It's that time of the year, and holiday music is in full effect. Everyone has a favorite holiday song. 

"Little Drummer Boy" is one of our favorites (despite the potential party-foul antic of banging on a drum and making a lot of noise at a baby shower…come on, the baby's mother did give him permission!).

The song - originally known as "Carol of the Drum" - was written by the American classical music composer and teacher Katherine Kennicott Davis in 1940. It was first recorded in 1951 by the Trapp Family Singers (check out the original version here). It then become popular after a 1958 recording by the Harry Simeone Chorale. Since then, many musicians have recorded more popular versions (we have over fifty in a holiday Spotify playlist including interesting takes by Johnny Cash, Bob Seger & the Silver Bullet Band, Low, Dandy Warhols & Los Straitjackets to name a few!).

For us, the song's brilliance is two-fold. First, the music's stripped-down, slow build into a low key anthematic rhapsody conjures up efficient yet celebratory emotional power through music. Couple that with its messaging about a cash-poor kid who was asked to come to an important party but could not afford a decent gift. Thinking quick on his feet, the young dude, an accomplished drummer in his own right, decides to give the gift of music. He simply played his drum. Shortly thereafter, an ox and lamb joined in the session, and they have the jam of their lives. The audience dug it. A good gift indeed. For us, this truly captures the spirit of the holiday season.

We truly appreciate someone who keeps it simple during a crisis (a gift-giving crisis or otherwise!). One of our "first principles" that grounds our investment process is a focus on simplicity over complexity. Granted, there are very complex things in the investment industry (much of it is made far more complex than it should be). We agree with Oliver Wendell Holmes Jr., when he said, “I would not give a fig for the simplicity this side of complexity, but I would give my life for the simplicity on the other side of complexity.”  So much of what we do for clients is to find that simplicity on the far side of complexity.

As an example: our maniacal focus on long-term asset allocation. There are so many ways to overthink about and get overly complex in individual investment selection. We keep it simple by being thoughtful on which asset classes to invest in. Knowing that you can count on one hand the important asset classes that matter to investment returns over the long-term, it is much easier to focus there instead of getting bogged down into the literally millions of individual investments out there available to investors.

This approach is backed up by academic practitioner research. In their seminal 1991 research paper "Determinants of Portfolio Performance II: An Update," Gary Brinson, Brian Singer and Gilbert Beebower figured out that the asset classes an investor invests in explains 92% of the future long-term investment performance while individual investment selection only accounts for 5% of the performance.

In our opinion, a keen wealth plan tied to a simple focus on asset allocation is a gift that will keep on giving!

"Pa rum pum pum pum…"

Happy holidays!


For more information on this topic please contact Russell Moenich.