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“I remind myself every morning: Nothing I say this day will teach me anything. So if I’m going to learn, I must do it by listening”  – Larry King

What to make of the Stock Market

“In my day I’ve seen a lot of wild rallies with a lot of mispriced stocks, but there is one thing they all have in common. Eventually they hit a wall and go into a major painful correction. Nobody can predict when it will happen, but when that does happen, look out below,” Icahn said. “Another thing they have in common is it’s always said, it’s different this time. But it never turns out to be the truth.” – Carl Icahn

And as if on cue:

Robert Shiller in his book “Irrational Exuberance” says that a characteristic of a bubble is when people start to rationalize the high valuations. Although recently Mr. Shiller told CNBC that ““The market is highly priced, but it’s not so high that I wouldn’t consider it as an investment,”

So is the stock market at an unsustainable level?

The Morning Brew said it well:

  • Signs the bubble is about to pop: The rapid rise in special purpose acquisition companies (SPACs) taking untested companies public, astronomical first-day “pops” when a company IPOs, and loads of speculative trading from retail investors, writes Bloomberg.
  • Signs the bubble is not a bubble, just healthy growth: the Fed’s promise to keep interest rates low for the foreseeable future and the arrival of coronavirus vaccines to end the pandemic.

No one ever knows, but my suggestion is to make sure you have managed the risk in your portfolio in a way that will allow you to take advantage of all possibilities.  Be well hedged like Carl Icahn.

Uncle Sam

At the heart of most political disagreement is the size of government. And now that the election season appears to finally be over, lets take stock.  The left wants a big government that has more control over how things are done while the right wants the opposite so that a free market can create balance.  The following is not to say one approach is better than the other but to bring awareness to government’s role.

“The Defense Department, after all, built the internet. Government research and development also led to transistors, silicon chips, radar, jet airplanes, satellites, artificial limbs, cortisone, flat screens and much more, as the M.I.T. economists Jonathan Gruber and Simon Johnson point out in their recent book, Jump-Starting America.”

“Almost everything about your computer today — and the way you use it — stems from government funding at the early stages,” Gruber and Johnson write

As Michael Lewis points out in his book the “The Fifth Risk”, many people who get small business loans from their bank don’t realize they are government loans.

With all this being said, without private enterprise we would probably be flying to our vacations sitting in uncomfortable bucket seats in freezing transport type planes.  Our iPhones would look and feel more like bricks and when we get sick we wouldn’t have much choice on which doctor treats us.

And protecting all this, and keeping the US dollar strong enough to be the “World’s Currency Reserve“, is the US military.

There is a delicate balance between public and private that is needed for us to enjoy the lives we want. For lifestyles that are easily taken for granted.

Should we be ok with this?

Nestlé’s CEO told a Swiss paper, “We buy from 200,000 dairy farmers around the world every day…of course we want to monitor our supply chains and we’re already doing this intensively. But you can see…how unrealistic it would be to ensure 100% compliance.”Mastercard’s CEO in an interview with Kara Swisher “I have to follow a legal standard. I’m not trying to follow a moral standard. If I did, I personally abhor all kinds of things to do with gun sales as well. I don’t own a gun. I also abhor things to do with porn. But you know what? That’s not what this is about. There are laws in a country, and we’re trying to work within the laws.”

This is where us as investors and consumers need to take action.  We need to hold those accountable who we think aren’t doing as much as they could be.

Goals

This time of year is when operation “New Year’s Resolution is well under way.  Goals have been set and we feel great about it.  Work, health and relationship goals are all in play whether you have declared them out loud or not.  For most there is at least some hint of a new beginning in the works.

Edwin A. Locke,  pioneer in the field of goal-setting, “found that individuals who had highly ambitious goals had a better performance and output rate than those who didn’t.”  He said before setting goals, it is vital that we choose only the ones that are truly rewarding to us, no matter how much we need to push ourselves to achieve it. The success of Locke’s theory owes to its cut-throat practical approach. While mentioning about optimism bias in his opinion, Locke said that we often tend to select goals that excite us temporarily.

For example, we may choose a profession by getting lured about the financial benefits of it, failing to notice the hard work that we will need to put in for enjoying the benefits. As a result, we are likely to fail motivation and lose commitment after delving into the reality of the work.

Thus, before setting goals, it is vital that we choose only the ones that are truly rewarding to us, no matter how much we need to push ourselves to achieve it.

And as Warren Buffet suggests, you cannot have too many goals.  You might need to cross some goals off your list if you want to accomplish those that are most important to you.

My goals for 2021 are:

– Retain 30 new clients.
– Surf inside the barrel of a wave (seems like a stretch…maybe I’ll get lucky)
– Cycle up the local mountain five minutes faster than my best time (also a stretch, but I’ll enjoy trying).
– Contact each of you directly to see if I can help you with your financial goals(No financial commitment required).
– Commit to not buying one bottle of water (not that its a terrible thing to do when you really need it, but it keeps my environmental awareness behavior sharp).

Welcome to the new year. See you soon!

Plan for the future you want

Use our interactive projection tools to help you prepare for retirement and other life goals.

Advisory services offered through Wealthcare Advisory Partners LLC dba Integrative Investing. Wealthcare Advisory Partners LLC (“WCAP”) is a registered investment advisor with the U.S Securities and Exchange Commission.