Carey Wealth Management

Happy Thanksgiving to our wonderful clients. Have a happy and healthy holiday season.

Depending on which state you live in, various shades of fall are upon us. Historically, fall has not been a great time for the investment markets.

Currently there are a lot of unknowns which create more risk throughout our economy and investment markets. We are starting to see some equity sell-offs however they have been very small so far and a large sell-off would help reset the investment markets.

Economies and investment markets like predictably. Therefore, the more unpredictable factors such as inflation, taxation, regulations and Covid become, the more overall risk to the economy and investment markets.

Understanding and planning for taxation is always an important factor in building wealth. There are a lot of discussions around increasing various taxes, however we still do not know which taxes will change. Income taxes, capital gain taxes and estate taxes are all on the table which could impact individuals.

We will continue to monitor these possible changes.

Hopefully, we will see a more balanced approach with a little less government spending, less manipulation of the interest rates and more predictable tax policies.
Interest rates are still at record lows. The benefit of these ultra-low interest
rates is debt. Meaning if you are refinancing your mortgage or buying something with debt, the ultra-low interest rates are a great opportunity. However, like anything if life, too much of something can be very bad. You can have too much of the ultra-low interest rate debt.

There are many individuals and companies that have way too much of this wonderful debt. We will continue to work hard to keep our client’s properly balanced.

The other side of these ultra-low interest rates is the saving and investing side.

Retirees and pre-retirees are being negatively impacted by the ultra-low interest rates. An example, January 2020, a 1-year CD was paying 1.86%, currently a 1-year CD is paying .15%. Higher inflation and ultra-low rates have the biggest negative impact on retirees and pre-retirees.

The Fed needs to stop buying bonds so we can start to see short term CD and bond opportunities again.

On a positive note, we are seeing more announcements of new manufacturing plants across the USA. If more of our supply chain is produced here verses overseas, that will be a strong positive impact on our economy.

Remember, we plan, we manage, we care about your future®

The Corona virus is causing a large sell off in the equity markets.

Hopefully in the near future the facts about this virus will come out.

The virus might end up being just another Chinese flu which there have been many and some have been very scary over the past 15 years. Until the real facts are known, it’s impossible to know the real impact.

So why is the stock market selling off?
1) It’s scary, if you have ever had an unknown health issue, it’s scary. It makes you overreact to things! It’s scary because the media uses words like “pandemic”.
2) Many investors, including countries, don’t have a long-term investment plan. The stock market is a short-term place for their money. They move in and out trying to make money, they never are focused on long term wealth creation. (Short-term money that is invested in long term investments, that never works, but there is lot of money that flows into stocks like this)
3) Many investors have to sell. They have to sell because they bought the stocks using a loan (margin). Over the last 5 year, more and more stocks have been purchased with margin. When stock prices drop, they have to put in more cash or sell the stock to cover the loan.
We have never used margin and will never use margin for investments. I learned that lesson in 1987. The Dow Jones Industrial Average fell 22.6% in one day. Yes, down 22.6% in one day.
4) Computer (program) trading will sell stocks even when it’s the absolute worst thing to do. We don’t use any automatic program trading.
Remember these two items:
1) This is from our last newsletter, dated February 11, 2020, “I have said this a million times and I will continue to say this, short term is always, always risky in the stock market. Always! Short term from an investment standpoint is 1 to 3 years”
2) We never want to be in a position that we have to sell stocks because someone, somewhere needs to sell. Example, we don’t want to have to sell stocks when China created a new virus that is currently causing a lot of fear. Example, we don’t want to sell stocks when a country might need a lot of cash because their economy is going to need a lot of money to support it because it was built with smoke and mirrors.
We are so proud of our clients. We haven’t received any panic calls.

We are seeing a lot of clients finding cash to invest. Hey, why didn’t you tell us you had the cash!

Remember, we plan, we manage, we care about your future!

We like to share this story again during this time of year.

THE MAYONNAISE JAR AND 2 CUPS OF COFFEE
When things in your life seem almost too much to handle & 24 hours in a day is not enough, remember the mayonnaise jar & 2 cups of coffee.

A professor stood before his philosophy class and had some items in front of him. When the class began, wordlessly, he picked up a very large and empty mayonnaise jar and proceeded to fill it with golf balls. He then asked the students if the jar was full. They agreed that it was. The professor then picked up a box of pebbles and poured them into the jar. He shook the jar lightly. The pebbles rolled into the open areas between the golf balls. He then asked the students again if the jar was full. They agreed it was. The professor next picked up a box of sand and poured it into the jar. Of course, the sand filled up everything else. He asked once more if the jar was full. The students responded with a unanimous "yes." The professor then produced two cups of coffee from under the table and poured the entire contents into the jar, effectively filling the empty space between the sand. The students laughed.

"Now," said the professor, as the laughter subsided, "I want you to
recognize that this jar represents your life. The golf balls are the important things - God, family, children, health, friends, and favorite passions - things that if everything else was lost and only they remained, your life would still be full. The pebbles are the other things that matter like your job, house, and car. The sand is everything else - the small stuff. If you put the sand into the jar first," he continued, "there is no room for the pebbles or the golf balls. The same goes for life. If you spend all your time and energy on the small stuff, you will never have room for the things that are important to you."

So . . . Pay attention to the things that are critical to your happiness.
Play With your children or grandchildren.
Take time to get medical checkups.
Take your partner out to dinner.
Play another 18.
There will always be time to clean the house and fix the disposal.

"Take care of the golf balls first - the things that really matter. Set your priorities. The rest is just sand." One of the students raised her hand and inquired as to what the coffee represented. The professor smiled. "I'm glad you asked. It just goes to show you that no matter how full your life may seem, there's always room for a couple of cups of coffee with a friend."