Happy Thanksgiving!

This is going to be a challenging holiday season. I don’t think that’s news to anybody. To me, Thanksgiving has always been a time to reflect on the year gone by and to look ahead at the year to come. To take stock and appreciate what’s been accomplished. But so much has happened, and continues to happen, in 2020 that last Thanksgiving seems like a distant memory.

Frankly, it’s sometimes hard to feel gratitude and to be thankful amid all the uncertainty and fear plaguing us these days. But then I remind myself that I truly have much to be thankful for. We all do. I have a wonderful family, good friends, work that fulfills me, and (hopefully) good health along with a positive outlook for the future.

So I hope you enjoy Thanksgiving this week, even if it’s unlike any you’ve yet experienced.

From my family to yours, Happy Thanksgiving.

Have questions? Ask me. I can help.

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The Market Whipsaw

Most of my clients receive emails every weekend updating them on how their portfolios performed during the week. While this can sometimes seem like too much information, I’ve always felt it’s better to know, for better or worse, how things are going. The week heading into Election Day was pretty rough for markets and, as I understand it, was one of the worst pre-Election weeks on record. But markets have been so on-again-off-again volatile in recent years it seems fitting that last week turned out to be one of the best General Election weeks ever. Go figure. But why did this happen? How could markets move so rapidly from feeling gloomy to ebullient?

To answer these questions I will again lean on my partners at Bespoke Investment Group. This is one of those times when I couldn’t have explained any better myself, so here you go.

As votes now stand, Republicans will hold 50 Senate seats in the next session of Congress while Democrats will hold 48. The two remaining seats are both up in the air in Georgia because none of the candidates in those two races received more than 50% of the vote. This triggers an automatic run-off with voting set for early January. If Republicans end up winning one of those two run-offs, they will hold the Senate and offer a significant check on a presumed President Biden and the Democratic House. At this point, we would expect Republicans to indeed hold onto at least one of those GA Senate seats and likely two, but obviously it’s far from a done deal and anything can happen.

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Upheaval and Change

Although it seems like a massive understatement, these are difficult times indeed. I’m now talking with clients and others every day who are seriously planning to move. There are conversations about lost jobs, frustration with kids going to school online and a sense that, simply put, this isn’t the area it used to be. It’s the years of fires too, of course, but I think it’s also a realization that a time of upheaval can present an opportunity for change.

The gloominess of all this has been compounded in recent days by a worsening outlook, not necessarily for the markets, but for how long it might take to get back to normal.

First came two interviews (at least that I heard) with National Institutes of Health chief (and Dr Fauci’s boss), Francis Collins, M.D. He was apparently making the media rounds talking about where we’re at with the virus and his outlook. When pressed by the interviewers he talked about the strong possibility that we won’t be back to “normal” until late next year, maybe longer. He seemed like a level-headed non-political guy, so his timeline guesstimate felt like a body blow. Another year plus?! He was clear about not making a prediction but merely suggesting a reasonable expectation amid a highly uncertain situation.

Add to that an unchallenged portion of a question during last week’s presidential debate. The moderator asked the candidates about government officials saying that mask wearing and social distancing might last into 2022. Neither candidate rejected the premise, leading me to assume that both generally agree with that potential timeline.

Where am I going with all of this? The longer outlook for the new normal, or whatever we want to call it, and the changes being contemplated by many of you, is making me reevaluate certain aspects of my business. I wanted to share a few of the thoughts with you today.

To Zoom or not to Zoom

It’s becoming clear that we need to double down on meeting virtually. While not being as satisfying as meeting in person, it definitely gets the job done. The technology continues to improve and so does our (mine and yours) comfort level with using it. Zoom is by far the most popular choice. I had been using the platform some years back when it had some useability issues and security concerns and I switched to something more professional. This was pre-pandemic, of course, and Zoom has been investing heavily to beef up security. Given how popular it is and my want to make things easy for you, I’ll go ahead and sign up for the business version of Zoom. This lets us choose between multiple platforms and, assuming Zoom proves better for you, we’ll just stick with it.

Popup meetings using video or just phone

We’ve always been able to chat via phone or exchange emails, but I’m wondering about the concept of popup video calls. This is an impromptu call where we could use screensharing and video on the fly if needed. I have the technology already, but there hasn’t necessarily been a reason to make this as efficient as possible. The goal is to be on the phone with you and then start using the technology within a minute or two. Again, ease of use is key.

The elusive in person meeting

Another big question is what, if anything, to do about my office. My building is still not open and won’t be until Sonoma County is in the “yellow” tier of the State’s phased reopening plan. Like you, I don’t know how long that will take. I’m planning to keep my office for the foreseeable future, but it’s unclear how valuable the space will be if fewer folks want to (or need to) meet in person.

I used to do house calls when I was first getting started with my practice and maybe I should consider offering that in the future. Part of the reason I enjoy my office is that all the technology I use to serve you is readily available. But ironically, I already have most of the technology to make things portable, I just haven’t really tried to leverage it yet. Maybe this will be better and more convenient for everyone. Time will tell.

If we move, can you still be our advisor?

Fortunately, most states have what are referred to as de minimis rules that allow me to keep working with you wherever you are so long as I have fewer than six clients there. Maybe if more than five of you move to Idaho, for example, I’ll need to register as an investment advisor in that state. It’s only paperwork and some relatively minor fees to get that done. So, the simple answer is yes, I can continue to work with you wherever you are. Maybe I’ll even come visit.

I won’t be making major changes like shuttering my office anytime soon. These are just some of the thoughts percolating in my brain these days. As I think about all of this, I’m also reconfirming some fundamentals. This is my profession and I love what I do. I also intend to do it for a long time and my outlook is fundamentally positive. I just want to stay flexible in how we work together because the environment is likely to be in flux for some time to come.

Have questions? Ask me. I can help.

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A Retirement Full of Transitions

It can be hard to think about what you want your retirement to look like. How do you plan to spend your time? How will you structure your week when Mondays can feel just like Saturdays? Many people assume they’ll just keep doing what they’ve been doing all along, while others plan for change. The bottom line is that transitioning into retirement is challenging, especially since it’s an end of something, like your primary occupation, but the beginning of so much more.

Planning is critical, of course, but not only the dollars and cents. You’ll want to figure out why you’re retiring and what it means to you – what kind of retirement you’ll want to live. Research and practical experience tell us that the concept of retirement is changing. Longevity expectations are increasing, and the pandemic has altered the outlook for many. Retirees today could encounter multiple transitions during a retirement that spans decades.

Along these lines I found an article on MarketWatch that interviews a counseling professor who, at 91, is still searching and working on her own transitions, even after many years of “retirement”. Here are some excerpts from the article and a link at the end if you’d like to read the whole thing…

Nancy K. Schlossberg, an author and former counsellor [… has] written about the transition to retirement for decades and [has switched] paths a few times herself in the last couple of decades. Now at 91, she’s starting an entirely new journey, acting as a consultant for Zoom programs about transitions in life.

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Happy Election Day!

I don’t know about you, but I still like to vote in person. I’ve worked the polls a couple of times and think in-person voting is just more fun. Granted, Election Day this year is even more politically charged than usual and we have the pandemic to think about. Showing up to vote in 2020 requires a sense of adventure and a healthy dose of patience. Also, our daughter recently turned 18 and my wife and I are taking her with us to vote. Exciting times indeed.

This week let’s keep things light and peek into that age-old question about which party is better for markets, Republicans or Democrats. This is one of those highly subjective questions where it can be easy to find information that fits your hypothesis instead of the other way round. Historical and economic context is important, and so is a variety of other detail that goes into a more robust answer to the question. Understanding all that, let’s simply look at the numbers.

My research partners at Bespoke Investment Group published a quick piece back in February looking at returns of the Dow Jones Industrial Average, a major US stock index, during presidential administrations going back to 1900. A quick note: while the data below is pre-Covid, the total return for the Trump Administration is currently still about 48% since Inauguration Day.

Beyond the numbers, however, remember that it’s important to think beyond politics when it comes to investing. Presidents don’t control the stock market and one administration is often the beneficiary (sometimes lucky, sometimes not) of work done by its predecessor. You’re investing over a long period of time, over multiple administrations, and a good goal is to be an all-weather investor. In other words, historical numbers like those below are interesting information for a cocktail party, but you wouldn’t want to make investment decisions based on it.

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Black Monday Remembered

Black Monday, October 19th, 1987, is a stock market event that’s long been an example of how fast things can go wrong when investors behave badly. There were a variety of reasons, structural and otherwise, for why it happened the way it did, but the bottom line is that investors really freaked out and selling begat more selling.

The anniversary yesterday seems especially poignant as we’ve seen so much uncertainty and volatility this year. Many investors simply panicked back in March and have felt left behind in recent months as markets rallied. Others who didn’t panic felt a sense of relief at how things have played out so far. But now many see risk rising again as our economic recovery slows and we edge closer to the election. No rest for the weary, right?

I think days like Black Monday are important to remember, either from personal experience or by study, because they lend perspective about what it takes to be a long-term investor. As the old saying goes: If it were easy everybody would do it. During a (hopefully) long investment horizon there will be lots of bad days mixed in with the good days, but it’s the slow build of value over time that truly matters. And the slow build can still happen, even if you feel like you’re working yourself out of a hole.

To illustrate this point let’s look at a brief research note about Black Monday from my partners at Bespoke Investment Group. They touch on how bad the market environment was at the time and how, in the decades and all the market events since, stocks and bonds still generated good returns for long-term investors, even if their timing was horrible. This will be helpful to remind ourselves of in the coming months.

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