Wednesday, January 11, 2023

“The stock market is a device to transfer money from the impatient to the patient.” – Warren Buffett

From the Desk of Joe Rollins

I guess it could be said that I really missed the mark on my 2022 stock market prediction. When you looked at all the data and financial activity, it was pretty clear to me and most analysts that the market would be up in 2022. The analysts and I just assumed that we would have normal economic activity in 2022, which would lead to higher prices later. I guess Casey Stengel said it best, “Never make predictions, especially about the future.”

I forecasted the year-end for 2022 at roughly 5,200. The actual ending number was 3839.5. As you can see, there is quite a gap between my prediction and reality. However, many people were on the same wavelength as me. As an example, Merrill Lynch forecasted 4600, Barclays forecasted 4800, Citi Bank forecasted 4900, Credit Suisse forecasted 5200, and Oppenheimer forecasted 5330. I guess we were all taken by surprise by the economy and stock market’s performance.

I have many subjects that I want to talk about in this posting, including things that people probably have not read about or fully understand. However, virtually all of them are positive with respect to the economy. I have interesting thoughts on the disruptive natural gas supply in Europe, oil prices in the United States in the coming years, the revolution in building microchips in America, and why all the so-called layoffs of employees is actually not the bad news the media would like you to think.

Pals Judge Jerry Baxter and Liz Mercure out for a hike in NC
We are in a period of time where good news is bad news, and bad news is good news. I know that the average observer of the stock market does not understand that mentality, but that is where we are today. Any good news whatsoever makes the market go down since that would presume that interest rates would be higher and, therefore, negative for stocks. Only when you have bad news does the market go up. I know it does not seem logical, but that is the mentality on Wall Street today.

Before I get into those terribly interesting topics, I need to report on the absolute bloodbath that was the financial markets in 2022. I was looking at the list of approximately 150 separate mutual funds at Fidelity. Of those 150 funds, less than 10 had positive returns in 2022 and virtually all of those were oil stocks or oil-related securities. Even the more conservative bond funds lost money in 2022 and the so-called famous 60/40 portfolio mix lost 16.1% for the year. That means if you had a portfolio during 2022 that was represented by 60% bonds and 40% stock funds, you would have lost 16% as compared to the S&P which lost 18.1%. There was truly nowhere to hide during 2022.

The Schultz Family
It’s not what’s under the Christmas tree that matters,
it’s who is around it.
The Standard and Poor’s 500 Index was down 18.1% during the year, but the good news is that it was up 7.6% during the final quarter of 2022. The NASDAQ Composite was even worse as it was down 32.5% for the year 2022 and 0.8% for the last quarter of the year. The Dow Jones Industrial Average was down 6.9% for the year 2022 but was up nicely 16% in the final quarter. Just for a basis of comparison, the Bloomberg Barclays Aggregate bond index was down 13% in 2022 and up 1.7% during the final quarter of 2022.

Although the numbers above were truly bad, you have to realize that this was the first significant loss year of the S&P 500 since 2008. We have enjoyed 14 years of excellent growth in the above indexes. Even with these large losses in 2022 the 10-year average on these indexes is still quite excellent. The 10-year average return on the S&P 500 is 12.6%, the NASDAQ Composite is 14.5%, and the Dow Jones Industrial Average is 12.3%. Even with the huge losses in 2022 year, these three indexes have annual gains in the double digits for the last 10 years.

Ava and CiCi taking turns opening presents
There are a great many things that happened in 2022 that were clearly unexpected which affected the market. One of the first things that happened was the Russian invasion of Ukraine which caused the price of oil to go up to roughly $125 a barrel in March. Given that the price of a barrel of oil today is roughly $72, you can see the dramatic change that has occurred in that inflation-rich factor. I guess we can all thank President Putin for that price increase. I had originally thought that the Russian/Ukraine War would be swift to complete but due to the heroic efforts of the Ukrainian military, they have done substantial damage to the Russian army and have provided a favor to all western countries in demilitarizing the Russian army.

After ten months of military conflict, it appears to be a stalemate or maybe Ukraine has somewhat of an advantage. But the longer the war goes on, the clarity is that Russia does not have the military capability to attack a NATO-bordering country. Back when the war broke out in February of 2022, historical forecasters were predicting that Russia would take Ukraine and then attack Poland. As I wrote in these pages, that assertion was ridiculous, given that NATO has roughly ten times the number of soldiers that Russia maintains.

Cameron visiting a newcomer in isolation at the
Tacugama Chimpanzee Sanctuary in Sierra Leone
We were also surprised by China’s heavy-handed Covid-19 crackdown. For much of the year 2022, China was going around shutting down factories and cities over even minute Covid-19 cases. By the end of the year they had abandoned that, but the result is that China is roughly two years behind the United States in spreading group immunity. During the year 2022, these massive crackdowns led to supply chain issues which slowed down the economy in the United States and certainly hurt shipments coming out of Asia. However, as we sit here today, the supply chain has caught up and now you are seeing not only reasonable prices but reasonable delivery dates on products coming out of China to the U.S.

However, the most disruptive news during 2022 was that the Federal Reserve hiked interest rates by 4.25% in just nine months. It has been rare in American finance history that interest rates have been driven up by the Federal Reserve so quickly over such a short period of time. The enormous volatility in the financial markets was a result of these huge increases. Of course, the real reason for these increases was to slow down the economy and create a period of time where inflation could actually catch up to the Federal Reserve’s goal of 2% annually.

The year 2022 will also be looked at under the spectrum of the Federal Reserve trying to slow the economy while the Federal Government was flooding the economy with money. We had the unusual situation where the U.S. Government continued to provide funding for numerous programs, thus funding the U.S. economy and inflation as the Federal Reserve was attempting to slow down the economy and inflation. You would think they would have at least attempted to work together to slow it down in concert.

Bundle of Joy
Client Mike Battle bonding with his first grandchild
Did you realize that during the year 2022, there was an increase in employment every single month in the U.S. economy? The U.S. economy added 4.5 million jobs and there was not a single month that there was a decrease in jobs. The year 2022 was the second-best year for job creation since 1940. If you recall, 1940 was the year preceding the ramp-up of the U.S. economy for WWII. The first was in the Covid-19 year of 2020.

So, was the Federal Reserve successful in slowing the economy during 2022? At the beginning of the year, the unemployment rate was 3.9% and at the end of 2022, the unemployment rate was 3.5%. As you can see, contrary to the desire of the Federal Reserve, as the year progressed, the economy actually got better. You may recall that there was much handwringing in the first two quarters of 2022 by the so-called experts that we would clearly have recession in 2022. What was interesting is that the GDP in the United States actually rose higher as the year went along. In the first quarter GDP was -1.6% and in the second quarter of 2022, GDP was -0.6%. Virtually to everyone’s surprise during the third quarter of 2022, the GDP bounced higher to 3.2%. The Atlanta Federal Reserve is forecasting that the GDP for the fourth quarter of 2022 will be an outstanding 3.8%. In fact, if the forecasters are correct in that assumption, rather than the U.S. economy falling into recession, it will have actually increased in GDP as the year went along.

Caroline + Reid
“May you never be too grown up to search the skies on Christmas Eve.”
While certainly, it is not easy to forecast 2023, it is satisfying that the Federal Reserve itself is not forecasting recession. While clearly there may be a slowdown, I too do not believe that we will fall into recession in 2023 since there are just too many positive economic events going on for that recession to come true. Just for the record and for those that ask me often about job openings, as of late November, there are 10,458,000 job openings and only 5,722,000 unemployed Americans.

One of the great mysteries that we will look back on in 2022, is why on earth do we have twice as many job openings as we have unemployed people. The unemployment rate today at 3.5% is one of the lowest unemployed percentages ever in the history of American finance. To this very day, employers are struggling to hire any employees whatsoever. It is just hard to conceive that recession could be coming in the near future given the absolute strength of employment in the United States.

We heard so many projections in 2022 that have failed to be realized. One of the projections was that due to Russia turning off the oil and gas supplies to Europe, the entire continent would suffer frigid winter months. Here we are halfway through winter already, and Europe has announced that they have solved their natural gas issue and have adequate natural gas to heat Europe through the winter. All that was required was for the U.S. and other countries to provide Europe with liquified natural gas which they could store in the summertime and have available for winter. It was announced over the weekend that Germany’s natural gas storage is above a 90% level. So much for the dire predictions that Germany would freeze during the winter months.

Catch anything?
Ziming Yu and a friend checking out the
Georgia Aquarium over the holidays
One of the main reasons why the economy has been so strong during 2022 is the generous funding of numerous plans by the federal government despite no tax revenue to cover those expenditures. In fact, the government wanted to spend a whole lot more money, but due to the split in congress they were not able to fund the various welfare plans that they had hoped to. Unfortunately, while it is not a problem today, it will be a problem in the future due to the deficits in the economy exploding during 2022.

Virtually all the money spent for these favored programs was deficit money with no specific revenues to cover them. Due to the stock market doing so poor in 2022, there will not be any capital gains revenue to offset these deficits. In 2021, the treasury generated almost a trillion dollars in capital gains taxes. In 2022, it is highly likely that it will generate none.

"Grandchildren are the dots that connect the lines
from generation to generation." — Lois Wyse
Harper and Lucy got to spend time with
both grandmothers over Christmas
I could write a whole posting on deficit spending and how it helps the economy and whether there really is a problem creating deficits. At the end of the day, deficits are not a real problem. Any time you have the ability to print your own money and the money is not guaranteed by any asset, and as long as there is a willing partner who will accept that printed money, deficits are not an issue. However, in recent years the federal government has gone crazy and has run up our national debt close to $30 trillion. The interest on that debt alone will become more challenging as we go forward. Once again not a problem for today, but certainly a problem for the future.

It is very interesting that in 2022 the automobile industry in particular was held back by the fact that they could not get microchips for their cars. What was so confusing to many investors is that every chip manufacturer was sold out and could produce no more chips for the next year yet their stocks were all down 50%. Much of the automobile manufacturing in the United States was held up for lack of these chips. Only recently have chip deliveries started to catch up for the auto industry.

However, there is really good news on this subject. Due to the money given to chip manufacturers by the U.S., they are building huge manufacturing plants in the United States. Intel Corp. is building a huge facility in Ohio and Taiwan Semiconductors Manufacturing Co. Ltd. is building a comparable plant in Arizona. If ever we had a national defense problem, it would be in chip manufacturing. If in a time of war we were cut off from chip manufacturers in Asia, we would be virtually handcuffed from building military armaments. The fact that we are building these plants in the United States at the current time is extraordinarily bullish for the future of America.

Ava and Joe watching the game. I wonder who Ava was cheering for?
Almost everyday you read some article in the financial press about big tech companies laying off employees. When Amazon announced that they were laying off 18,000 employees, it was the leading headline all day long. They rolled out a number of so-called “experts” to explain how serious the financial situation was with Amazon in that they had to layoff 18,000 office workers.

Obviously, people who get hysterical regarding that information do not bother to look at the facts. Yes, there are layoffs occurring in beg tech at the current time, but there needs to be. Just to give you an example of the growth in that sector, look at the actual number of employees, both pre-Covid and post. In 2019 Amazon had 798,000 employees, in the third quarter of 2022 they had 1,544,000 employees. Therefore, when they announced that they were laying off 18,000 employees, it was just a little over 1% of their employee base.

The same can be said for virtually all of tech. Alphabet Inc. had 118,899 employees in 2019 and 186,779 employees in 2022. Meta Platforms which is the old Facebook had 44,942 employees in 2019 and in the third quarter of 2022 they had 87,314 employees. As you can see, virtually all of these have grown their employee base over the last couple of years by 100%. It would be irresponsible for them not to consider layoffs at the current time given their bloated employee situation at work.

Happy Pawlidays from CiCi
Another thing that has come up lately is that the productivity of workers has fallen in the United States. This is the first year in many where productivity has actually inched down. Many experts believe that is due to the work-from-home concept, but I think it has more to do with the fact that we have too many employees trying to do the job. Down through time we have found that if an employee is not pushed to produce, productivity fades away. I rather suspect that is the real reason in the fall of productivity, rather than the work-from-home concept.

A few people realize the effect of currencies in corporate earnings. When the United States started increasing interest rates in March of 2022, that made the U.S. more attractive to foreign currencies. As people rushed to move money to the United States, it forced the value of the dollar up. A higher dollar is actually a negative for corporate earnings. That makes U.S. based products more expensive internationally and makes international products less expensive here in the United States. During the second and third quarters of 2022, this huge increase in the dollar dramatically reduced earnings of U.S. corporations.

During the fourth quarter of 2022, foreign central banks caught up with the trend and started to increase their interest rates which forced the value of the dollar down. The dollar has fallen dramaticlly over the last several weeks and months and now should be a net positive for corporate America. This fact alone should increase earning in 2023 as a net positive as compared to the net negative that it was in 2022. I know these points are technical in nature, but they are very meaningful to understanding corporate profits in international commerce.

Cecilia Cmeyla and her Aunt Brisa over the holidays,
leaving no doubt that they’re related
So, I would like to give you some predictions you can hold me accountable to this time next year. It is interesting what is going on in the oil industry. As I mentioned above, the price of oil has gone from $125 a barrel down to roughly $72 a barrel at the current time. What you do not realize is that rotary drilling operating in the United States is up almost 32% over the last year. This time last year, there were 727 rigs working and now there are 961. It seems that the oil industry has caught on to the higher prices and is beginning to produce at a higher level. I think what will happen is what has happened so often in the past. Due to a shortage of oil in the United States, we are working our way back to a glut of oil here at home. This is a very good thing.

It has taken roughly two years to overcome the restrictions on drilling oil that the new President installed. I personally believe it was his clear desire to get the oil prices up, and by restricting their permitting he was able to accomplish that. A great deal of that help can be attributed to Putin beginning a war that nobody wanted in Ukraine. But all of a sudden American oil is gearing up for higher production.

It is my projection that before the next President is installed in office, the U.S. will once again be energy independent. We reached energy independence during the Trump Administration but due to the restrictions on new drilling, we lost that advantage several years later. If oil production in the U.S. continues at the current level, we will not care about the price of oil produced in the Middle East or Russia.

The economic effects of the war in Ukraine and the sanctions on Russia are crushing the Russian economy. I would hate to think of the pressure that the Russian government is undergoing now due to the bad news coming out of Ukraine. The one aspect of any war that affects people’s feelings is the reality that sets in when they send back deceased soldiers to their families. When you have a death of a son or daughter, a brother or sister, or a father or mother, it has a huge emotional impact on a country.

Evan Bentley and Alexis Chambers under the lights
at Truist Park for Evan’s company party
Even though they are not allowed to express their outrage in Russia, it is clear that the population is beginning to suffer due to this war that no one wants or really needs. The Ukrainians have done the U.S. a great favor in demilitarizing the Russian government and therefore will reduce the cost of building military armaments for decades to come. It is also clear that a winding down of the Ukrainian war will have to occur due to depleted military supplies by both sides.

From an economic standpoint, inflation is starting to fall and the November numbers were very encouraging. November was the fifth consecutive month of declines suggesting that inflation has clearly peaked. The next big number that all of us we will have to watch out for is what corporate earnings are going to do with the upcoming projected recession. During the fourth quarter of 2022, it was thought that corporate earnings would be up 5.1%. So if corporate profits are higher in the fourth quarter 2022, what will they project in 2023 based upon the so-called upcoming recession?

This gets us into the meat of the question as to what we expect in 2023. Based on my reading of the economic tea leaves, I do not think we will have recession in 2023. We might have a slowdown, but definitely not recession. One of the beauties of investing is that the stock market projects far before the economy bottoms. Most people believe that the stock market will rally six to eight months prior to the economy bottoming out. Based on this information it would seem that the first half of 2023 should be rocky and volatility will continue to capture the market. It looks to me like the second half of 2023 should be excellent in almost every respect.

Finally, now stock prices are at a level that seems to be more than reasonable. At the current time, the S&P P/E ratio of 19.1 is well in line with the long-term averages. Over time this index has averaged a P/E ratio of 19.8. In late 2020 that same ratio was 30 times earnings. So, the correction in 2022 dramatically reduced the fair value of the stock market.

Fake it till you make it!
Elizabeth Flores’ dog, Rico, convincing Santa to add him to the “Nice List”
We are seeing inflation fall fairly dramatically and even by the Federal Reserve’s projection, inflation at the end of 2023 should be at 3.5%. All the economic forecasters that I review indicate that we are very close to a bottom and the fact that the fourth quarter of 2022 yielded positive financial results should indicate that 2023 should be quite satisfactory.

Based on that information, I forecast that we should see gains in the financial markets in 2023 of roughly 20%. While that amount will not completely recover the losses of 2022, it will build a strong foundation for many profits in the future.

If you have an interest in coming down to visit with us, we look forward to seeing you. We are moving into tax season for our Firm and will have the time to sit down and review your portfolio, taxes, or anything else you might be interested in.

As always, the foregoing includes my opinions, assumptions, and forecasts. It is perfectly possible that I am wrong.

Best Regards,
Joe Rollins

All investments carry a risk of loss, including the possible loss of principal.  There is no assurance that any investment will be profitable.

This commentary contains forward-looking statements, which are provided to allow clients and potential clients the opportunity to understand our beliefs and opinions in respect of the future.  These statements are not guarantees, and undue reliance should not be placed on them.  Forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from our expectations.  There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

Wednesday, December 21, 2022

Happy Holidays!

In celebration of the Christmas holiday, Rollins Financial Advisors, LLC will be closed from Thursday, December 22nd to Monday, December 26th. Our regular office hours will resume on Tuesday, December 27th.

AND, in celebration of the New Year holiday, our offices will be closed on Monday, January 2nd. We will resume normal office hours on Tuesday, January 3rd.


If you have any pressing matters that require immediate attention on any day that we are closed, please do not hesitate to contact any of our staff.

All of the Partners and Team Members wish you Happy Holidays and a Healthy and Happy New Year!

Thursday, December 8, 2022

Stock Market Rally – A Conundrum Between What You Hear From the Media and What You See in Real Life

From the Desk of Joe Rollins

For the last two months, the Standard and Poor’s 500 Stock Index was up 14.1% yet you do not read much about that rally in the financial press. At the end of September 2022, the S&P 500 was down 23.9%, clearly in bear market territory. At the end of November 2022, that same index was down 13.1%, increasing nicely over the past two months. Yet, as you and I watch the financial news daily, all we hear is negative financial information based on this so-called upcoming recession that everyone seems to be predicting.

I want to cover some of those facts for you in this posting and some other subjects I find of interest. The U.S. posted another strong employment report on Friday, but the big question is, where have all the workers gone? Particularly, the younger male employees seem to be nowhere in sight in the employment report. I also want to focus on why consumers are accumulating so much cash but are spending their savings to either stay out of work or reduce their working hours. I also want to try to explain the absolute absurdity of the financial press and its emphasis on layoffs; the numbers are meaningless in the grand scheme of things. Also, I want to focus on the increase in GDP that has occurred this year, contrary to any reports you might hear of the economy slowing. Lastly, I must once again take a shot at the traders who are confusing investors with irrelevant information. I want our clients to focus on investing and ignore the hype the traders are publishing in the local press.

Lucy and Harper Wilcox up to a little hocus-pocus
in Salem, Massachusetts
Before I report on all that interesting information, I need to report on the month of November 2022. For the month of November 2022, the S&P 500 Stock Index was up a very healthy 5.6% yet is down 13.1% for the year 2022. Just as a comparison, the 10-year average, including this down year, is 13.3% annually. The NASDAQ Composite Stock Index was up 4.5% for the month of November 2022 and is down 26.2% for the year 2022. The 10-year average on this index is up 15.6% annually. You would expect an index that is more volatile than the others to be down more in a down market and up more over time. As you can see, it has had the highest double-digit increases over the last ten years.

The Dow Jones Industrials Average Stock Index was up 6% for the month of November 2022 and is only down 2.9% for the year 2022. Its 10-year average is 12.9%. In comparison, the Bloomberg Barclays Aggregate Bond Index was up 3.8% for the month of November 2022 but still down 12.5% for the year 2022. Its 10-year average is a measly 1.1% over the last ten years. It pays to note that the bond index is down almost as much as the S&P 500 Stock Index, at 12.5% to 13.1%. It is highly unusual that both stocks and bonds are down in the same year. In fact, this has not happened since 1969.

We had a very strong unemployment report last Friday, with the United States adding 263,000 new jobs. It was surprising to the traders that the unemployment report remained at 3.7%. Going into this quarter there was an assumption by the financial press that due to the higher interest rates, the Federal Reserve has been applying to the economy. Unemployment should be going up. At some point, it will affect jobs causing the unemployment report to go higher. However, during 2022, even though the higher rates of interest has been moving higher, the number of people unemployed has either fallen or stayed stable throughout 2022.

Snowbirds - The Rollins Family headed south for Thanksgiving
Some of you may not remember, but in 2019 we thought that we had a super strong economy, and that it could do no wrong given its overall strength. However, the job growth in 2019 had a monthly average of 164,000 jobs per month. Compare that with the job growth now over the last three months, and it has grown to over 272,000 jobs per month. As you can see the job growth in 2022 is actually faster than in 2019.

One of the issues the Federal Reserve continues to cite is that if employment is strong, they will have to continue to increase interest rates to slow the economy. However, there is tons of information that will illustrate that employment is not out of control. Today, in the United States, there are 158 million workers currently employed out of a civilian workforce of 164 million. Obviously, the two indicate that there are roughly six million Americans unemployed, which is down from the 6.8 million 2021 average. Basically, the number of unemployed over the last year has been reduced by roughly 800,000 Americans.

Danielle Van Lear and Robby Schultz
May your days be merry + bright!
What continues to be the conundrum of employment is there are currently 10 million job openings and only six million unemployed people. As you can see, there are almost two job openings per every unemployed American. It is clear that if you are unemployed and want a job, there are plenty of jobs available.

When interest rates started going up in the spring of 2022, the so-called experts projected that the U.S. would fall into recession in 2022 and the GDP would fall off the chart. As a matter of fact, in September, many of the largest brokerage houses forecasted that there would be another drop off in stocks of 25% before the end of the year. As mentioned above, the S&P rallied 14.1% in October and November 2022, which I guess made their projections somewhat moot.

“Chur!” Martha and Lee Nemeth on a speed boat adventure
near Queensland, New Zealand
The one fact that continues to astound me is the call on the Gross Domestic Product of the United States. You would expect, with all the negative news, that the GDP would be crashing and burning during this particular time. In the first two quarters of the year 2022, the GDP was down 1.6% and 0.6%, forecasting a potential recession with two negative GDP quarters in a row. However, those two quarters came following the very strong 2021 GDP of 5.7%, which bled over to the year 2022.

Astoundingly, the GDP for the third quarter was recently revised upward to 2.9% by the Commerce Department. This GDP surprised most all viewers of the economy since they were expecting negative not positive numbers. Currently, the Federal Reserve of Atlanta is forecasting GDP growth in the fourth quarter of 2022 to be 2.8%. If we in fact hit that percentage for the year 2022, the entire year will be a positive GDP growth, making the economic picture even more confusing to those looking at it from the outside. When does the recession start, surely not in 2022?

Of course, the financial press says that they were not wrong about GDP growth, it is just delayed until 2023. In fact, due to the strong GDP growth, this would push the Federal Reserve to increase interest rates even higher and longer. However, the evidence would indicate something different as I will illustrate later.

Ken & Una Dooley’s grandkids -
“The best gift is the presence of family wrapped in love!”
One of the things that continues to baffle me is why the stock market reacts to an announcement that a company is going to lay off workers. The company Amazon recently announced that they were going to lay off 10,000 workers and the market drove the stock down 4% based on the news. However, obviously, the people that traded on that news do not understand the employment history of Amazon.

In 2019, Amazon had 1.3 million workers. From 2018 to 2019, they increased their workforce by 62%. In 2020, Amazon had 1.6 million workers, which was an increase of 23% year over year. As you can tell, 10,000 workers being laid off is a small percentage of their total workforce and is certainly meaningless. I would bet on a day-to-day basis, based on 1.6 million workers, they probably hire and fire more than 10,000 employees each and every workday.

Eddie and Lucy Wilcox at Harvard - getting an early start on college visits
With the economic news it only makes sense that they would pare back some of the employment that they have accelerated throughout the years. Likewise, you are reading about layoffs of workers in the tech sector. Once again, the tech sector has been aggressively hiring employees for the last four to five years due to the pandemic. A reduction in hiring or laying off excess employees only makes good business sense and when they make those announcements, the stocks should go up rather than down.

I want to remind you that with all this so-called negative news related to employment, there are still 10 million job openings for people to take a job. It has recently been announced that the people laid off, particularly in the retail sectors, had quickly found jobs in other industries that are short employees.

In the most recent unemployment report, something shocking is appearing. Not only are the number of workers in the United States declining due to retirement and other reasons, but the participation by the most productive group in the employment pool, males ages 25 to 54, has dropped from 89.3% to 88.4%, which is a significant number in any one age group. Since this age group is the most qualified in most segments of the economy, it is hard to understand why this group is dropping out of the workforce altogether.

Josh and Ava – Sensei and Grasshopper or Grasshopper and Sensei?
In males aged 20 to 24, participation has dropped 1.7% from January 2020 versus 0.5% for those aged 45 to 54. As you can see the number of workers in the United States is falling in virtually every category of young males. No one can seem to explain why these jobs are no longer filled by them. It may just be that these employees have accumulated too much money during the pandemic and just do not desire to go back to work. Once again, this very strange conundrum of the amount of money Americans hold as compared to the amount of young males working raises additional questions about whether these employees will return anytime soon to the workforce.

Take as an example; a recent Federal Reserve report estimated that U.S. households, as of mid-2022, were sitting on $1.7 trillion in excess savings. Make sure you understand that I am not talking about millions, I am talking about trillions of dollars. It is further interesting that during the most recent year, the personal savings rate for Americans had dropped from a high last year during this month at 7.3% to an October low of this year of 2.3%. I think it is pretty clear what you are seeing. So many workers that were in the workforce are now electing to spend their savings rather than go back to work. With the significant reduction in the savings rate, it should be fairly obvious to everyone that these workers no longer need a job because they are spending their savings earned during the pandemic.

Murray and Susan Van Lear rockin’ around the Christmas tree
One of the questions always addressed to me is, how did Americans accumulate $1.7 trillion in excess savings? Much of it can be directly linked to the government subsidy during the pandemic. As you recall, unemployment payments during that time were greatly expanded in order to cover the people currently out of work. But there have been numerous other government handouts that have increased the amount of cash held by Americans. As you recall, even though the President proclaimed that the pandemic was over, there was a major increase in food stamp payments implemented during the pandemic as a humanitarian help for people out of work. However, those food stamp beneficiary payments have not stopped. Currently, the average food stamp monthly benefit is $227 per month, which is nearly twice as much as before the pandemic.

If you look at the political football, which is student loan payments, you will note, once again, even though the pandemic is proclaimed over, the payment holiday on those payments has been extended to June 2023. It is assumed by the Federal Reserve that the average savings due to these loan payments being postponed saves an average debtor of roughly $12,800 a year.

“Small cheer and great welcome make a merry feast.”
- William Shakespeare (not pictured)
As you can see, there are many monthly subsidies that are going into the hands of workers that are no longer willing to work and be employed. As long as the government continues to subsidize these workers, they are comfortable spending their savings in order to maintain a lifestyle that does not require them to work on a daily basis. Also, with the higher interest rates passed to the public by the Federal Reserve, now the savings of these workers is earning more. Last year at this time interest rates on money market accounts were paying virtually a zero-interest rate for the year. Today, those same accounts are earning for savers roughly 3.5% per year. This substantial increase in earnings on these savings accounts further insulates workers from having to go back to work anytime soon.

You probably didn’t notice since most people do not actually look at interest rates daily, but long-term interest rates have fallen dramatically for the last several months. Not only has the stock market rallied, but so have the interest rates. Most recently the 10-year treasury was quoted at 4.25% annually, but today that rate has dropped to 3.5% as of this week. That is a huge drop in only a few weeks. What is very interesting about this drop is that clearly interest rates affect long-term mortgages. With this dramatic drop in 10-year treasuries, it is very likely that mortgage rates will fall from 6% to in the 5% area.

Psst, over here! Elon Musk as guest speaker at the Baron Conference
Once again, this is very bullish for home purchasing and lower mortgage rates. One of the items that I am often confronted with is a young couple indicating that they would postpone purchasing a new home for another year because of the increase in interest rates. I find that philosophy to be flawed. If you think about it for a second, if you have to pay 3% higher on your mortgage than you would have six months ago, while uncomfortable, it may be what you need to do to get the house. It is very likely that home values will continue to increase by at least the inflation rate of 2% to 3% per year. If you wait a year and you lose 2% appreciation on the value of the house but pay a 3% higher rate, you have lost 1% of the value of the house. However, the alternative is if you rent for one more year, and you are paying $2,000 a month for rent, you have completely lost $24,000. Homeownership continues to be much more desirable for young couples than renting.

The decrease in long-term interest rates is important for another reason. The Federal Reserve has pretty good control over short-term rates. They can move rates higher very quickly, which affects short-term interest rates such as the 1, 2 or 3-year treasury bonds. However, they have virtually no control over the long-term rates. So, what you are seeing in the actual world is that while the Federal Reserve continues to push up short-term rates the long-term rates that are affected by the investors are falling.

Caroline Schultz – 8th year in a row on Santa’s nice list!
I think it is fairly clear from the movement in the interest rate that the markets are betting that shortly after the Federal Reserve increases rates again, they will begin cutting them after the first of the year. Also, the reduction in the long-term rates tells you that there is a pronounced decline in inflation, or these rates would not be falling. We see the price of lumber going down dramatically due to lower home starts and we see the price of gasoline falling dramatically due to the perceived state of the economy. I think as the Federal Reserve contemplates increasing interest rates now, they will have to consider the reduction in inflation.

The Chairman of the Federal Reserve, Jerome Powell, has already announced that during the December Federal Reserve meeting, the interest rate increase will be 0.5% rather than his customary 0.75%. I think the Federal Reserve is finally seeing, and maybe it is from the pressure of the public, that taking the country into recession would be a mistake for both the Federal Reserve and the country as a whole. I do not believe for a second Federal Chairman Jerome Powell wants to put the country into severe recession. Given the falling interest rates and the clear movement in reduced inflation, it does not look to me that he will be required to do so.

Cecilia Cmeyla and Anam Syed striking a pose at the Omni Hotel
As you would expect the financial specialists do not agree. A Bloomberg survey of economists released last week found that three-quarters believe that the Fed will act too aggressively, eventually triggering a global recession. I cannot explain why this group would be so negative on the ability of the Federal Reserve given their public pronouncements that no one has the desire to put the country into recession.

I guess it has to do with the cycle that we went through in the late 1970s with Federal Chairman Paul Volcker. At the time when Chairman Volcker took over the Federal Reserve inflation rate was 12%, mainly due to the Arab oil embargo against the United States. To bring down inflation, Chairman Volcker immediately forced the country into recession by driving up interest rates to more than 22% and mortgage rates to nearly 17% in the process. Not only did he increase interest rates, but he also restricted the money supply forcing a severe recession in the economy. Unemployment during that time stood at 10% and peaked at 10.8% in 1982.

Reid Schultz showing that he’s strong enough
to batten down the hatches!
Recall that the unemployment report today is 3.7% in the United States. There is no question that the Chairman of the Federal Reserve has the capacity and ability to put the country into recession. The question is why they would want to do so given the already declining inflation picture. As I mentioned in the last posting, I do not believe that this Chairman has the desire to put 10 million Americans out of work today. Remember that Chairman Powell is not a trained economist. In fact, he is an attorney by trade, and I think he is very cognizant of the public pressure to not overshoot this very important interest rate cycle.

My only hope for my clients is that they do not watch too much television related to the financial markets and they do not overreact to things they see on TV. I want to give you an example of how the data is so misinterpreted. Last week all the financial press could talk about was the fact that the Covid-19 shutdown in China was restricting the production of iPhones for Apple products. China is taking a very aggressive approach on Covid-19 protection and has basically shut down many cities for only a few cases. However, one of the major manufacturers of iPhones is in that shutdown area and has had to reduce their working hours because of the Covid-19 restrictions.

Elizabeth Flores and Jose Reyes Ventura.
Dream big, shine more, and sparkle bright!
The financial media went crazy last week discussing the issue that Apple would not be able to produce the number of iPhones they had predicted during the current quarter. Due to production delays, it would be impossible to meet their production projections going into Christmas. As a result of the comments, Apple stock fell roughly 5% during the time in which this discussion was ongoing. Understanding that these are traders making these types of trades and not investors, I hope you see through the controversy.

Yes, it is true that Apple may not be able to meet their production quotas due to their Covid-19 restrictions, but basically so what? They will meet those quotas in the coming weeks and months even though it may not be before Christmas. This event, while it influences the short period of time between now and Christmas, should never have any negative effects on the strength of Apple. Therefore, let the traders sell for the two weeks and buy back, and long-term investors should sit tight.

Once again it brings me to a conundrum that I cannot fully explain. The S&P 500 Index is up 14.1% for the months of October and November 2022 which is good news for long-term investors. It is also fairly clear that the U.S. economy’s GDP has moved higher after being negative for the first two quarters of 2022 and is looking to be positive for the last two quarters of 2022. Also, we know now that the supply constraints are virtually eliminated, and I was recently told that freight rates out of China, which were $53,000 earlier this spring, have now dropped to $1,200 per container. When you see that type of change in the marketplace, you know that whatever constraints there were now have been basically resolved.

It’s a boy!!!
Congratulations to Drew and Nicholle Malone!
We also know that employment is extraordinarily strong with an almost all-time low unemployment record in America. The more people that are working, the more people are spending money and the more people that are building the economy. In a recent trip to Florida, you could not get reservations at any restaurants and traffic from Atlanta to Tampa was bumper-to-bumper the entire way. If you go out to a mall during this time, you will note that they are almost at capacity levels. It was recently announced that over Black Friday, cyber retail sales were up 9.4%, which was a record. Normal brick-and-mortar retailers reported an increase in sales of 2.7%. You are just not seeing any level of softness in the current economy. If we had these economic numbers in 2019, we would have believed that we were in a record-strong economy. We had those numbers in 2022 but the perception is exactly the opposite.

While it has been an extraordinarily disappointing year financially, I have great hopes for the future. I think the ridiculous selloff of big tech is going to end soon and you are going to see a massive rally in those stocks that are down 20% to 30% this year. They are the most important companies in America and certainly, nothing that we have seen so far should limit their growth. Therefore, I see this as a major buying opportunity for young people and people that are willing to wait for the stock market to turn back up.

As we go into 2023, I believe we are going to see smaller interest rate increases by the Federal Reserve and if the economy continues as strong as it is today, earnings by major corporations will be higher in 2023 than they were in 2019, further pushing the stock market higher. I know it is frustrating to sit here and watch the stock market go down. But when you have a performance where in the last 20 years, the market has been up 16 times, you have to expect one year to be a negative return. If you have 16 up years and four down years, that is a win rate of 80%.

CiCi sends you holiday joy from the beach in Florida!
I expect 2023 to be better, and if you have excess cash you should invest today or at least do your IRAs early in the year so you get the benefit of the reduced value of stocks that currently exist. Since it is not likely you are going to have major capital gains this year from the mutual funds, it might be an opportune time to make a conversion. If this is something you are considering, reach out to us as soon as possible and we can do a quick calculation and tell you the tax consequences of converting.

If you have an interest in coming down to visit with us, we look forward to seeing you. We are moving into a slower period for our Firm and will have the time to sit down and review your portfolio, taxes, or anything else you might be interested in.

As always, the foregoing includes my opinions, assumptions, and forecasts. It is perfectly possible that I am wrong.

Best Regards,
Joe Rollins

All investments carry a risk of loss, including the possible loss of principal.  There is no assurance that any investment will be profitable.

This commentary contains forward-looking statements, which are provided to allow clients and potential clients the opportunity to understand our beliefs and opinions in respect of the future.  These statements are not guarantees, and undue reliance should not be placed on them.  Forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from our expectations.  There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

Wednesday, November 16, 2022

Do you believe Powell will eliminate 10 million American jobs? I don’t!

From the Desk of Joe Rollins

I have been overwhelmed with questions regarding the economy and what has been going on with the stock market over the last month and I am beginning to believe that the public is being overwhelmed with fake news. I read an article the other day that said the vast majority of Americans believe we are already in recession; they fear for their jobs and the ability to support their families. However, the evidence is so far removed from those statements that it must be bewildering to someone who actually reads the facts.

I hope I can give you some information in this posting regarding the excellent month of October we enjoyed, but more importantly, explain to you why the economy is not in recession. If you believe the lines they give you on TV, you need to do your own homework. I also want to explain employment which seems to have gotten confused with the economy since people do not understand that layoffs do not necessarily create a recession. Lastly, I want to go through my reflections on meeting with Elon Musk in New York and hearing his coherent statements regarding virtually anything as compared to politicians. Of course, I will touch on the elections and the reasons why they were important for further stock market increases.

Ava Rollins and her friends having a roaring good time on Halloween

If anybody tells you they can forecast a bottom to the stock market, they are just born liars. No one has ever been able to do so, and if anyone could do so, they would certainly keep it to themselves. What we do know, historically speaking, every sizable stock market decline has represented a sure-fire buying opportunity for long-term investors. I know it is hard, you just have to hold your nose and buy on the dips. Did you realize that over the last 70 years the stock market has declined by over 10% on 39 separate occasions? You probably did not realize that market corrections were as common as those facts tell you. Yet, in every one of those 39 declines of 10% or more (except for the current one) a bull market rally eventually recoups all that was lost. Given that it is a 100% recuperation of all losses indicates this too at some point will pass. A really good time to invest.

Before I cover all those interesting topics, I need to report on the very excellent month we had in October. The Standard and Poor's Index of 500 Stocks was up 8.1% for the month of October, but yet is still down 17.7% for the year 2022. Once again, I point out the 10-year returns on this index, even with this very down year, average 12.8%. The Dow Jones Industrial Average was up 14.1% for the month of October yet is still down -8.4% for the year 2022. The 10-year average on this index is 12.2%. The NASDAQ Composite was up 4% for the month of October but is still down significantly at 29.3% for the year 2022. The 10-year average on this index, due to its more volatile nature, is also the highest at 15.2%.

Ava out for a graceful spin around Central Park

For the month of October, the Bloomberg Barclays Aggregate Bond Index was down 1.4%. For the year, bonds are down 15.6% and for the 10-year they average at 0.7%. This is the first time on record that bonds have taken such a large decline and the combination of both stocks and bonds being down is almost unheard of in American finance. Maybe this leads to some of the conspiracy theories I will discuss later in this posting.

As mentioned in the prologue, I find it incredible that most Americans believe that we are already in recession. If you recall back in January and February all these so-called experts were beating the table and explaining that recession was unavoidable in 2022, and that in 2023 we would likely see bread lines, foreclosures, and huge bad debts by the banks. I am not sure exactly where those Pundits get their information from, but it is certainly not supported by the facts. You must wonder whether there is a broad conspiracy going around that is convincing the public of something very negative, when in fact, we are in just a normal slowdown in the economy.

Shelley Fietsam’s son, Cameron, dressed to impress for HOCO 2022

I guess the Pundits were shocked when the government reported that the GDP for the third quarter was at 2.6%. While it is true that during the first and second quarters of 2022, the GDP was marginally negative. So, the increase of 2.6% for the third quarter must have been a sure shock to those Pundits that were beating the table and explaining how recession was just around the corner. However, if you want really shocking news, check out the website for the Atlanta Federal Reserve. As I have pointed out on numerous postings before, these preliminary calls on GDP by the Atlanta Federal Reserve have been closer than any other projections. If we were going to have a recession in 2022, the fourth quarter would have to be a large negative number to wipe out the 2.6% earned in the third quarter. However, as strange as it may seem, the Atlanta Federal Reserve is forecasting fourth quarter GDP at a stunning 4% increase. If in fact they are close to that percentage increase for the fourth quarter of 2022, the entire 2022 will be quite satisfactorily higher on a GDP basis.

What confuses me, and I guess most investors, is why these so-called experts are forecasting severe recession when the government itself is forecasting real growth in the current quarter.

I have been on a lot of airplanes lately and I can tell you from personal observation that every seat is full and there is a standby line on every flight I have boarded. Airports are completely run over with people; and as everyone knows, it is almost impossible to get reservations at a good restaurant. I was in New York City over the weekend and most of the hotel rooms were sold out and the city was covered up with tourists. In fact, I began to believe that no one spoke English in New York after the few days there since there were so many tourists from foreign countries. That fact alone should convince you that the world is not in recession, given that whole families were willing to travel from Italy, France, and the Far East to come to New York on vacation.

Client Chris Barg with Braves’ Dansby Swanson
at the Gold Glove Awards in NYC
I have a hard time convincing my own clients to read the facts. I get client telling me that when Facebook starts laying off employees, it must mean we have recession. In recent news, all the major tech companies reported that they would slow down hiring or start laying off people in the coming months. Unlike the explanation of the upcoming recession, this more properly reflects that corporate America is downsizing to a slower economy. That is only good common sense and exactly what they should do if they thought their business would be slower going forward. Absolutely nothing in those statements would be an indication of an upcoming recession.

Also recall, that if you lay off a couple thousand employees by a major employer, as of today, there are still 10.7 million job openings in the U.S. that are not filled. So, if these newly laid-off employees desire to find new employment, they have vast opportunity to do so. As I said often said before, for anybody in America that wants a job, there are plenty available. If someone is without a job, it is most likely that they do not desire to work again.

This gets me back to the title of this posting. If the U.S. is really going to go into recession, the Federal Reserve will have to orchestrate laying off and eliminating over 10 million American jobs. Take that into perspective when you consider employers today cannot find enough workers and especially low-paying jobs that are going unfilled because no one is willing to work for those wages. Will the government now take that situation and aggravate the economy by laying off 10 million additional workers to reduce inflation and slow the economy. I am betting there is no chance in the world that any governmental agency in an election year would eliminate that many jobs and endanger that many families' livelihoods over something as obscure as the inflation rate.

Ken Higgins finished his 38th Peachtree Road Race – Way to Go, Ken!

So maybe the Pundits are saying that we are going to see severe recession in 2023 due to the actions of the Federal Reserve and we have just not felt the effects of higher interest rates. There is no question that higher interest rates have slowed the housing industry by pushing long-term housing mortgage rates up above 7%. I do not know if you have noticed but those rates are falling and are now below 7%. Truth be told, most people really do not care what houses cost, they only care what the monthly payments are. With the huge increase in interest rates over the last six months, many young buyers are suffering “sticker shock” with new home pricing. However, I have many clients on the other side of the housing industry, and I can tell you that housing prices are not going to fall if commodity prices for those houses continue to rise. Sure, there will be a slowdown in housing but frankly, there needs to be.

We got a little bit ahead of ourselves in the spring when lumber prices doubled, and supply chain issues made building houses come almost to a standstill. Now that lumber prices are back to normal and the supply chains have opened; efficiency in home building will improve, but it will take some time. So, it is perfectly fine that the economy slowed down some to allow housing to catch up with current demand. The people who write for the financial news and talk about “crashing” home prices and the desperation felt in home building obviously have no clue as to what they are reporting. While last month housing prices declined by 1.5%, given that they have increased by 20% over the last year seems to be a most normal reflection of softer pricing.

Bob and Margaret Cash preparing for a bike ride
through Burgundy, France – À tout à l’heure!

The difference that so many of the people writing the financial blogs cannot seem to understand is that we do not have an undersupply of product, we have an oversupply of demand. Coming out of the Covid shutdown for several years, suddenly people wanted to use the money that they had accumulated since they had not been able to do anything in two years and they began to travel and spend money on capital items. We had too few new cars to buy, we had too few used cars to sell, lumber was at exorbitant prices and every airline seat was filled. That is what happens when you have demand in excess of supply. But all of that is slowly receding and supply and demand are more closely aligned today than they were several months ago.

So, when we have more aligned supply and demand, we will start to control inflation. For the month of October inflation was down to 7.7% year over year from 8.2% in September. Remember that I explained that inflation is valuated based on an annual increase this month over same month last year. As we go into the end of the year, we will have much more favorable months to compare, and I fully expect inflation to continue to fall as previously mentioned.

Long-time client Claude Hoopes shares the beauty of Maine!

At the very first sign of a significant reduction in inflation, you will see that the Federal Reserve will have to back off this desire to increase interest rates in this economy. It is a fine line to increase interest rates to slow the economy, but under no circumstances would you want to do so to the point where interest rates throw the economy into severe recession. I think the Federal Reserve is very cognizant of this fact and that when they meet in December, the increases in interest rates will be less than the 0.75 that they have been increasing for most of 2022.
So, I talked about the economy, and I talked about what I think the Federal Reserve is going to do, but what really affects stock prices are earnings. With all the talk about the potential of recession, most people have failed to see the reality of what is going on in corporate America. It is amazing to me that bank stocks are not rallying significantly with these higher interest rates. As you know, every time they increase interest rates, the banks make more money, yet bank stocks have been down virtually all year and even flat lately. The Pundits have convinced the public that the reason why bank stocks cannot rise is because with the upcoming recession, the banks will have overwhelming debts and companies that cannot pay their loans. I find that position so preposterous it is even hard to repeat. The banks today are in the most healthy and well capitalized position they have ever been in American finance.

If the Pundits were so correct regarding their projections of inflation and recession in 2022, you would have expected that earnings would fall dramatically. It now looks like that for 2022 in corporate America, net income will go up by 7.5% for the year 2022. What is incredibly coincidental is that is the exact same percentage that they went up in 2021. So, we have no declining employment and no declining earnings by major corporations. Why are the most major stock funds in the world down 30%-40% in the year 2022 and the S&P 500 down 18%?

Proud moment - Randy and Kathy Wittman
introducing their 3rd grandchild!

While I was in New York I had the opportunity to talk to a lot of the fund managers and their reflection on this year was quite surprising. They all indicated that nothing had really changed and that they were evaluating stocks as they had always done. The exclamations seen in the financial press of recession, depression and hyperinflation were to be ignored given that there was no financial support for those positions. While we all recognize and appreciate the slowdown in the economy, there is no indication of a major fallout from corporate America. Therefore, even though their performance this year has been uncharacteristically bad, their position is that you still value stocks the same way and all this hyper talk in the press is probably designed to support a position that the traders have that the invested public does not.

People ask me all the time what my reflection of the recent election was and my thoughts about it going forward. I am quite pleased that the elections appeared to be an even split between the two major parties. I am also very glad that neither party won substantial positions in any of the major house and senate races. I am a firm believer that government works best when it does nothing. It is the old joke Ronald Reagan used to paraphrase all the time, “I am from the government, and I am here to help.” As Ronald Reagan said, anytime the government shows up to help you may rest assured that industry will be worse for that help. Therefore, virtually an even split in Congress and in the Senate should lead to two really good years of the government doing absolutely nothing. As long as the government continues to debate, argue and make excuses and not pass any substantial legislation, we as investors will be much better off.

Ava and Dakota Rollins in the Big Apple

One of the principal speakers at the seminar I attended was Elon Musk, President of Tesla Motors and various other companies. It was very enlightening to hear his comments. I found this guy brilliant beyond belief. Not only did he start PayPal from scratch, but he also started the very first fully electric car manufacturer, Tesla, SpaceX, Solar City, and Starlink. No one in the history of world had been successful in the building of electric cars before Elon Musk came along. When I listened to him speak, I was so impressed by his intellect. I just wish we had politicians that had above-average intelligence.

One of the things that he said seemed to make a lot of sense. He said that while studying space geography as part of SpaceX, he discovered that there might be as many as one million planets with the same atmospheric conditions as Earth. The difference is that those planets do not have people on them. Maybe at one-point, multiple generations ago they actually had people but they either killed each other in war, a virus wiped out the whole planet or environmental effects got to them. What was interesting about his comments is that he related them to the same effect on the Earth. Here you have one madman in Russia attacking a neighboring country for no good reason and wiping out hundreds of thousands young men. What if someone like him could start a nuclear war and basically eliminate all the people on earth? At least we now know that Elon Musk is certainly thinking about it.

One last pit stop before heading home...

What was fascinating about this conversation was that the very next day when I picked up my phone and looked on the internet, every other article I read was a negative article written about Elon Musk. You would think that if there were anyone to be the darling of the progressives, it would be him. No one before him was able to build an electric car cutting car emissions. Many have tried, but all have failed. Even today, the major car manufacturers are so far behind Tesla that the race is not even fair. Yet the progressives for some reason hate Elon Musk beyond belief. Maybe it is because he is the richest man in the world, or he has become remarkably successful.

Another thing he said that impressed me was that he indicated that the President of the United States should never be more than 15 years older than the average American. If the average American is 38.1 years old, that will make the President’s age around 53. Think about that just for a second when you have Biden and Trump running for political office again at age 80. They are so far removed from the average American’s beliefs and daily activities; I am not sure how they can properly govern a country. Hopefully, in this next Presidential election, we will have some young people willing to run.

If you have an interest in coming down to visit with us, we look forward to seeing you. We are moving into a slower period for our Firm and will have the time to sit down and review your portfolio, taxes, or anything else you might be interested in.

As always, the foregoing includes my opinions, assumptions, and forecasts. It is perfectly possible that I am wrong.

Best Regards,
Joe Rollins

All investments carry a risk of loss, including the possible loss of principal.  There is no assurance that any investment will be profitable.

This commentary contains forward-looking statements, which are provided to allow clients and potential clients the opportunity to understand our beliefs and opinions in respect of the future.  These statements are not guarantees, and undue reliance should not be placed on them.  Forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from our expectations.  There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.