July 2021 Financial Update Newsletter

pot full of coins, sprouting a green shoot

In the business world, the rear-view mirror is always cleaner than the windshield.
Honesty is a very expensive gift. Do not expect it from cheap people.
Most news is noise, not news.

– Three Quotes from Warren Buffet

Wow!!! Another three months just flew by and the stock market continues to rise.  For those who ask me when the market will drop so they can get in when it is not so high, I simply ask, did you put money into the market in  Feb 2020 when “the world was coming to an end”.  Everyone wants to get in on a sure thing but no one wants to guess wrong.   The market is not about short term speculation, it is about long term returns beyond inflation. 

I don’t have any inside track to what the market will do in the short term.  However, I always enjoy sharing some recent clips to help you keep things in perspective.

  1. Households have more cash than ever.  Combined checking and savings accounts rose from $11.4 trillion at the end of 2019 to $14.1 trillion at the end of 2020.  By May 2021 that number rose to $17.09 trillion.—Wall Street Journal & National Review
  2. Many appear to have taken some of their cash and became an expert in investing.  15% of all current investors in the US stock market say they began investing in 2020.—Business Wire
  3. One of the hottest new investment platforms was the “free” trading platform, Robinhood.  The SEC just announced a $70 million fine against Robinhood (the largest fine ever) for misleading investors.  One individual using their trading platform apparently committed suicide when he found out he was investing with borrowed money and apparently did not realize he had turned that option on.—New York Times
  4. Automated robo-advisor platforms get hit with penalties from SEC.  Charles Schwab announced in July the firm has taken a $200 million charge to profits for an SEC probe into their robo-advisor platform.—-Financial Advisor
  5. Bitcoin and digital currency still get a lot of press.  The price of Bitcoin rose to over $63,000 on April 15 and then by June 22 it was trading below $29,000.  The wildly fluctuating price is not the only risk in digital currency.  There is an estimated $140 billion of bitcoin that can’t be accessed because owners have forgotten their passwords or digital keys.—Markets Insider
  6. Individuals opened their hearts & their checkbooks to help others.  Charitable giving hit an all-time high in 2020 of $471 billion.—US News  
  7. The government proposes sweeping changes to help pay for all the pandemic programs.  In his address to congress the president proposes a new income tax on all appreciated assets at death.  For those who contribute assets to so called wealth preservation trusts he wants to collect a tax on the appreciation when the asset goes into the trust and every 80 years the trust stays in existence.  Until new proposals become law they are simply proposals.  Our point here is simply we will all most likely pay more to the government in some way to recoup the funds handed out to keep our economy going during the pandemic.       

My objective with these tidbits of the info from the media is simply to give you a sample of things that have an effect on your portfolio every day.  Lots of food for thought but no way to predict the future.  It always helps to step back and look at history and the values of our founding fathers.  Our country was founded on the morals and values of opportunity for all and reward for those who put in the efforts.  Over time there are those who want to “beat the system”.  The latest examples of get rich quick schemes are the same as those from prior years with some new twist.  Slick marketing campaigns promise years of returns instantly.  Unfortunately as you read the SEC fines above and the 50% drop in the value of a digital currency you see that all that glitters is not gold.   The new investors with cash in their pockets are not happy with long term returns.  They want it now. 

When the stock market is going up, everyone looks like a great investor.  A disciplined approach and staying invested during down markets is the difference between an investor and a speculator.  As Warren Buffet says “If you don’t feel comfortable owning a stock for 10 years, you shouldn’t own it for 10 minutes.” 

How we manage your portfolio is based on 30 years of data rather than the latest 30 days of hot tips.  The simple proven concept of strategic diversification has always worked long term.  We spread across market segments and sell some of the hot one that has gone up and invest those gains in the one that has underperformed.  Over time the one on the bottom climbs to the top and you get the benefit of owning more of that segment as it rises.  In addition, diversification lessens the volatility in your portfolio as different segments react differently to market news.       

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 insure 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.  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​