February 24, 2009
Hildy Richelson and Stan Richelson are bond advisors who focus their practice on the design and management of bond portfolios for high-net-worth individuals. Hildy is President of Scarsdale Investment Group, Ltd., a fee-based advisory firm. They advise clients on the art of buying and selling fixed-income investments. They are co-authors of several books, most recently Bonds: The Unbeaten Path to Secure Investment Growth, which was named one of the ten best investing and finance books of 2007 by the editors of Amazon.com. It can be purchased via the link above. As a special bonus, advisors that read the book and take a short test can earn 15 CFP credits.
We spoke with the Richelsons on February 22, 2009.
Congratulations on providing your clients with what must have been a winning strategy for 2008 – an all-bond portfolio. What were the background and history that led you to develop this strategy, and what are its core components?
We developed our strategy in the mid-1970s, after unsuccessful attempts at investing in equity mutual funds. At that time, we bought aggressive equity mutual funds, and sold them when we thought the market was going down. After three years we came out where we started, basically wasting our time.
Interest rates were very high then. We realized we could achieve our personal goal of financial independence without taking on a substantial amount of risk by utilizing tax free municipal bonds and holding them to maturity. Moreover, we could do an accurate financial plan, since our future cash flows from these investments were highly predictable.
We put together our first book in the md-1980s. Our core principles were in this book and are now in our latest book (on page 306). They can be summarized as follows: carefully define your objectives; don’t lose any money; if you can’t afford the risk then don’t play in the market; evaluate every investment on a risk-adjusted after-tax basis; make sure you understand all your investments; focus on cash flow; and carefully understand the risks you are taking.
We have built a successful advisory practice on these principles.
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