Joltin’ Joe DiMaggio, What Do You Know…How About the Dow Reaching 50,000?

December 23, 2017 | posted in: Blog, Financial Insights | by

Stock Performance from 1926 to Now
Many of you have sat in my conference room and viewed what we in the financial industry call the “Mountain Chart” of market performance.  The chart, courtesy of Morningstar, reveals that since its inception on 12/31/1925, the S&P Composite Index has averaged annual returns of over 10% per year.  I think my Dad, born in 1925, a year before the Mountain Chart begins, would agree with me that 91 years of performance history is a long and significant period for making observations.  Dad still talks about getting ice delivered to his apartment in the Bronx, about accompanying his dad during the Depression as he visited neighbors to collect life insurance policy premiums paid in weekly cash installments, (and getting robbed along the route more than a time or two!) and about how impressed he was watching Joe DiMaggio play center field at Yankee Stadium during his rookie season in 1936. The point is, 91 years is a long time.   Read More  »

How to Remain Financially Empowered During a Hurricane

September 6, 2017 | posted in: Blog, Financial Insights | by

To remain financially empowered following potential hurricane damage, implement these three planning steps: Review and Update | Gather and Organize | Protect

The NBA, The Markets…And Plenty of PB&J!

April 27, 2017 | posted in: Blog, Financial Insights | by

As I began to write this blog post on the outlook for financial markets, I received a fun article from ESPN highlighting a surprising NBA-wide team tradition of featuring a variety of yummy peanut butter and jelly sandwiches for their player pre-game and post-game buffets. Who knew? There is actually a competition between teams regarding the creativity and quality of their PB&J offerings. For example, the world champion Cleveland Cavaliers’ scrumptious pre-tip-off PB&J line-up boasts artisanal breads, homemade grape and raspberry jellies, peanut and almond butter, Nutella and bananas.   Read More  »

Next stop…DOW 36,000?

January 27, 2017 | posted in: Blog, Financial Insights | by

With the Dow conquering 20,000 on Wednesday, there is a bit of euphoria out there on “The Street,” along with a healthy dose of skepticism. I’m now fielding questions such as “Is this the start of a new upward leg of the stock market?” or alternatively, “Should I sell my stocks now because they are so pricey?” And, of course there are the general types of questions along the lines of, “What does Dow 20,000 mean?” or “What effect does Dow 20,000 have on my portfolio?” The answer to these questions requires some perspective and experience, and since I’ve been in the investment world since 1975, I believe I maintain a good inventory of both. Let’s travel back to 1999 together for a moment, and let me set the scene. The Dow has risen by close to 18% per year for the prior 20 years* and optimism reigns supreme. I am at an investment seminar in Boston and the huge concern on the minds of the participants and the speakers is the “Y2K problem,” (remember that?), which addressed how computers would handle the century’s turn. Massive spending increases on the parts of corporate IT departments attempting to ward off the potential Y2K disaster are adding fuel to a seemingly unstoppable tech stock rally. During this seminar, I am presented with a signed copy of a book by Glassman and Hassett called “DOW 36000: The New Strategy for Profiting from the Coming Rise in the Stock Markets.” At the time of the book’s publishing in early 1999, the Dow is trading close to 10,000. Many professionals embrace the book’s thesis that a “new paradigm” for evaluating stocks is taking hold – one not as concerned with underlying fundamentals such as price/earnings ratios…Accordingly, stocks are deemed to be underpriced and ready to soar to unfathomable heights. So goes the thinking. Sadly, the book’s publishing was followed by the worst decade in stock market history, which included a tech crash, and later, a devastating full market collapse. After reaching a high of close to 14,000 in October 2007, the Dow dropped to 6,500 during 2009. Glassman and Hassett, the former Wall Street darlings, were eviscerated by the press and in academic circles. As a reminder of what occurred, I always keep my signed copy of the book close at hand to show to clients and colleagues. It invariably draws out a few laughs and stimulates lively discussion. So what does 20,000 mean? On the surface, it doesn’t mean a whole lot. After all, 20,000 is just a weighted measurement of the prices of 30 stocks which comprise the Dow Jones Industrial Average index. But to me, after I dive beyond the surface and reflect on what has occurred in the markets over my career, it actually has much greater significance.. Dow 20,000 means and affirms to me that stock prices DO rise in the long run, and if one holds on to their quality stocks through bad times and good, they will always make money. The ride may be rough, and at times appear to be bleak and hopeless; look no further than the state of economic affairs in 2008-9, during the mortgage and real estate collapse, when the Dow fell to 6,500. But, do the math: a new $1000 investment in the Dow in 2009 would be worth over $3000 today. Good investing takes patience and a long view. At the same time, 20,000 also indicates that it may be time to proceed with caution. It means we must not forget that when markets are frothy, investors can get too optimistic and not see the danger lurking around the bend. Euphoric investors can drive stock prices to unsustainable levels, resulting in inevitable large market corrections. And, as we experienced in recent years, depending on the magnitude of the correction, it may take years for the market to recover. So, Glassman and Hassett were appropriately discredited, but in fact, in one aspect they were right. I am certain the Dow will, indeed, reach 36,000 one day. But when will it happen? That I can’t tell you, and the Dow may very well fall back to 15,000 again before reaching 36,000. But I do believe 36,000 is inevitable, in the same way that rocky markets and large market corrections are. It is the nature of financial markets. Understanding the bumps and turns, and keeping a lid on the euphoria, will serve you well and ensure that you capture the returns that the markets will inevitably bring you. Do I hear Dow 50,000?   *Dow Jones 12/31/79-12/31/99, via AmericanFunds.com/advisor/tools/planning/hypotheticals/update-review/htm   DISCLOSURES: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. This is a hypothetical example and is not representative of any specific investment. Your results may vary. Stock investing involves risk including loss of principal.

Special Market Commentary: Presidential Election 2016

November 4, 2016 | posted in: Blog, Financial Insights | by

2016 Election Playbook Our clients are a very diverse group of people representing the melting pot of cultures that make life in South Florida so rewarding and enjoyable for me. Yes, that means different religions, colors, sexual orientations and income levels. As one would expect, when I take your phone calls, read your emails and participate in face to face meetings, I hear many differing views regarding the presidential election and who is the appropriate candidate to lead this nation forward. As an example, yesterday, after completing a call with a Trump supporter who was literally yelling on the phone about how America needs to “drain the swamp”, I immediately took another call from a frantic, crying Clinton supporter who just could not understand how the recent polls were showing a narrowing gap between the 2 candidates.   Read More  »

Mother’s Day Rescue at Sea

May 17, 2016 | posted in: Frye Happenings | by

Policemen and Firemen face mortal danger on a regular basis, and Doctors and EMS technicians routinely save lives. Financial Planners on the other hand don’t usually save actual lives. While we may be first responders in times of financial or family crises, risking life and limb is, generally, not part of our job description. No, there is not much of an adrenaline rush in helping Americans save for their futures and in making sure they don’t run out of retirement funds, though we do get involved in our fair share of urgent client issues – many more than you might expect. Clients call me to discuss problems in their marriages. They call me when their high school kid gets kicked out of school for smoking marijuana (OK — I practice law too, but mostly Trusts and Estates). They call when family members are sick or hospitalized. They call when the sale of their business might be about to fall through, and when they find out a long term employee has embezzled from them. They call for my thoughts on how a potential Donald Trump presidency would affect their stock portfolios. They want to know whether they should buy a home or rent a home and whether they should purchase a car or lease their transportation. They call me to find the best doctors and the best restaurants. Take that Mr. 1-800-Vanguard or Fidelity!! Clients call me for just about everything. As an LPL Financial Planner and lawyer, I feel gratified that I can help improve the lives of my clients, in more varied ways than I can list here. But up until yesterday, I could not say, other than metaphorically, that I, in fact, save lives. On Mother’s Day, May 8, 2016, that narrative changed for me, permanently. Late that afternoon, on a spectacular day, I decided to take my wife, Heidi, for a ride on our paddleboards around North Lake in Hollywood, Florida. Heidi was happy to go, but had trepidation about our launch site on the Stranahan Lake off Holland Park. The problem being that in order to get to North Lake we would first have to transverse a short but somewhat turbulent section of the Intercoastal waterway between Holland Park on one side and the bars and restaurants of North Ocean Drive on the other. As we entered the rough waters of the Intercoastal on our boards, I was surprised to spot two swimmers in the middle of the waterway’s boat traffic, attempting to cross the channel. My immediate thoughts as they passed beyond my field of vision was that were probably both very strong swimmers, though severely lacking in judgment. As Heidi and I safely navigated a path close to the shoreline, a fisherman yelled out, “Look at those two idiots trying to swim across the channel!” Seconds later, another person on the shore started screaming for someone to,” Call 911! Those guys are drowning!” And then the swimmers chilling pleas, “Help, help we’re drowning” left no doubt as to the urgency of the situation we were suddenly in the midst of. I immediately performed a 180 turn on my board and headed back a hundred yards to the struggling, desperate swimmers. By the time I reached them they were completely exhausted, fighting the currents to no avail. I first dragged the weakest swimmer on to my board and then the next. Fortunately, for all of us, I had chosen that day to use a racing paddleboard that had a very thick hull and could handle a lot of extra weight. I dropped to my knees and paddled my board like a kayak, struggling to keep from tipping over. We all made it safely to shore and the dazed and relieved swimmers were delivered to terra firma. Things happened so quickly that I never got the swimmers names and they didn’t get mine. They thanked me profusely, as did the swelling crowds along the shoreline. Now I am left with so many questions swirling around in my head. Were the two men drunk and showing off to their friends? Did they learn a lesson? Will these two “20 somethings” lead productive lives? I will never know the answers to these questions. What I do know is that in what seemed like seconds, two lives were saved, and just as quickly, Heidi and I were off paddling the more gentle waters of North Lake. Yes my friends, financial advisors do help improve the lives of their clients, and maybe, once in a lifetime, they actually save a couple of lives!