The Legacy Perspective - October 2020
by Steve Wachs, CFP®
Some of you may recognize this quote. Was it spoken by FDR, Winston Churchill, or Ronald Reagan? Actually, it is spoken by Coach Eric Taylor from the fictional television series, “Friday Night Lights” which follows a high school football team in a rural Texas, football obsessed community. As the son of a college coach in a basketball obsessed town in South Dakota, I related to the series. 2,100 people would pack into Aberdeen Civic Arena for “Saturday Night Lights” as there is not much else to do when there is 3 feet of snow on the ground and the temperature is below zero. Given all that has gone on these past 7 months, it is hard to have clear eyes, a full heart, and it seems, at times, we are losing. Let me offer 7 points of economic and human optimism that might just open your eyes to a positive perspective.
Interest rates are at historically low levels which economically benefits many individuals and companies. Increased consumer demand for big ticket items like autos, homes and electronics that are more affordable due to zero or low interest rate offerings have helped benefit many companies in these sectors. Jefferies global equity strategist Sean Darby recently wrote the following, “What has been the most astonishing is not only that housing activity grew through the COVID-19 recession – the US consumer’s biggest ticket item – but so did the second biggest ticket item – autos.”
The following information is taken directly from the Beige Book which is a report prepared by the Federal Reserve. “The median home sale price rose in all markets, with double-digit increases for single family homes. Changes in closed sales varied by market, largely reflecting available inventory. Contacts said they did not expect the usual fall and winter slowdown this year. Pent-up demand from the delayed spring market as well as the desire to take advantage of historically low interest rates have fueled the current buying frenzy. While there has been some increase in seller activity, it is failing to match demand.” The bottom line is that people are buying homes. As many of you know, home buying has a magnifying effect across many industries ranging from the purchase of lawn mowers to new furniture.
Technology has allowed companies to maintain productivity as employees moved to working at home and benefited families to stay connected, albeit in a remote manner. In our office, Jen Boling seamlessly facilitated the transition that allowed us to serve our clients in an uninterrupted, secure manner. A similar process happened in thousands of business across the country. It has been so successful that many companies are reevaluating their need for office space in the future. Zoom calls and Facetime have allowed us to see our families and friends – we have come a long way from waiting until after 11:00 pm to make a long-distance phone call.
In 2020, despite going through the worst 1st quarter returns in stock market history, client portfolio values are positive. We have shared in the past the benefits of diversification and the importance of reducing downside risk. This translates into generating investment returns that will keep you on track for financial independence.
“Projections about how COVID-19 will play out are speculative, but the end game will most likely involve a mix of everything that checked past pandemics: Continued social-control measures to buy time, new antiviral medications to ease symptoms, and a vaccine. While there is no one historical example to follow, humanity has gone through several large epidemics in the past 100 or so years that eventually stopped ravaging society.” This is from a recent article in Scientific American. From smallpox to polio to SARS, all epidemics in history have ended. This will be the case with COVID-19.
Many Americans rise to the occasion and are generous when needs exist. For North Texas Giving Day, over $58.8 million was raised that benefited over 3,200 non-profits. Due to the nature of this pandemic, it has made it difficult for many who want to volunteer to be able to do so. As demonstrated above, the heart to help others that are in need still exists.
“If you are going through hell, keep going.” That actually is a quote from Winston Churchill. During the past 7 months, it may seem at times we are going through hell. The ability to keep going is the admirable quality of resilience that I have personally witnessed in interactions with clients and friends who have recently lost parents and children. It is a quality that by definition is never easy to attain, but it is a quality that can define who we are.
Some of you may be wondering if we are just putting on our rose-colored glasses and ignoring what is going on. The toll COVID-19 has taken in death and illness is real. We listen to calls daily that outline the political and economic uncertainty that exists. We have been actively planning and preparing. As a side-note, Matt Quinn will be sharing some of his thoughts next month after the election. For this month, let’s wrap up with a quote from Tami Taylor, Coach Taylor’s wife. It is something my Mom might have said, and I believe it particularly apropos now. “Well, you’re gonna win or you’re gonna lose. Either way the sun’s still gonna come up tomorrow morning.”
Disclosures
Legacy Consulting Group is registered as an investment adviser with the SEC and only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.
Information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional advisor before implementing any strategies discussed.
All investments and strategies have the potential for profit or loss. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that an investor’s portfolio will match or exceed any particular benchmark.
Historical performance returns for investment indexes and/or categories, usually do not deduct transaction and/or custodial charges or an advisory fee, which would decrease historical performance results.