stick to goals
How did you get into this line of work?
>> New job: President and chief operating officer of Cadinha & Co.
>> History: Joined the firm right out of college and most recently served as chief investment officer.
>> Cadinha & Co.: Founded in Honolulu in 1979, it manages investments for wealthy individuals, business retirement plans and nonprofit organizations.
To keep it down to a few words, I was introduced to the investment adviser business on an educational trip to Sydney, Australia. I was in the fisheries and biology program at Colorado State University. With two years left in school, I decided to switch my major to finance and finished with a business degree.
How did you wind up at Cadinha & Co.?
This was the only job I wanted in all of Hawaii. I applied pretty much right out of college and Harlan Cadinha hired me six months after I graduated. I was attracted to the reputation of Cadinha & Co. and the field they were in, in terms of managing money for high net worth individuals. It was a place where I could see my self growing and developing over the years. There's not a lot of firms like us in Hawaii. In 15 years, I've worked my way up through the ranks, doing everything the from putting together computer systems to managing investments to this new job.
Are most of your clients companies or individuals?
Do people and institutions necessarily have different investment strategies?
Different needs I would say. Institutions are more specific in terms of their exact goals. There are trustees and monitors involved and they have specific benchmarks. Individuals tend to have a wider range of goals based not just on age, but also lifestyle and other needs. Most of our clients don't want to lose money. Preservation of capital is always a goal for us here. We want to get the greatest return for level of risk. We do that through asset allocation. Right now, for the first time in three years, we believe the stock market is going to provide a higher rate of return for our clients than fixed income. So we started shifting more money into stocks about eight months ago.
The bull market saw a lot of novice investors jump into stocks and many of their holdings got pummeled before they knew what hit them. To what extent are individuals at the mercy of the big players in the market?
There's a lot of vehicles out there that small players can use to get the same types of returns as the institutional investors. Getting in to the right mutual funds, with goals consistent with their own, is a good way to do that. But seek the help of professionals. The mistake a lot of novice investors make is they go to a party and listen to a friend who says to invest in XYZ Corp. and XYZ Corp. doesn't do as well as hoped and they lose money. And that's their first exposure to investing. The best advice I have is to get the help of a professional and be patient, invest with your long-term goals in mind.
In a volatile market, how does the average 401(k) holder strike a balance between refusing to look at statements and bouncing their holdings around in reaction to the day's news?
It comes back to who's helping the individuals in their 401(k). There's too much information out there. Investors can be bouncing in and out of mutual funds and that's going to hurt them. You can't worry to much about the one- or two-year time span in the market. Stick to those goals you are trying to achieve in 10 to 15 years. Get professional help to diversify your assets between stocks, bonds and cash. Talking to their planners would be the No. 1 goal.
In general terms, how are you invested, personally?
Basically like my clients. I'm on the younger side, so at times I could be as much as 80 percent invested in stocks. But it's all about asset allocation and I believe in the system we have here at Cadinha & Co.
Are your clients showing signs of wanting to get back into stocks?
Yes. What we do is called proactive asset allocation, where we examine market risks going forward. What we are seeing is a better macroeconomic picture forming. The tax cut just passed is going to be very positive both in terms of the investment tax cuts and accelerated income tax cuts. And the stock market, from a technical standpoint, is also signaling a bottom. Toward the end of 2002, we were 30 percent to 35 percent in stocks. We've started moving toward 60 percent equities.
So, have we seen the bottom in the stock market?
Yes, I think the probability is very high that we have seem the bottom in the stock market.
Inside Hawaii Inc. is a conversation with a member of the Hawaii business community who has changed jobs, been elected to a board or been recognized for accomplishments. Send questions and comments to: firstname.lastname@example.org