Friday, October 13, 2023

“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.” - Warren Buffett

From the Desk of Joe Rollins
Josh and Carter saying their goodbyes to Wrigley Field
As we roll into October, we are happy to have survived the downturn of August and September. Historically, those two months are the slowest of the year for investing and the fact that we only shed a few percentage points during that period was quite positive. We are now moving into the superlative time of the year for stocks, and the best time of year for your investments. As Warren Buffett says in the title of this posting, invest now.

There are many reasons why the months of August and September are slow for stock market investing. Many of them center around the fact that people are vacationing with their families and are not paying as much attention to what is happening on Wall Street. There is also the low volume that is present during this time of the year which makes the market easier to manipulate and move by the large hedge fund type investors. We saw greater volatility during August and September but fortunately, the large sell-off that so many were predicting did not come to fruition.
Is this a dream? Penelope celebrating 6 months
One of my favorite Warren Buffett phrases is when he talks about people who forecast the valuation of stocks. It goes something like, “The only value of stock forecasters is to make fortune-tellers look good.” Boy, this year has proven that statement to be so true. This quote illustrates one of the items I wanted to cover in this posting. How could the forecasters be so wrong and continue to be wrong even today? I also want to discuss why corporate profits are likely to be higher than anticipated, which is a huge support for the anticipated stock increases. I must also cover the current state of the economy, the misinformation about the housing market, and of course, touch on our dysfunctional government that continues to be a laughingstock to the rest of our world.

Before I cover all those terribly interesting topics, I need to report on the returns for the month of September. The Standard & Poor’s Index of 500 Stocks was down 4.8% during September but is up 13.1% for the year and up 21.6% for the one-year period ended in September. The NASDAQ composite was down 5.7% in September but was up 27.1% for the year 2023 and for the one-year period ended in September up 26.1%. The DOW Jones Industrial Average was down 3.4% in September but is up 2.7% for the year 2023 and up 19.2% for the one-year period that ended.
Family Bonding - Tom Fowler, Sherie and Steve Foster,
Betty Florence and Paula Fowler on their way to Normandy
Just for a basis of comparison, the Bloomberg Barclays Aggregate Bond Index was down 2.5% for September and is down 1% for the year 2023. For the one-year period ended September, it is up 0.6% for that one year. As you can tell, investing in bonds has been a losing proposition all year long, and for those who believe that bond investing is safer than stock investment, you can see the difference between the double-digit returns of the market indexes and the virtually flat returns on bonds for the one-year period ended September 30, 2023.

One of the most amazing things about all this is how wrong the so-called forecasters have been about the economy going all the way back to the beginning of 2022. As you recall, the major market sell-off in 2022 was principally a reflection of every major forecaster indicating that the U.S. was quickly going into recession and there would be a severe downturn in the economy, thus the number of workers unemployed would be staggering and U.S. profits would plummet accordingly. As we now know, 20 months later, there was no recession and we still do not have a recession even today.
Nadine (above) and Steve Hooks (below) celebrating “His and Hers”
holes-in-one, while Steve reminds her this isn’t his first!
What is most amazing is that the GDP growth in the first quarter of 2023 was a very satisfactory 2% and in the second quarter of 2023 the GDP growth was 2.4%. It is now projected by the Atlanta Federal Reserve that the GDP would grow in the third quarter of 2023 to 4.9% based on their posting on October 5, 2023. I am now reading numerous postings indicating that the fourth quarter of 2023 will have GDP growth of roughly 4%. What is interesting is most recently the Federal Reserve actually revised its projections and increased its forecast for GDP growth in the U.S. to 2.1% for the year 2023. Their previous projection would have been 1% annual growth.

Although the evidence of robust GDP growth in 2023 is quite evident, the Federal Reserve does not agree with those assumptions. They believed we must surely be turning the corner for the U.S. economy to go into recession. I guess the labor report on Friday blew up that bad prediction on their part as well. On Friday, the job report stated a shocking increase in employment of new hires reached 336,000 of non-farm payrolls in September. What was amazing about this number was that it was roughly double the consensus of the economist’s estimates.

To add further shame to the projections, the month of August employment report was revised to include an additional 119,000 employees. It is amazing that this economy, as strong as it is, continues to put even more people to work. Although the unemployment report remains steady at 3.8% unemployed, the number of people actively seeking work increased and therefore the entire labor report on Friday was overwhelmingly positive.
Rosemary Church and Patrick O’Byrne
enjoying the sunset in beautiful Tuscany!
As mentioned so many times before, there are currently 9,610,000 job postings and the current unemployed are 6,360,000. As is evident, there is more than enough work for anyone who wants a job. Recall the forecasters indicated going into 2022 we would have a massive number of people unemployed during 2022 and 2023 which would lead to substantially lower profits by major corporations since people could no longer afford nonessential consumer goods. As the last 20 months have illustrated, those forecasts could not have been more wrong. You read in my previous postings that I just did not see how a recession could be possible with less than 4% unemployed, which fortunately ended up being an accurate call.

As we go into the last Federal Reserve meeting of 2023, this strong employment report will most likely lead to the Federal Reserve increasing interest rates one last time at a quarter point. I am not sure exactly why the traders on Wall Street fear this increase so dramatically. The Federal Reserve has increased interest rates aggressively over the last two years, and to this point there has been little or no effect on the economy. More importantly, there has been little or no effect on employment. The projections of mass unemployment, even with higher interest rates, have not had much effect whatsoever on the consumers’ ability to spend.
Lloyd King and son Michael in town for the playoffs.
At least someone is happy (womp womp)…
So, as we go forward into the end of 2023 and the beginning of 2024, what can we expect? If it is true that the third and fourth quarter GDP is 4% as illustrated above, there is a high likelihood that the economy will slow in 2024 as 4% GDP growth is not sustainable over the long term. It would be much better for all of us if the economy would cool down to the 2.5% range, which would allow inflation to continue to drift down, which would have a positive effect going forward.

So even though I believe the Federal Reserve will increase interest rates one more time on November 1, 2023, I believe that will be the last time. Since it has been proven that the Federal Reserve’s one and only perceived function these days is to put people out of work, I cannot help but think that the only conclusion they will draw at the next meeting is, “How can we run more jobs out of the U.S. so we can meet the artificial goal we have established of inflation being 2%”?
We see you - Alexis and friend made it on the Jumbotron!
We are currently at an inflation rate of roughly 3.5%, but there is much evidence that it is falling quickly. Even the most recent labor report indicated wages have only increased slightly when compared to prior reports. We are also moving into a time when we will see a dramatic decline in the price of oil going into winter. The effect from the reduced cost of oil affects virtually everything we use in our everyday lives, anything that must be transported from manufacturers to consumers, which in turn should decrease the cost of goods if precedent is to be trusted.

It looks likely that by the first quarter of 2024, the Federal Reserve will have reached its target of roughly 2% month-over-month inflation and can call an end to their continuous desire for more unemployment in America. Do you realize that what has happened with inflation has allowed corporations to be more profitable?

Think about it for a second, last summer everyone dramatically increased the prices of virtually everything. The price of food went up dramatically overnight when we were at a 9% inflation cycle. You heard the public complaining about the price of everything going up, and the price of groceries increasing dramatically over a short time. Have you noticed that even though those prices went up and the commodity prices are going down, there has been no change in pricing?
Lauren and her beau arriving at a wedding in style!
Suddenly corporate America is enjoying the benefits of higher prices but lower commodity costs to pass the products along to the public. I think once again the forecasters will be surprised when the third quarter corporate profits come out and people realize that corporate margins have improved over the last six months not because of higher prices but because of lower commodity prices.

You have seen moves that truly defy reasonable economic understanding. We have a large-scale strike going on in the union-based automobile industry. Twenty years ago, virtually every car in America was built by a unionized company. Today it is estimated that only one in five cars built and sold in the U.S. is built by unionized companies as all imported cars have no union representation. So, though the union automobile companies are on strike, and even when the President of the United States is walking the picket lines, they are losing their market share to those who are not on strike.
Being a mom is exhausting!
One of the major manufacturers in the United States of cars is Tesla. Usually, everyone thinks of Tesla as a smaller operator compared to the likes of GM or Ford, which of course would be correct. However, last quarter Tesla was more profitable than both GM and Ford combined. The manufacturing workers are now campaigning for substantially higher wages and a shorter work week. This will only damage the companies they work for and at the end of the day will lose a substantial amount of wages while the strike goes forward. All in all, their actions actually help inflation since with reduced wages they are not likely to consume as much, and at the end of the strike whatever is decided will take them years to catch up with what they lost while on strike.

I remember back when the so-called forecasters were predicting that these dramatic increases in interest rates would create absolute chaos in the real estate markets. One I recall most dramatically was that the price of housing would fall 25% almost overnight due to the actions of the Federal Reserve. Here we are 20 months later, and what do we know?

First, the truth of the matter is that there is a huge shortage of housing in the U.S. The combination of higher interest rates, inflation, and greater scrutiny by banks has led to fewer houses being built and a much more difficult situation for young people trying to buy houses. In my opinion, the main reason there is a shortage of housing is that people are just not willing to sell their houses and incur higher interest rates. If you are sitting on a mortgage with a 3% interest rate, why would you be willing to sell and incur a mortgage of 7% to buy a new house? This leads to fewer homes being sold thus creating a shortage of houses that are within the new buyers' price range.
DeNay channeling her inner Lorax - I speak for the trees!
If it were true that the housing market was in severe decline, why are virtually all homes in Atlanta sold at or above listing price? Something extraordinarily unusual is happening. For the first time in my professional career, not only is there a shortage of homes for sale, but the homes that do sell are sold at much higher prices than listed. Of course, this leads to properties becoming overpriced which will continue for the foreseeable future as those buyers eventually sell the properties that they paid entirely too much for. This keeps us in an endless cycle of selling the home for too much, buying an overpriced home and the value of property continues to go up. Those forecasters that indicated housing prices were going to fall by 25% were correct, they were just facing the wrong direction.

Last week the biggest headline was when the Speaker of the House was voted out by our Congress. The news commentators were almost foaming at the mouth in their explanation of their reasons. Out of curiosity, I watched some of the reporting on this subject, and I realized that no one really cares what is going on in Washington at the current time. Washington is so dysfunctional that it is almost the laughingstock throughout the rest of the world. Throughout all the silliness due to removing the House’s Speaker, they are not legislating, which is their one and most important job.
Ava unsure about this” trust game” with her back turned
to the wildlife in the heart of Africa!
Now we are going to have two candidates for the presidency that are each close to age 80. There are no new ideas coming out of Washington, there is no innovation. Obviously, you cannot make progress when every decision is made based on your political affiliations, regardless of the integrity of the action. Everyone is deeply divided including the Republican party, which is split between the conservatives and the ultra-conservatives. I guess this can be compared to the famous acts of Nero, who played the lyre as Rome burned.

Congress does not seem to get the point that we have $32 trillion in debt and the cost of borrowing that debt is double what it was only a year ago. The increase in interest expense to service a national debt is going to be a staggering amount going forward. It looks like the current deficits are going to be close to $2 trillion for as long as the eye can see and yet our government is so dysfunctional that all they want to do is spend more money rather than less.
"Happy Fall, y'all"
I do not want to pretend that this is a current issue, because it is not. Any time you can print money, cash flow issues can be solved immediately. However, there will be a day when this issue will become paramount. The amount of interest to service the Federal debt will soon be a major driving force in the budget and if some politicians do not begin to take this into consideration, we will have issues much more serious than they are today.

Congress should also be embarrassed by how they are handling the southern border debacle going on now. The illegal immigration issue has become paramount, and Congress cannot even have a civil conversation on the subject. We cannot fiscally continue to allow thousands of illegal immigrants into the country daily and support them while they are here in limbo awaiting immigration proceedings. Any other legislative body would get together, recognize the issue at hand, and come together for a solution to this issue. I personally think the current administration believes the immigrants will come in and eventually vote to support their causes. As we all know illegal immigrants do not have the right to vote at the current time. If Congress were truly concerned about doing something to help America, they would spend less time worrying about who will become Speaker of the House, and more time worrying about how to deal with the immigration issue on the southern border.

We could not be more excited about the upcoming six or seven months of investing. The economy is in excellent shape and corporate profits are continuing to rise. You are seeing an opportunity now to put new money to work, notwithstanding the negative projections of the forecasters who have been so very wrong. After 20 months, many of the so-called experts are no longer calling for the recession they predicted, but rather just a slowdown. What is most amazing is that during this entire time from the beginning of 2022 to now, the economy has not slowed, but accelerated. As you recall the first two quarters of 2022 were marginally negative and the GDP has gone up every quarter since that time.
"Pose for the tourists, they said.
We’ll throw in a wildebeest, they said."
If you have not made your IRA or maximum 401(k) contributions, you should do so immediately. The time for investing is beginning November 1st through May 1st and if you are not invested you may lose the opportunity for a nice acceleration. Consider meeting with us, giving us the opportunity to spend time with you and discuss anything about investing or your portfolio. We would be happy to meet with you at any point and discuss your goals and opportunities going forward. What we know with some precision is that you have been misled by the media over the last 20 months, and we are hopefully headed into a period of positive financial results that will once again prove the critics were never giving you accurate information.

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, September 13, 2023

There is a saying, “Economic expansions do not die of old age: they are murdered by the Federal Reserve.”

From the Desk of Joe Rollins

“Nature’s great masterpiece, an elephant -
the only harmless great thing.” - John Donne
Astonishingly, the U.S. economy has been so resilient for almost the last two years. Going into 2022, it was almost a unanimous consensus by all the major forecasting brokerage houses that the U.S. economy would fall into a swift and deep recession in 2022. However, you didn’t hear those words from me. I maintained the position that there would be no recession in 2022 and likely none in 2023. So far, I have been more accurate in my projections than those brokerage houses.

What is amazing to me is that these brokerage houses will not stand up and admit that they were flat wrong. In the last week, Goldman Sachs lowered their projection for recession in the U.S. over the next 12 months to 15%. I am not sure how useful this information is since their projection at the beginning of 2022 was 80%.

Bank of America only recently scrapped its forecast for a U.S. recession next year, indicating that now they do not think it is likely. The massive banks, Barclays and Citi, postponed the anticipated start of a mild recession downturn until next spring. I suppose if you keep postponing your projected recession date, everyone will eventually forget whether you were right or wrong.
Ava, Dakota, and Joe with their new friend - for comparison, Joe is 6’4”
I think back to the swift and severe selloffs we had in the markets in 2022 and cannot help but be convinced that they occurred due to these extraordinary and frankly scary calls for a severe recession. Looking back, now that we know the economy never spiraled into recession during that time, I wonder whether all those capital losses could have been circumvented.

I have several items to discuss in this posting, and I thought I would give some insight into our recent trip to Africa. I wanted to share all the beauty and exotic nature of that continent we witnessed. I will also discuss our economy, and current financial matters while reviewing why, once again it is highly unlikely that there will be a recession in 2023.

Before I delve deeper into those terribly interesting thoughts, I must report on the financial outcome for the month of August. As you know the year 2023 has been quite excellent for investing, and even though August fell off somewhat, it continues to be a vastly profitable financial year. The Standard and Poor’s Index of 500 stocks was down 1.6% in August but is up 18.7% for the year 2023 so far. Also, for the one-year period ending August 31st, that index is up 15.9%. The Dow Jones Industrial Average was down 2% for the month of August but is up 6.4% for the year 2023 and is up 12.6% for the one-year period ending August 31st. The NASDAQ Composite was down 2.1% for August but is up a sterling 34.8% in 2023 and is up 19.8% for the one-year period ending August 31st.
A little chilly, but the view was worth it!
Just to give you a basis of comparison, the Bloomberg Barclays Aggregate Bond Index was down 0.6% for the month of August and is up 1.5% for the year ended August 31st and is down 1.2% for the one-year period ending August 31st. As you can tell, bonds have performed rather poorly if compared to stocks for the last several years. I have often been asked when it is a good time to start investing in bonds and the simple answer is that you should be investing in them when the interest rates start falling, not while they are increasing. There is still a high likelihood that the Federal Reserve will increase interest rates once again before the year is over, therefore investing in bonds should be on hold for now.

I have been asked repeatedly why the so-called experts in the field of finance were so wrong about the U.S. falling into recession. I cannot help but think that a major reason for this failure to accurately forecast recession is that the financial system as a whole has changed. At one time, the entire American economy was dependent on the ability to borrow from banks and to use that cash in their operations.
A sight to behold, indeed!
No longer do major corporations need to borrow from banks. Many of these corporations have more available cash on their balance sheets than banks. They no longer need to borrow as frequently for their operations, so an increase in interest rates on bank loans has little or nothing to do with making Americans tighten their belt and reducing the pressure on the economy.

There has been much said about the concept of people having extra savings, which I have also seen firsthand during business. After the flood of money, the government bestowed upon individuals during COVID, many are still living off these extra savings to ride out the economy. While it is true that unemployment went up from 3.5% to 3.8% last month, that had nothing to do with more people being laid off. For the first time in a long time, the actual number of people seeking employment went up in July which increases unemployment. With the number of people seeking employment being higher, the unemployment rate would clearly have to increase, but this is not a negative. Throughout this entire two-year period, employment has stayed enormously strong. Even to this day, employers are reporting that it is difficult to hire employees for any level of classification. Even my firm has suffered through long bouts of not being able to hire qualified employees to fill our positions.
Josh and Carter checking out the Golden Gate Bridge.
Did you know it took a little over 4 years to build it?
It is now believed that there is close to $5 trillion in cash sitting on the sidelines waiting to be implemented either in investing or purchasing consumer goods. As an example, if some of these excess savings are removed to complete a project on your house, that keeps the economy growing and higher interest rates will have no effect whatsoever on that financial activity.

The Wall Street Journal reported on Friday that home prices are rising again. The reason home prices continue to rise is scarcity. There are just not enough houses on the market for people to buy. It is true that interest rates and mortgages have reached a 22-year high, but most people who own a home and have locked in low rates years ago have no intention of selling and subjecting themselves to a higher rate. What we are seeing in Atlanta is that home ownership is more difficult because, for each home on the market, multiple offers are above the original listing price. It is hard to believe now, but the listing price is now only the beginning of the bidding war on the purchase of new housing.

So, what do we know about the economy now that we did not know before? As I mentioned in prior postings, all the evidence of the economy continues to be quite good. But what does the official record say? For the first quarter of 2023, the GDP was up a very satisfying 2%. In the second quarter of 2023, the GDP was up 2.4%. While we do not have the final numbers for the third quarter’s GDP, on September 8, 2023, the Atlanta Federal Reserve projected that the GDP for the 3rd quarter would be 5.6%. Wow!
DeNay setting out to explore The Last Frontier
It is pretty clear from these excellent GDP numbers in 2023 that there has been no recession at this point. This is interesting given that the Federal Reserve's calculations of GDP would have already put the U.S. economy into recession. There are two more meetings of the Federal Reserve before the end of the year, and they will not increase interest rates in their September meeting. However, there is a high likelihood that they will increase interest rates in November 2023 for the last time.

For those of you who sit on the edge of your seat whenever there is an interest rate increase, just look at the prior two years. Even though the Federal Reserve has increased interest rates 13 times over this period, there has been almost zero effect on the economy and that is an exceptionally good thing. In the most recent announcement, we now have inflation starting to fall from last summer’s rate of 9.8% inflation to 3.2% inflation. The Federal Reserve has done an excellent job of bringing down inflation and creating an economy that continues to be strong.
Four generations of Battle boys – Bill, Pat, Will, and little Paul!!
For those who argue that the economy cannot withstand these higher interest rates and that the valuation of stocks is excessive given those rates, consider the fact that there is a high likelihood that during 2024 rates will have to come down to a more reasonable level to allow the economy to expand. If that ends up being the case, stock valuations at this level with lower interest rates are a long way from being stretched. Yes, there are all kinds of problems in the U.S. but notwithstanding all the political strife that we are seeing in the financial news, the economy continues to expand and there continues to be plenty of jobs for U.S. workers to fill.
A-weema-weh, A-weema-weh…
I thought I would share a few thoughts on our recent trip to South Africa. All the preconceived misconceptions we had about Africa being a hot and dry climate ended up not being true when we arrived. It was extremely cold and, particularly in Cape Town, extraordinarily wet. Even though the weather was not ideal, it did not prevent us from enjoying the pristine jungle and all the animals therein.

Our first stop was Cape Town, where we spent three days. I found Cape Town to be uninteresting for the most part, particularly when one considers all the racial problems they have. While the end of Apartheid brought a close to institutionalized segregation, racial tensions did not end with it.

We did see some interesting sights and visited the Cape of Good Hope which was the most southwestern point of the African continent, but I was anxious to get to the jungles and see the animals. You may be familiar with the Cape of Good Hope and the legendary boat accidents that have occurred there due to the roughness of the water around the Cape. I can confirm that the water is extremely rough.
From Cape Town, we flew out to the Jabulani Safari. This is a game reserve privately owned by a family who is passionate about the conservation and rescue of elephants. They began their efforts in 1977 when they were called to rescue an elephant calf who was injured and stuck in the mud. On the property, they have a sanctuary where there are roughly 16 elephants but the entire property shelters roughly 100 elephants that are still running wild.

The Big Five (lion, leopard, rhino, elephant, and African buffalo) were so named because they were the most difficult to hunt on foot. On our first day on safari at this location, we were able to witness all five of these animals and many more. I am not sure exactly what I was expecting when it came to the animals and their reactions to humans. We have all heard how protective a mother lion can be, but in one instance we were as close as 10 feet to one with her nine cubs and she was not concerned in the least about our presence.
Not always a gentle giant!
On another excursion, we were following a leopard as it was getting dark. The trail guide lost sight of it and could not locate the leopard since it was moving so quickly. I looked down next to the jeep, and the leopard was right next to my hand. I could have easily reached down and petted the leopard but, of course, that would have been ill-advised. The only case where we had a negative interaction with an animal was when we were observing a rhino that was in the process of marking his territory. After a while, the rhino grew agitated over being followed and turned around and charged the car. Fortunately, the trail guide was able to pull away safely and the chase was off.

In the back of my mind, I was expecting we would be sleeping in tents without air conditioning and lacking necessities, but I was completely wrong. All the accommodations were 5-star hotels in the middle of nowhere, deep in the jungle. The first resort we stayed in only had 10 rooms and was situated in the middle of the jungle, such that we were not allowed to walk around the premises without an escort. The food was nothing short of extraordinary, even though it is difficult to focus on food when you have seen the jungle two times a day for a week.
Patience is a virtue…
After a week we took a bush plane to another private resort, Singita Ebony Lodge, and this was even more extraordinary than the first. This lodge only had 12 rooms and hospitality was over the top. What was amazing is that everywhere we went in South Africa everyone spoke perfect English. I guess I realized that South Africa at one time was a British Colony. I asked some of the trail guides about languages and they told me that all the children in school are taught both English and the local language, therefore they are all bilingual and speak perfect English.

At the Singita Lodge, we were able to see a lot of different animals that we did not see at the first resort. We saw a great many giraffes, hyenas, and wild dogs. Wild dogs are very difficult to locate since they move in packs and work mainly at night. But we were able to come across a group of about 10 as they were hunting.

We also came across three young male lions hunting buffalo along the plains. Once again, even though they were hunting for their food we were right beside them as they stalked buffalo. As the buffalo moved, we moved with them and followed them for several miles until it became too dark to follow them. The picture of these male lions, in my opinion, is quite extraordinary.

It was an amazing experience in every regard and one I had wanted to have for many years. It is not likely that I will return to South Africa, or Africa itself, but I just wanted to emphasize what a beautiful place it is and how pristine the area with wild animals is to see.
Lucy, Jennifer, Harper et Eddie en balade à vélo à Paris!
The last thing I wanted to mention is that this country is richer now than it has ever been. If you look at the definition of the generations of Baby Boomers alone, they are defined as those people born between 1946 and 1964. They are now reaching full retirement age and have started to spend some of the money they have accumulated during their lifetime. Based on the Department of Commerce, the Baby Boomers were worth $74.8 trillion at the end of the first quarter of 2023. $19 trillion of that is in real estate which includes their personal homes.

At some point during their retirement years, they will sell their principal residences and use some of that money to spend on travel and entertainment. However, if you think that money is illiquid, the bulk of it is in savings accounts and is believed to be worth $8.9 trillion in bank deposits and money market accounts alone. I bring up these facts just to illustrate that there is enormous spending power that has not been fully tapped. When it does, it will keep the economy going for many years to come.
Long-time clients, Pat and Alice Anne Battle with their growing family: Mary Raines, Annie, Danielle, Will, and little Allie
at the christening of William Paul Battle
So, the fear that the excess pandemic savings will be gone by the end of the year is not based on fact. As illustrated above, even if the excess earnings are depleted, the Baby Boomers have trillions in firepower that can keep the market going higher.

As we go into the last quarter of 2023, we need to be reminded that the best time in the stock market is November through May of any given year. Yes, August and September are volatile, but they mean nothing when building long-term wealth. Yes, a recession is unlikely any time soon, interest rates are likely to have topped out, inflation is clearly falling and getting better on a monthly basis, and corporate America continues to generate consistent and excellent profits.

There is nothing that I see that can bring down the market dramatically unless there is a geopolitical bend that none of us see. It is a shame we are all so focused on politics when it comes to money, but it cannot be avoided when it comes to a Presidential election year. I sense that even with the volatile August and September, the market has been great up to this point and is very likely to go higher before the end of the year. If you have not contributed to your IRA, now is the time to do it - and remember to make an IRA contribution every year.
Proud mom Paula Herraiz with sons Blake and Mason –
congratulations, Mason!
This is a great time to sit down with us and let us review your financial plan. It is never too late to update that plan to current events. I have also been reviewing a lot of testamentary wills and trusts for clients. What I am finding as I review more and more is that these documents are way out of date and need to be updated to your current situation. If it is only you and your spouse in the household and all your children are grown, a simple will is appropriate but extremely important in passing your estate to your next of kin.

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.