2018 Client Letters

View 2019 client letter archive here.

December 2018

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One of our favorite, and most requested, presentations is “How To Get Rich and Stay Rich.”

It’s one we borrowed from a friend who was a Senior Trust Officer at The Harris Trust in Chicago years ago. Fred Young was a true gentleman, with a commitment for helping people. And what an interesting, enlightening, and humorous speaker. Somehow the autographed copy of his book that he gave me never returned from being loaned to ??? and the glass he sent me, inscribed “The Eleventh Commandment: Thy Shalt Not Invade Thy Principal’ was turned into shards by me one slippery fingered afternoon.

November 2018

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So much for October and it’s trick or treat whoops, make that trick and trick shenanigans---at least as far as the markets were concerned. Call them ups and downs or volatility or gotchas—the gyrations probably scared the whatever out of less experienced investors.

October 2018

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October has a reputation for having experienced some of the worst market declines: The ‘Crashes’ of 1929 and 1987 (aka “Black Mondays”), and the financial crisis of 2008.

It’s interesting though, when looking at the history of market performance, October has not really been the worst. For the past 20 years October has been the strongest month for the S&P 500, the market having risen by an average 2.1 percent. (As an aside, on average August and September are typically the weakest months of the year.)

September 2018

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The media, ever on top of even the tiniest bit of news, especially negative news that involves ‘personalities,’ lost little time in letting us all know that Aretha Franklin died without a will or trust. We have no way of knowing if the estate is substantial and whether settling it will be complex; however, we do know from eleven years of experience in such matters at a multi-bank Trust Company, it will not be settled quickly. It may also be settled in a manner not consistent with what she would want if she were alive.

August 2018

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Heads up! Look for the Wall Street pundits to inundate us with comments about an inverted yield curve and how it is; 1. A predictor of recessions, and 2. Bad for stock markets.

An inverted yield curve, an economist’s way of saying that, unlike a normal interest rate relationship where long term interest rates are higher than short term rates, exists when short term (2 yr.) interest rates are higher than long term (10 yr.) interest rates.

July 2018

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We have written several times over the years of our philosophy of owning passive interests in good companies: In other words, investing rather than ‘trading’ stocks. Recently Warren Buffett was quoted on the same topic:

"Charlie [Munger]and I view the marketable common stocks that Berkshire owns as interests in businesses, not as ticker symbols to be bought or sold based on their 'chart' patterns, the 'target' prices of analysts or the opinions of media pundits."

June 2018

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As a consequence of the improving economy, the tax cuts, and repatriated funds, merger and acquisition activity continues at a pace not seen in decades. That’s positive, as are stock buy-backs and increasing dividends—situations on which we will continue capitalizing.

May 2018

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Repatriation of corporation foreign funds, tax cuts, mergers and acquisitions (at a record setting pace), and growing consumer confidence have received short shrift in the media, as 24/7 news competition appears to dictate the he said/she said Mueller, Rosenfeld, Trump, et al brouhaha.

April 2018

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We have an acquaintance in his late 30s—early 40s that has a credit card balance too large to pay off all at one time, so monthly he is carrying over a balance on which he is paying approximately 25% annual interest rate.

We all know that there are many folks who do the same; however, in this situation the plot thickens.

March 2018

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The experts (?) are at it again, as they are every year about this time when earnings from the last quarter of the previous year give indications of the health of the economy. In addition to earnings, there are multiple other inputs that analysts and economists incorporate in their projections.

February 2018

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Corrections are a necessary part of markets, identifiable only after the fact. Trying to predict a correction is not possible, but taking advantage of one is. We do not try to time the markets, rather, as you know, we are interested in taking advantage of opportunities in high quality issues that may become undervalued in a declining market.

January 2018

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Wondering what the markets will do in 2018?

Maybe Wall Street crystal ball readers can provide a clue, since it is the time of year when the gurus feel compelled to make investment predictions. Perhaps the media should be partially responsible by pressuring them into the exercise—take your pick.