A Decade Ago

Where were you in 2007?

After their success with the iPod, Apple launched a new product that they dubbed the iPhone in 2007. Apple launched it on AT&T’s 2G network without the app store which wouldn't arrive until 2008.

A 10 year-old DVD rental company named Netflix offered a new service called “streaming video” that promised to deliver a massive catalog of television and movie content to customers over the Internet to home computers instead of waiting for the mail.

Peyton Manning lead the Indianapolis Colts to a 29-17 victory over the Chicago Bears in Super Bowl XLI and was named the game MVP for his performance. The Dixie Chicks had the number one song, “Not Ready to Make Nice” and album, “Taking the Long Way” a rebuttal to the death threats the band faced after their anti-war comments in 2003.

LeConte Opens

In March, Kevin and I opened LeConte Wealth Management after working together for five years in a local bank investment department. We built a solid friendship before we built our business partnership. Our friendship was founded on trust and respect for the character that our families had instilled in us. We encouraged each other on good days and not so good days. Clients always came first even when our sales manager pushed us to increase production. We enjoyed our work and how it benefited our clients, many of whom were (and are) family and friends.

We had a few simple goals when we started LeConte. We wanted to create a firm that was independent of conflicts and outside influences that are typical in the investment industry. We wanted to create a business culture of skilled, honest practitioners who worked together to help clients. We wanted the freedom to pursue a healthy balance between work and our family life.

Surviving the Great Recession

2007 was a devastating time to start an investment firm. Within our first 18 months, we saw the housing crisis boil over into an economic meltdown that forced dozens of banks and Wall Street investment firms into declaring bankruptcy. The S&P 500 lost more than ½ of its value before bottoming out in March 2009. Bank after bank fought for survival by reducing their businesses to bare bones essentials. This meant most banks reduced or eliminated their bond trading functions. As a result, the market for corporate and municipal bonds seized up in a liquidity vacuum.

When we opened LeConte, we moved our largest clients away from transaction-based brokerage accounts and into advisory accounts. With nearly 40 million dollars under discretionary management, we had flexibility to take advantage of the market disruptions of the times. At the point when many other investors we either over-reacting to events or burying their head in the sand, we were on the hunt for mispriced assets for our clients.

Growth Through Innovation

We not only survived with this strategy, we laid a solid foundation for growth. We transformed our financial planning process and personnel to incorporate advanced real-time reporting technology. This enabled 24/7 access for clients to their financial data regardless of where the accounts were maintained. Our willingness to invest in technology and people when other firms were struggling to survive gave us a head start when the economy stabilized.

In 2013 Kevin and I left the brokerage commission business in the wreckage of the housing crisis and focused on growing our advisory practice. As we crossed the 100-million-dollar threshold in advisory assets, we registered with the Securities and Exchange Commission in Washington, DC. and dropped our brokerage licenses for good. Our transition to becoming a registered investment advisory (RIA) firm was complete but our growth story wasn’t.

Building on Our Advantage in the Marketplace

We added the next piece to the puzzle in 2014 when Jon Dockery, a local CPA, brought his tax expertise to LeConte clients. By offering excellence in asset management, financial planning and now tax preparation and filing, we offer a strong value proposition to Blount County residents who are busy enough in their personal and professional lives.

A decade after starting up, client assets have grown more than threefold from 40 million to 140 million. We’ve never raised our fees. We adhere to the same core principles that we discussed in 2007: Independence, teamwork, life outside of the office and community involvement.

We’ve added new team members and expanded our services so that we can help clients at every stage of financial maturity. We have maintained our technology investment pace by offering every client a customized Purpose-Built Planning portal, the LeConte Mobile app and text based notification services.

Our Second Decade

The next decade will undoubtedly give birth to significant historical events. We hope and pray that they aren’t as tumultuous as the last decade. With great clients, great team members and hard work, we look forward to seeing where it takes LeConte. Thank you to all our loyal clients who place their financial hopes and dreams in our hands. The trust that you have shown us is our most precious asset. We are grateful.

Thank You!


Is This Correction Different?

In this age of instant information, investors have access to more financial news than ever before. With headlines on the Shanghai markets trending on Twitter and client account access on smartphones, how will the reception of that information change the way that markets react? While the velocity of market downturns could be more sudden and end more quickly than in the past, it’s helpful to look to historical corrections as a guide.

Many pundits have made predictions that the current correction in the U.S. markets are different than the ones we’ve seen before. A correction is defined as a drop of more than 10% in an asset class, while a 20% drop in prices signifies a bear market. There have been nine bear markets since 1957 with an average duration of 14 months. The shortest has been 3 months (Black Monday crash of 1987) and the longest was 31 months from 2000 to 2003 when the dot com bubble burst.

Typically with market pullbacks, they are difficult to predict but after the smoke clears, they are quite easy to understand.

The S&P 500 closed at 1867.62 on August 25, 2015, down 12.8% from the highs in May of this year. It’s the first time the markets have entered a correction since 2011. As the markets continue to process Chinese economic data and look for guidance on if/how/when the Fed will act, it’s imperative to understand what this correction will be like. Has a swift drop in prices presented a buying opportunity or is it merely the beginning?

Black Monday (October 19, 1987)

We can look to history as a guide to what might happen. On October 19, 1987, the Dow Jones lost 22.6%, or 508 points in a one day crash. The pain was immediate and swift. The overall market corrected over 33% over a 3 month period.

Tech Bubble/9-11 Terrorist Attack (2000-2003)

When the dot-com bubble burst in 2000, the S&P 500 fell over 49% during a 31 month period. It rallied from the lows on two separate occasions before finally heading upward in the spring of 2003.

The Great Recession (2008-2009)

When the housing bubble burst, the market dropped 56 % over a 17 month period. Coupled with the Lehman bankruptcy and credit crunch, this correction was all encompassing and severe.

One day, six months or three years or nothing at all? Market corrections can be quick or they can also be a slow burn. As we saw with the market sell off late yesterday, dead cats do bounce. Patience and principle can be rewarded for those investors with discipline and foresight to maintain diversification when markets freak out. A portfolio without a purpose is like a ship without a rudder.

Even though we have access to more information than ever before, markets can still test the resolve of it's participants.

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