GAME OF DRONES

His opportunity-seeking isn’t limited to the U.S. border.
He’s a big fan of investment opportunities abroad and frequently
travels to China, Brazil, India and soon – Africa.
He is attending a large mining conference in South Africa
at the end of January 2014 in an effort to evaluate opportunities
there.
Those parts of the world are where
great opportunities will exist for the
next decade,” Lutts explained. “You
have to be open to the idea that growth
opportunities are not limited by coun-
“try borders.”
He has the good fortune, “to be able to identify trends
early on that become long-term trends and achieve a significant
value creation.” That value creation begins right
in Cabot’s home offices. There, clients go through a comprehensive
review of their current financial situation, followed
by the development of a strategic plan.
“This is our firm’s number one value,” Lutts explains.
“Our clients see it the first time they come in. On that first
day, they work with four individuals whom are highly-skilled
in each of their respective sectors – taxation, investments,
estate planning and insurance. The thing that
really works for our clients is that these four individuals
talk to each about each client’s case and they develop a
custom approach to the unique aspects of each client’s
life. The client is not getting some off-the-shelf cookie cutter
approach.” His clients – most with a liquidity of funds
worth at least $1 million, value this high level of personalized
service.
“These are people who have resources that need to be
managed. Not only that, they have complex tax, estate
and financial planning needs as well as a strong need
for insurance planning,” Lutts explained. Being high-net
worth isn’t the only thing Lutts seeks in a client. He prefers
to work with people who allow his firm’s investing
methods to work for them over the long haul.
He emphasizes educating clients regarding the various
and ever-developing tools of the investment trade.
He knows some clients are
weary of the recently-popular
ETFs (exchange-traded
funds). Lutts is a big fan,
even though he does admit
they can be a double-edged
sword.
“They do offer benefits in
lowering costs, offering tax
efficiency and simplicity,”
Lutts said. “They allow me to
target an individual part of a
particular market of a particular
economy. Yet, challenges
are created. I may be taking on more risk because of this
flexibility. This more complex slicing and dicing of the
marketplace may make trading more complicated.”
Lutts also sees that ETFs increase investor trading activity.
He cautions that increased activity does not necessarily
equal increased profitability. Yet, in the overall
investing scheme, he believes in the fluidity of ETFs. “I
am thrilled to have them,” he said. “But they do raise risks
and those risks are something we have to be aware of.”
Risk is not something Lutts avoids. He recognizes it
comes with the territory, “There is no free lunch. You cannot
get high returns without taking risk,” he said when
addressing the recent appearance of advertising, allegedly
delivering market returns with no risk. “In the long
run, they are lying. If you take less risk, you simply are
going to get less return.”
Lutts understands where the notion is coming from.
The past ten years, marked with financial scandal after
scandal and two bear markets have made investors leery
of risk. He calms investor fears with a simple reminder:
“Investing is about the long-term.” According to Lutts,
“Over a long period of time, if you invest in a carefully
chosen group of companies, you will achieve a 9-10 percent
annual rate of return.”
For now, Lutts does not see a federal uniform fiduciary
standard being developed. “It’s not there aren’t issues to
be addressed. It’s just that most of those arise ‘after the
fact,’” he said.
“For investors, counselors and wealth advisers, it is
very challenging to come up with a uniform set of standards
effective at managing and monitoring markets.
Investor behavior dramatically changes from cycle to cycle
and what usually happens is that they (government
authorities) outlaw things that didn’t work – after they
didn’t work.”
Instead of looking in the rear view mirror, Lutts is always
looking forward. He’s working on being a bit less
bullish at market highs and less bearish at market lows
– which he acknowledges is challenging.
Lutts comes by this careful watching of trends and opportunities
naturally – his father was the founder and
original editor and publisher of the “Cabot Market Letter.”
In 1983, when launching his own firm, Lutts contacted
those subscribers because he knew they were also
looking for new opportunities. The next profitable opportunity
is what Lutts intends to keep on finding not only
for himself, but more importantly, for his clients.
216 Essex Street Salem, MA 01970 (978) 745-9233
www.ecabot.com
THE SUIT MAGAZINE p.63