‘On The Money’ with Mark Hamrick: Investing advice from expert Michael Farr

If you’ve listened to network radio or watched of CNBC over the years, you’ve probably listened to or watched Michael Farr. First as Founder and CEO of Farr, Miller and Washington, and now also as chief market strategist at High Tower Advisors, Farr uniquely understands the intersection of financial markets and Washington politics, as a longtime resident of the nation’s capital.

In this episode, Farr begins by noting that he wasn’t always interested in managing money (2:46), earlier teaching English and coaching baseball at a New England prep school. At age 25, he knew he wanted to pursue another career and made the transition to Wall Street.

Money lessons learned from childhood

When advising people about investing, Farr says he draws upon lessons he learned from his father including that money is used to keep people safe (7:19). He adds that it’s “not a game” or a “time to see how clever we can be with your money.” Farr says his approach is to take on less risk while still trying to achieve “the highest return,” which he likens to threading a needle. After that, he says a typical conversation involves understanding the client’s appetite for risk, managing expectations and identifying financial goals (8:30).

Invest, don’t speculate

In today’s fast-paced media environment, Farr says the sense of urgency many individuals feel about making a quick buck, goes against the grain of truly being an investor. “You’re not an investor, if you don’t have time. Without time, you’re a speculator,” Farr says. He says there’s an opportunity for investors to “ignore that short-term noise,” using Disney’s recent stock turbulence as an example where long-term performance might deserve a look.

The democratization of investing

With investors having increased access to stock trading and information, Farr says the democratization of investing has been a positive development in general. On the other hand, with meme stock frenzies including the GameStop phenomenon last year and enthusiasm about NFTs, Farr warns, “if it’s too good to be true, it’s too good to be true” (15:03). “Money’s hard to make,” he says.

Don’t forget about bonds

After the big move up in bond yields recently, Farr says, “the allocation of bonds depends on the client’s risk parameters and not the bond market” (19:24). As a result, Farr says one doesn’t make a decision about bond investing about the market, rather the decision is based on what the client needs. He uses the example of a 70-year-old investor who can’t afford a sharp pullback in stock prices, seeking fixed income exposure to hedge and reduce volatility (20:05). Farr says higher bond yields may begin to draw more investor dollars.

As with golf, some investing ‘swing thoughts’

To close, Farr offered some basic thoughts of investing people should remember. He suggests investors ask a couple of key questions: “Am I making a commitment for the long term?” Additionally, “Will this investment last for the long term,” meaning, can it survive a potentially large decline in price.

Farr says long-term investors will inevitably experience some volatility but can be sustained by focusing on the stock market’s historic positive return.

Farr adds: “Time, not timing, is what will make you money as an investor.”