January 2022 Financial Update Newsletter

Photo of the word "trust" on U.S. currency. Photo by Joshua Hoehne on Unsplash

Opportunity is missed by most people because it is dressed in overalls and looks like work.
— Thomas Edison
A wise person should have money in their head, but not in their heart.

— Jonathan Swift
Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.

— Will Rogers

Last quarter you will recall we had a September market drop and now the markets ended the year near an all time high.  We still believe the market is a good long term investment to give you a real return beyond inflation.  However, we also understand all the speculators out there.  Warren Buffet’s Partner, Charlie Munger, gave some sage advice in a recent interview to those who pick individual stocks and try to time the market.

“It’s getting very difficult, because we have a vast increase in the intellectual horsepower that’s trying to get rich by owning securities.  They’ve bid the good business up and up and up.  The great companies come at a high price.”  “There’s no great company that can’t be turned into a bad investment just by raising the price.”  

Charlie’s words of wisdom should be read by everyone who thinks they can beat the market. They really think they have it figured out when in reality, they have made money trading the last few years simply because the market has been going up and everyone made money. Anyone could have thrown darts at a dart board to pick stocks and had a rising portfolio. Now to help you make your own decisions on the future I want to share some additional recent clips below:

  1. Will you retire with debt? From 1999 to 2021, the total debt burden for Americans over the age of 70 increased 614% to $1.27 trillion. Today, roughly 46% of all Americans expect to retire in debt.—CNBC, November 16, 2021.
  2. The reason trade schools are looking better for so many: Between 1980 and 2019, the inflation-adjusted costs of attending college rose 169%. Over the same time, the earnings for workers ages 22 to 27 rose 19%.—CNBC, November 2, 2021
  3. How long will you live in retirement so you know how much you need to save? Over the past century, global life expectancy has roughly doubled to 72.6 years. In the United States, it rose from 39 years in 1860 to 53 in 1920 to 78.8 in 2019. A report by the World Economic Forum estimated that about half of babies born in the US in 2007 will live to be 104.—The Week, November 27, 2021
  4. Is there anything supporting this high stock market? The earnings of the S&P 500 for the year 1996 were $40.63. With less than a month to go in the current year, the consensus forecast is around $200, up almost exactly five times. The S&P 500’s cash dividend in 1996 was $14.90. Consensus forecast for this year is about $60, up almost exactly four times.—Nick Murray, December 2021
  5. Did the pandemic really change us? Do we really know what we want? Before the pandemic changed the working world, Americans ranked flexibility to set their own work schedules as the 74th most important out of 76 attributes associated with a successful and happy life. Now it sits at No.2, second only to compensation.–Axios, November 16, 2021
  6. Is Covid going to take the market down? Conditions for a large selloff are not in place right now given already low investor positioning, record buybacks, limited systematic amplifiers, and positive January seasonals. Investor positioning is too bearish—the market has taken the hawkish central bank and bearish Omicron narratives too far.—JP Morgan Chase’s Dubravko Lakos Bujas-December 2021

As you can see from some of the tidbits above, if we don’t do some planning and don’t help educate our kids and others who are important to us, the future could be a shock. Living to 104 with debt hanging over their head, spending huge amounts on college to get a paycheck that won’t pay the debt, worrying about the pandemic, thinking working from home with a flexible schedule will solve everything, etc. The hardest thing for a parent is to see their children struggle and realize you can no longer make their decisions for them.

The quote by Swift at the top of this letter is where the harsh reality of life meets the heart. Money is important and you have to plan or your chances of failure are greatly increased but your heart and your ability to help those less fortunate in life are what really matters. We can all preach so many things, but our actions speak louder than our words. In the end we will not be judged by our toys but rather by the difference we make in the lives of others. In a world that seems so divided by the various media maybe the old saying “don’t tell me how much you know until you show me how much you care” could help heal some of the division and stress we all encounter every day.

Swinging for the fences with your retirement is a game of chance and we will never take that chance. We do everything we do with you in mind to ensure you and your loved ones have a long retirement where you can maintain your quality of life. We don’t take your trust lightly. Our clients are also our friends and we treat friends the way we would want to be treated. THANK YOU FOR YOUR TRUST!

Call us to discuss anything. Our mission is to serve you so well you will never need to look elsewhere. If you know of someone who might benefit from our services, please give them our contact information or share a copy of this quarterly update with them. Our practice is expanding and referrals continue to be our primary source of new business.

Thank you for your trust in us!

Bert Doerhoff, CPA​