Carlson Capital Management

Integrated Wealth Management

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Why Do We Invest?

James Yaworski – Carlson Capital Management
James Michael Yaworski, CFA

Senior Investment Strategist
507.206.2804
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Professional Biography
James Michael Yaworski serves as Senior Investment Strategist at Carlson Capital Management. In this role, James is responsible for investment research, portfolio management, and client investment education. James monitors and reviews client portfolios to maintain balance across asset classes, makes recommendations for portfolios when out of alignment with models, reviews daily cash positions, and places trades through the custodial trading platform. He also provides new client portfolio analysis, asset class/portfolio research and analysis, prepares and presents client education materials, and manages other activities in support of overall client portfolio management.

James is a graduate of Northern Illinois University where he earned his degree in Finance. While studying at NIU, he gained insights into his future career as part of a student-managed portfolio team. Prior to joining CCM, James’ experience included working in the roles of investment manager, project manager in investment research, and financial analyst in both large and small financial organizations. James holds the Chartered Financial Analyst (CFA Charter) designation, granted by the CFA Institute, which entails a rigorous exam requirement. He also represents CCM as chair of the investment research committee of Zero Alpha Group, a national network of eight independent wealth management firms.

In addition to the research James conducts related to building strong client portfolios, he is engaged in research on approaches that enhance institutional experiences as well. His most recent work sets out to provide institutional investors with a more robust way of constructing spending policies. In a paper published in the Financial Analysts Journal, James shows how current practices create poor long-term outcomes, resulting in declining support for beneficiaries over time. He also demonstrates how current methods expose trustees to significant fiduciary risk, and how small errors in implementation can have significant long-term ramifications on portfolio growth. His in-depth and thoughtful research stems from his genuine interest in providing university, public and private foundations, and endowment trustees with an approach that not only optimizes the outcomes of their portfolio’s performance, but also addresses their fiduciary responsibility with regard to spending policies. [You can read the accepted manuscript of James' paper here.]

James enjoys being engaged in the community with Habitat for Humanity and Paws & Claws. In his free time he also enjoys golfing and playing softball. James grew up in Crystal Lake, Illinois and now resides in Rochester, Minnesota with his wife, Brittany, their three young children, and two dogs, Frankie and Jordy.

Personal Thoughts
“I can do things you cannot, you can do things I cannot; together we can do great things.”  -Mother Teresa

I have grown to appreciate the importance of collaboration and teamwork in this industry. A group of individuals, each dedicated toward expertise in their respective fields, can help to piece together the puzzle of a family’s financial lives in an incredible manner. The end result is one which truly connects the math of an individual’s personal finances with the why that makes up who they are and what they want to achieve in life.

As a member of our investment team, I enjoy every aspect of this process; from our discovery meetings where we learn about financial goals, to the analysis and construction of a financial plan, to the educational meetings where we help put all the pieces into place. Ultimately, building a relationship with clients that centers on creating financial security and establishing confidence in their financial plan is extremely gratifying.

James and other members of the CCM Investment Team regularly post articles of interest including investment insights, recommended reading on timely topics, and articles on portfolio management which you can find here.

James Michael Yaworski
James Michael Yaworski, CFA
Senior Investment Strategist

Why do we invest? It may seem like a simple question, but it is one that is too frequently passed over. We invest to accomplish our financial goals. But those goals are unique relative to the goals of other investors. To illustrate the importance of the story behind an investment strategy, especially as it relates to a life stage, let’s consider a couple entering retirement.

It’s no surprise that a couple entering retirement has very different goals and objectives than a nonprofit institution with a 200-year history. That couple also has very different objectives than a day-trader looking to meet profit goals for the week, or that of a young professional hoping to uncover the next great American business. And certainly, this retiring couple has different goals than investors who are speculating on cryptocurrency, non-fungible tokens, special purpose acquisition companies, and every other investment fad that briefly captures investment headlines. If we understand that investors have different goals and objectives, then we can also understand why the investment strategy that’s right for one may be equally inappropriate for another.

A Portfolio Strategy for Your Goals

At Carlson Capital Management, we believe that aligning our investment strategy to the goals and objectives of each client is extremely important. This means building diversified, low-cost, and tax-efficient portfolios, and layering in risk characteristics that align with each client’s preferences and financial goals. In general, we construct portfolios by seeking out high quality, profitable companies, selling at attractive valuations, which is the antithesis of speculation. 

Performance Over Time

The result of this approach is that during speculative manias, like what we saw from March of 2020 through February of 2021, we may not participate in the most exciting areas of the market. In this time, a popular Exchange Traded Fund, the ARK Innovation ETF (ARKK), captured headlines after producing returns of 351% during this time period,1 primarily by investing in unprofitable technology stocks, leading to billions of dollars in investor inflows to the fund. Our consistency in approach also means that we will not be harmed when these bubbles inevitably pop. Since February of 2021, ARKK has lost 71% of invested dollars, and is down 52% this year through the end of July.2 Year-to-date, unprofitable companies as a whole have lost an average of 25%, while profitable companies selling at attractive valuations were down just 4.5% on average.3 This is not just cherry picking a recent short period of performance either; profitable companies selling at attractive valuations have outperformed unprofitable companies by over 10% per year since 1991, as shown below.

Data represents past performance. Past performance is no guarantee of future results. Table is for illustrative purposes only. Returns are US Large Cap stocks represented by Russell 1000, US Small Cap stocks represented by Russell 2000, for the time period of December 31, 1991–July 31, 2022. Source: Pacer Financial. Unprofitable companies defined as those with negative free cash flow. Attractive/Neutral/Expensive valuation categories represent companies with positive free cash flow segmented into equal tertiles.

Not only is there a strong reason to avoid unprofitable companies due to inferior long-term performance, but the performance of these types of stocks tend to magnify market cycles—outperforming in good times, while underperforming in bad times—which is the exact opposite dynamic of what an individual approaching, entering or in retirement should be seeking to accomplish. And this is not a small esoteric issue for investors, considering that 884 of the companies present in the Russell 3000 Index were unprofitable at the end of July.4 

Building for You

Markets are made up of many participants with different goals and objectives. There are some investors, for example, who are attracted to investing in unprofitable companies whose expected returns are similar to that of buying lottery tickets. Not every investment is right for your portfolio and that’s ok. By aligning strategy with portfolio construction, we’re able to look past short-term investment noise and focus on what matters—accomplishing your financial goals.


  1. NYSE Arca, Inc., ARK Innovation ETF (ARKK) for the time period of 3/18/2020–2/12/2021. Morningstar.com.
  2. NYSE Arca, Inc., ARK Innovation ETF (ARKK) for the time periods of 2/21/2021–7/31/2022 and 12/31/2021–7/31/2022. Morningstar.com.
  3. Universe includes the 3000 largest companies based on market capitalization. Unprofitable companies defined as those having negative free cash flow as of 12/31/2021. Attractive valuation companies defined as the top quintile of companies, based on a segmentation of the 3000 largest companies base on market capitalization who had positive free cash flow. Morningstar Direct. 
  4. Russell 3000 TR Index USD. Morningstar Direct. 

NOTE: The information provided in this article is intended for clients of Carlson Capital Management. We recommend that individuals consult with a professional adviser familiar with their particular situation for advice concerning specific investment, accounting, tax, and legal matters before taking any action.

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Published August 22, 2022 Topics: Diversification, Financial Planning, Portfolio Management, Retirement Planning

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