Introducing Eric Wathen, Our Newest Full-time Employee of Provident
After working part-time at Provident for a year and a half, I am thrilled to announce that I will now be transitioning to a full-time role with the team as a Financial Analyst. While I have met a few clients, I am eager to meet more as I become more involved in day-to-day activities.
As with most small companies, we at Provident wear many hats. Most of my time is spent on trading, marketing, and client service including helping clients evaluate Roth conversion opportunities, Social Security timing, and withdrawal strategies, among others.
I have nearly 20 years of experience in the financial industry, including expertise in investment management, financial planning, 401k plan design, security valuation, and trading. I started in the industry in 2005, assisting with research on a team at Raymond James, and later, I designed and implemented portfolios for clients. In 2015, I transitioned to Ameriprise Financial as a Financial Advisor, working with clients to develop retirement plans and construct portfolios to match risk and return requirements.
Before joining Provident, I managed a private investment fund focused on troubled companies, generally those in or approaching bankruptcy. My first exposure to troubled companies began during the 2008/2009 financial crisis when General Motors filed for bankruptcy. I was eager to learn how companies that file for bankruptcy could reorganize their capital structure and successfully emerge from bankruptcy. After earning the Chartered Financial Analyst (CFA®) designation in 2013, I read everything I could find on the topic and began investing in troubled companies. A typical transaction would consist of buying a distressed company’s bond at a discount, holding it through the reorganization process, and receiving a package of new securities in exchange for the bond, hopefully a total package worth significantly more than the original cash outlay. This is just part of my past – Provident isn’t going to invest your money in distressed debt!
My interest in investing started in the early 2000s after taking a general elective course in college called Investment Fundamentals. I was so enthralled with the class that I immediately switched from an engineering major to finance. I helped launch an investment club in March 2003. I will never forget our decision to add to our XM Radio holdings. Our notes show that no amount of growth could justify its valuation, massive dilution was likely due to stock options and convertible securities, and it was experiencing significant negative earnings with huge capital expenditures to launch and maintain the satellite network. The stock was a big winner for us, up over 400% in the short amount of time we held it. We voted and decided to buy more due to the outstanding performance of the stock price. You can imagine what happened next. We learned that buying a company at any price without connection to valuation can be disastrous as the stock would later fall 90+%. This is just one of the many investment lessons learned over my 20-plus years of investing experience.
As an avid reader, I soaked up all the books I could find on investing. I have read many investing books, including classic works on fundamental analysis and modern-day books on hyper trading strategies. Here’s a list of some of my favorite books on investing:
· Security Analysis by Benjamin Graham & David Dodd
· Intelligent Investor by Benjamin Graham
· The Most Important Thing: Uncommon Sense for the Thoughtful Investor by Howard Marks
· When Genius Failed: The Rise and Fall of Long-term Capital Management by Roger Lowenstein
· Liar’s Poker by Michael Lewis
· Distressed Debt Analysis: Strategies for Speculative Investors by Stephen Moyer
If I’m not reading an investment book, it is likely a sci-fi book. One of my favorite book series is “Odyssey One” by Evan Currie. Check it out if you are looking for something different to read. The story takes place in the future when humans first develop the capability to travel between the stars. In addition to reading, some of my favorite hobbies include astronomy, disc golf, and tinkering with electric dirt bikes. October has been a fabulous month for viewing celestial objects including a comet and a supermoon. We’ve had a lot of clear, chilly mornings in southeast Michigan. Early risers have been able to enjoy Jupiter and Mars straight overhead. Mars is easily identifiable with the naked eye as the red object along the ecliptic. With cheap binoculars and dark skies, up to 4 of Jupiter’s moons are visible; sometimes, the moons are hiding in front of or behind the planet.
I enjoy spending time with my wife and three daughters. Finding time for all my hobbies can be challenging with three young kids. One hobby I would like to get back into is growing microgreens. Microgreens are easy to grow, highly nutritious, flavorful, and ready to eat in about 10 days. There are tons of how-to videos available online with a simple Google search. My favorite microgreens to grow include Sunflower, Radish, and Spicy Mix (Broccoli, Kale, Kohlrabi, Arugula, Red Cabbage & Mustard). They can be grown indoors, and the kids love the taste!
Not high on the list for excitement, but very important, are the potential changes to existing tax law, which have prompted some client questions. Periodic reviews are recommended as circumstances change. Topics to discuss include strategies for Roth conversions, 401k benefits, Social Security, charitable intentions, withdrawal strategies, and any other factors that may impact the investment portfolio or retirement cash flows.
I have experience designing and implementing 401k plans and other work place retirement plans. Please reach out for a review of your 401k plan and other employee benefits to see if they are being fully maximized. Every 401k plan is different. A select few 401k plans offer an uncommon 3rd contribution bucket known as ‘after-tax.’ This is in addition to the more common Pre-tax and Roth buckets. The 401k plan’s Summary Plan Description (SPD) document explains all the plan's features. Send me a copy of your SPD if you want a full review of retirement benefits. This document can generally be found in a documents section on the 401k plan website or by asking an HR representative. An easier way to see if your plan offers the 3rd bucket is to go to the contributions page while logged into your 401k plan. A lucky few will see 3 choices: Pre-tax, Roth, and after-tax. Most plans will only have two options: Pre-tax and Roth. Call me if you see a 3rd choice and want to learn more. This could be a great way to save additional tax-advantaged dollars.
I am excited to be a part of the exceptional team at Provident. I am eager to assist clients in achieving their financial goals and contribute to the top-quality research and outstanding service they receive every day.
Eric Wathen, CFA®