available in many communities where participants are guided to capture their memories and share them in writing and other formats.
The unique path you create for your life inspires others. They are encouraged by the way you managed the twists and turns, faced challenges, and overcame adversity. They feel a connection to you as they see their lives mirrored in yours.
Your authenticity, joyful living, integrity, courage, and positive energy make an impact and leave a priceless legacy that extends far beyond your immediate world and time.
Multi-Factor or Not Multi-Factor? That Is the Question
Written by: Chris Shuba, Helios Quantitative Research, LLC
Let’s pretend you are a US investor that wants to deploy some of your money overseas. You think international developed market stocks are attractive relative to US stocks, and you also think the US dollar will decline over the period you intend to hold your investment. Your investment decision is logical to you. But you have choices: You could a) simply invest in a traditional index like the MSCI EAFE, b) invest in a fund that systematically emphasizes a single factor (like a value fund) that only buys specific stocks related to that factor, or c) invest in a developed fund that blends several factors together, like the JPMorgan Diversified Return International Equity ETF (JPIN). What is the best choice?
Investing in a traditional international market capitalization index like the MSCI EAFE is not a bad choice. It has delivered nice returns for a US investor, especially uncorrelated outperformance in the 1970s and 1980s, and helped to diversify a US-only portfolio.
Your second choice is to invest in one particular factor because it makes sense to you. Sticking with the example of a value strategy, you might believe a fund or index that chooses the cheapest or most attractively valued stocks based on metrics like Price to Earnings (PE) is best.
You could go find a discretionary portfolio manager who only buys stocks he deems to be cheap. Typically the concept of “cheap” is based on some absolute metric that the manager has in mind, such as never buying a stock with a PE greater than 15. If there are not enough stocks that are attractive, he will hold his money in cash until he finds the prudent bargains he seeks. This prudence also obviously risks possible underperformance from being absent from the market.
The alternative is to buy a value index or fund that systematically only buys the cheapest stocks in a particular investment universe. So if there are 1000 investable stocks available, the index ONLY buys the cheapest decile of 100 stocks and is always fully invested in the 100 securities that are relatively cheapest. This is an investment approach that a discretionary manger may disdain. The discretionary value manager may look at those same 100 stocks and think they are pricey. But nevertheless, academic research has shown that always being fully invested in the relatively cheapest percentiles of stocks in the US has produced superior returns over many decades.
Such a portfolio is called a “factor” portfolio. Why the name? In the early 1960s, academics introduced the concept of beta and demonstrated that individual US stocks had sensitivities to, and were driven by, movements in the broad market. In the early 1990s, academic research began to show that other “factors” such as value and size also drove US stock returns. Since then, several factors have been identified as driving individual stock outperformance: value, size, volatility, momentum and quality. Stocks that are cheaper, smaller, less volatile, have more positive annual returns and higher profitability have historically outperformed their peers. It turns out these factors also work internationally.
Related: Who Gets Sick When the U.S. Sneezes?
Of all the factors, value is the factor that has been the best known the longest (even before it was academically identified as a “factor”), thanks to the books of Warren Buffet’s teacher Ben Graham. And if you look abroad at an array of developed global markets and create a value index and compare it to its simple market capitalization weighted brother, the historic outperformance of value has been stunning. Until recently.
While there was some variability by country, on average from the mid-1970s up until 2005 a value factor portfolio in a developed market outperformed its market cap weighted index by about 2% a year. That’s a lot. By contrast, since 2005, the average developed country value portfolio has underperformed a market cap indexes by about -40 basis points. Which is the danger of investing in one factor. It may not always work at every point in time.
So if investing in one factor like value runs the risk of underperforming, how about a multi-factor international developed equity portfolio?
Below is a breakdown of individual factor portfolios’ performance in international developed equity markets since 2005, an equal weighted factor portfolio as well the performance of the MSCI EAFE as our performance reference. Note that, for the last 13 years, value has been the poorest factor by far, while the others have handily beaten the EAFE. An equal weighted portfolio of all 5 factors, while not as optimal as some of the individual factor results, beats the EAFE by 1.6% and has an information ratio, or risk adjusted returns that are superior by 37%. The equal weighted factor portfolio also has the advantage of not having to predict which factor will work when, so even when a factor like value does not beat the market, the other factors can pick up the slack.
SOURCE: MSCI, Data as of January 31, 2018. Past performance is no guarantee of future results. Shown for illustrative purposes only.
The equal weighted factor portfolio has one other advantage over the market cap weighted alternative. Note in the chart below how well the portfolio outperformed in the 2008 crisis, so it tends to do relatively well in highly volatile sell offs.
SOURCE: MSCI, Data as of January 31, 2018. Past performance is no guarantee of future results. Shown for illustrative purposes only.
While it’s not inconceivable that one or two of these factors could erode, or underperform for a stretch, the fact that you have exposure to multiple factors in a portfolio that seems to do especially well in crises suggest the multi-factor blended portfolio remains the most attractive way to invest in developed markets.
So, when asked the question: Multi-factor or not multi-factor? The data speaks for itself.
Learn more about alternative beta and our ETF capabilities here.
DEFINITIONS: Price to earnings (P/E) ratio: The price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings.
DISCLOSURES: MSCI EAFE Investable Market Index (IMI): The MSCI EAFE Investable Market Index (IMI), is an equity index which captures large, mid and small cap representation across Developed Markets countries* around the world, excluding the US and Canada. The index is based on the MSCI Global Investable Market Indexes (GIMI) Methodology—a comprehensive and consistent approach to index construction that allows for meaningful global views and cross regional comparisons across all market capitalization size, sector and style segments and combinations. This methodology aims to provide exhaustive coverage of the relevant investment opportunity set with a strong emphasis on index liquidity, investability and replicability. The index is reviewed quarterly—in February, May, August and November—with the objective of reflecting change in the underlying equity markets in a timely manner, while limiting undue index turnover. During the May and November semi-annual index reviews, the index is rebalanced and the large, mid and small capitalization cutoff points are recalculated.
Investors should carefully consider the investment objectives and risks as well as charges and expenses of the ETF before investing. The summary and full prospectuses contain this and other information about the ETF. Read the prospectus carefully before investing. Call 1-844-4JPM-ETF or visit ww.jpmorganetfs.com to obtain a prospectus.
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