CLEARWATER WEALTH PARTNERS
Client Meeting Transcript
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CLIENT: Chen Household (Sam & Alex Chen)
DATE: October 10, 2018
TIME: 2:00 PM
MEETING: 2018 Q4 Quarterly Review
LOCATION: Conference Room A, Clearwater Wealth Partners
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TRANSCRIPT
[0:00] Sarah Chen: I'm glad we're meeting today because markets have been volatile
and I want to talk through it directly. The S&P sold off about 6% just last week —
October has been rough. We're down roughly 5% year-to-date now. Your portfolio is at
$574,000, which is lower than the $598,000 we discussed in June. I want to make sure
you're both anchored to the long-term picture before we get into the specifics.
[0:04] Alex Chen: Honestly, I've been checking the account more than I probably
should. What's driving the drop?
[0:05] Sarah Chen: A few things converging. The Fed has been raising rates faster
than the market expected — they've now hiked 8 times since 2015 and are signaling
more. Rising rates make bonds more attractive relative to stocks, which puts pressure
on equity valuations. You also have trade war uncertainty with China and some
softening in tech earnings. Nothing here is economically catastrophic — it feels
worse because 2017 was so smooth.
[0:08] Sam Chen: Is this the beginning of a recession?
[0:09] Sarah Chen: I can't predict that, and I'd be skeptical of anyone who tells you
they can. What I can tell you is that the underlying economy is actually quite
healthy — unemployment is near a 50-year low, corporate earnings have been strong,
GDP growth is solid. Market corrections of 10% or more happen on average once a year.
We're in one of those. The right posture is to stay invested.
[0:12] Alex Chen: So we don't do anything?
[0:13] Sarah Chen: Correct — no trading based on headlines. Your allocation at
70/28/2 is appropriate for your risk tolerance and time horizon. What I am going to
do is monitor for rebalancing opportunities. If equities fall further and drop below
the 65% band, we'd actually buy more equities at lower prices — that's the mechanical
advantage of a disciplined rebalancing policy.
[0:15] Sam Chen: That's counterintuitive but makes sense.
[0:16] Sarah Chen: It's the hardest part of investing — doing the right thing when it
feels uncomfortable. The NLTK Q3 vest executed in September as planned — 625 shares
at $18 per share. $11,250 W-2 income, 450 sold for diversification, 175 held. NLTK

concentration is at about 5.2% of portfolio — still within our cap but moving toward
the upper end as portfolio value has dipped. I'll keep an eye on it.
[0:19] Alex Chen: If NLTK falls in a correction too, that actually helps the
concentration math, right?
[0:20] Sarah Chen: Only in an unfortunate way — a lower NLTK price reduces the
concentration percentage but also reduces the value of what you hold. I'd rather
manage concentration proactively than rely on the stock falling. The 5% cap in your
IPS is there to protect you from the scenario where NLTK has a company-specific
problem that the broader market doesn't share.
[0:22] Sam Chen: What about our home savings? We opened ACCT-CASH after the June
meeting.
[0:23] Sarah Chen: ACCT-CASH is at $22,000 — you've been contributing consistently.
Very much on track. The target is $110,000 by mid-2021, and at your current savings
rate we should get there. I want to leave that account alone regardless of market
conditions — don't be tempted to deploy it into the market during a selloff. That
liquidity is earmarked.
[0:25] Alex Chen: We won't touch it.
[0:26] Sarah Chen: Good. On year-end planning: we're looking at about $6,500 in
taxable capital gains this year from the NLTK vest sales. No tax-loss harvesting
opportunities right now — I'll look again in November. Your estimated tax payments
should be sufficient. Maximize your 401k contributions before December 31st — make
sure you're hitting the $18,500 annual limit if you haven't already.
[0:28] Sam Chen: Alex, I don't think we've maxed it. I'll check.
[0:29] Alex Chen: I'll check tonight actually.
[0:30] Sarah Chen: Let me know and I can help you model whether catching up in
November and December makes sense. Let's plan to reconnect at the December annual
review.
[0:30] Meeting adjourned
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ACTION ITEMS
1. Alex to confirm 401k contribution YTD and top up to $18,500 limit by December
31
2. Monitor NLTK concentration — flag if exceeds 5% of AUM through Q4 volatility
3. ACCT-CASH at $22,000 — maintain $3,000+/month contribution pace toward $110K
target
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CONFIDENTIAL — For client use only. Not for distribution.
