Wednesday, January 13, 2021

“Bull Markets Are Born On Pessimism, Grown on Skepticism, Mature On Optimism and Die On Euphoria” – Sir John Templeton

I often refer to the above quote by the famous investor Sir John Templeton to explain what is currently going on in marketplaces. Not a single day goes by that I am not confronted by the question from clients regarding the ever-advancing stock markets. It seems that everyone would like to project the decline in the market since everyone now has become an expert on valuations of stock. In each of those cases, I attempt to talk clients out of any rash moves since we all know that “market timing” is virtually impossible, but it is really difficult to convince clients of that fact. So in this writing, I thought I would explain why we have not reached the level of “euphoria”, referred to above, by Sir John Templeton. 

While it is certainly not 1999 again, for too many reasons to explain, I will give you the basics of the difference between then and now. And we certainly cannot party like it is 1999 any longer. Also, I want to reflect back on the incredible year of 2020, which none of us are sad to see pass. If you are not excited about the upcoming 2021 year, you really do not have a firm concept of basic economics. In Economics 101 we learned the importance of supply and demand. We all learned that if the demand is higher than the supply, then prices will most assuredly rise. We learned many other basic economic provisions during those years in school that will come into play during the 2021 year. I will try to explain all of those. 

Ava (9) and CiCi enjoying a Florida Christmas

At the beginning of every year, I try to make a projection for the upcoming year. If you refer to my blog posted in January 2020, you will note that I projected that the S&P 500 Index would be at a level of 3600 at the end of 2020. That projection reflected a total gain in that index of 13%. I am not disappointed to report that I actually missed that projection by roughly 5%. The S&P 500 Index finished the year at 3756, with a total return of 18.4% for the year 2020. But quite honestly, that does not tell the entire story. 

So many investors have been lured into the mistaken concept that they can invest strictly in an index fund and outperform professionals who actually manage money. The year 2020 was a clear example of how flawed that concept really is. Most of the actively managed mutual funds with professional management teams outperform the S&P 500 Index by a multiple of 1.5 to 2 times that rate of return. It was not unusual to find many actively managed growth funds that returned 35%-45% during 2020, far exceeding the level of index funds. There are many reasons for this outperformance, some of which I would like to point out later in this writing. Of course, I want to give you my projection for 2021, which is always based on my reading of the economic data. If anyone could accurately forecast the future, they would certainly be too wealthy to write this monthly posting. 

The Wilcox family taking in the view
 from Rabun Bald 

I have so much to discuss and so little space, but I must give you the excellent financial results for the year 2020. Who would have ever thought in March of 2020, when the markets declined over 30%, that we would end the year setting all-time records in virtually all indexes? I guess you could say maybe I projected that, but even I had an uncertain comfort level with that projection. As the markets came roaring back in April through the rest of the year, there were many that fought the concept of higher returns and did not participate. In many cases, I talked until I was literally hoarse to convince clients to stay invested, but many elected otherwise. They missed the basic concept of economics that drives stocks higher. In this period of time liquidity exceeded the number of stocks available to buy and coupled with the avalanche of cash the government threw into the economy, stocks moved higher, notwithstanding the economy. 

During the year 2020, the Standard & Poor’s Index of 500 stocks had a total return of 18.4% for the year. The five-year annual average for this index is 15.2% and the 10-year at 13.9%. The Dow Jones Industrial Average returned a total return of 9.7% during 2020 and has a five-year average return of 14.7% and a 10-year average return of 13%. The NASDAQ Composite, once again, was the leader having a sterling return in 2020 of 44.9% with a five-year average at 22.1% and a 10-year average at 18.5%. As you can tell, all of the one-year, five-year and 10-year numbers were excellent rates of return. Just to form a comparison, the Bloomberg Barclays Aggregate Bond Index was up 7.8% for 2020, has a five-year annual increase at 4.5% and 10-year annual increase of 3.8%. As you can tell, the bond index has not kept up with the sterling returns that the stock indexes have returned over the last decade. 

The Schultz family spending their Christmas
in beautiful Amelia Island, Florida

Recently, the 10-year Treasury Bond jumped over 1%, which by any definition is a historically low level. However, with the flush of cash provided to the economy by the Federal Reserve, almost assuredly we are facing inflation going forward. You could not expect that the Treasury furnishing $3.5 trillion worth of liquidity into the economy would not create a supply and demand issue related to certain hard assets. When this demand for hard assets exceeds the supply, you will eventually get inflation. It is my projection that by the end of 2021, the 10-year Treasury Bond will be closer to 2% than the 1% it is today. If that forecast is correct, during the year 2021, there is a high likelihood that cash earning the meager rates that it currently earns, will outperform the total return on bonds for the year 2021. 

For those of you that are concerned about the current chaos in Washington, the only comfort level I can give you is that with the Congress being equally divided in both houses, there is hardly any likelihood of major change that will occur very quickly. It would be a miracle of legislative speed if a tax bill could be approved by Congress within a two-year period. Given that the Senate is exactly 50/50, it only takes one sitting Senator to make any bill impossible to pass. I think it speaks very well for the economy that Congress is likely to be in a period of chaos for some time to come. As we all know, the best years ever in investing occurs during times when the politicians do not affect our pocketbooks. 

I have so many people that try to give the impression that the year 2020 was like the year 1999. Most investors today really weren’t around in 1999 and did not understand the dynamics of the market. That was a time when Dr. Alan Greenspan, as chairman of the Federal Reserve, was very concerned about the Y2K problems and flooded the economy in 1999 with a ridiculous amount of liquidity in order to avoid any potential risk of a Y2K meltdown. During that time, the so-called “dot.com” stocks came on selling at many times their value, given the potential of the newly formed internet. You can easily see where a company coming out of nowhere that can reach virtually everyone in the world at no cost would have huge potential. What we now know is, of course, many of these are not real companies and the run-up in the dot.com marketplace quickly failed in the year 2000. However, the major difference did not relate to any of these matters. The major difference related to what the Federal Reserve did to close down the dot.com era. In March of 2000, Dr. Greenspan immediately restricted the money flow and “choked” the financial markets to a major correction. Just as he hyperinflated the market in 1999, he deflated it in 2000. The strangulation of the economy was solely at his desire to burst the bubble of speculation in the dot.com era. Fortunately, we do not have a similar situation in 2020. 

Caroline (6) and Reid (5) Schultz taking 
Santa’s chair in Rosemary Beach, Florida 

As the new Congress comes to be at the end of January 2021, you can expect that the spigots of governmental spending will explode. You can expect another stimulus package of higher rebates to taxpayers and more than ever before governmental spending for municipal projects and supporting municipal governments. If we had a Federal Reserve that was conscious regarding reducing the speculation, they would not have announced that there would be no significant rate increases through the end of 2023, three years from the beginning of this year. 

As I have pointed out before, the decade that ended in 2019 was the only decade ever in the history of American finance that we did not have a recession. We actually did have a recession in 2020 for a couple of months, but the Federal Reserve dumped $3.5 trillion into the economy and, in turn, the economy came roaring back. Just in the last couple of weeks, Congress has approved to add an additional $900 billion stimulus directly into the economy. Along with that, I project, we will see a couple trillion dollars more in stimulus will come almost immediately. All of this money will create a gush of cash in the economy which will not only bring the economy back to life, but will almost assuredly lead to higher stock prices. There are many commentators that have pointed out that cash levels sitting in checking accounts are at all-time highs. One of the reasons for this is when the economic fallout occurred in March of 2020, the average citizen in the U.S. was concerned about their future employment and the savings rate spiked to an all-time high of 35% in April of 2020. At the end of 2020, cash levels sitting in checking accounts were 15.3% higher than they were at the beginning of 2020. Now we are not talking about money in investments, we are talking about actual cash sitting in checking accounts. What has been proven over and over again is that cash sitting in checking accounts is not a savings vehicle, but rather a spending vehicle. It is only a matter of time before this cash will be put back to work, either in additional consumer goods or that cash will be invested. Even though we are standing at record levels of cash today in checking accounts, this number is only going to get larger as the Federal Government flows through additional stimulus that will end up in people’s checking accounts. 

Jennifer, Harper (11) and Lucy (9) Wilcox 
admiring the festive light display

So, what we can assume in 2021 is that as we move forward, we are going to see less of the influence of the virus on the economy. As of this writing, it is believed that 23 million Americans have already contracted the virus and roughly 10 million have been vaccinated against the virus. Therefore, we have already reached a level of 10% of the population that has some level of immunity going forward. It is believed, and I concur, that there will be vaccination rollouts to the general public, which will lead to vaccinations of roughly 1 million per day going forward. If we are able to vaccinate 100 million people in the U.S. before the end of the first quarter of 2021, along with the people that have already contracted the virus, we will have reached the level where businesses can reopen, and a level of normal activity can return. 

It is now projected that corporate earnings would increase roughly 38% in 2021 over earnings in 2020. What you will see almost assuredly is a flood of Americans this summer wanting to go on vacation and spending money for pleasure that they have missed during the pandemic and a rush to visit restaurants, movie theatres, cruise ships and airlines. All of this bodes extraordinarily well for earnings and the economy, and ultimately for stock prices. 

What we will not see like we did in 1999 is the Federal Reserve pulling out the rug and tripping the economy. The Federal Reserve has already committed to long-term low interest rates and they intend to allow the economy to continue to accelerate which should be nothing but great for stock prices. I fully anticipate that the current euphoria in real estate prices will continue as more and more money chases hard assets such as real estate. We are seeing the effect of supply and demand on virtually all commodities. You are seeing record prices in copper, gold and other commodities that give you the impression that certainly inflation will eventually follow. 

Printing all this money that the Federal Reserve is pushing into the economy is certainly a long-term negative and a short-term positive which, at some point, some generation will be tasked with the obligation of repaying. However, that is likely decades, rather than years, away. At the current time, the need to stimulate the economy was important in March 2020 but it appears that the economy has quickly recovered on its own and an additional stimulus will probably only accelerate asset appreciation in the coming months. Even though the negative for the future is well documented, we have years to prepare for that and we should participate in any market increases that occur due to this flooding of cash by our Federal Government. 

Mia Musciano-Howard and her
family enjoying their annual, 
traditional Christmas PJ picture

Sometimes, I like to reflect upon the growth of our firm here in Atlanta. In 2015, CNBC ranked our firm the 20th best financial advisor in the country. This is not an award that we asked for, applied for, paid for, or even actually knew was even going on. At that time, the information they utilized was from our SEC filing that listed our assets at $274 million. Today, five years later, we are approaching $1 billion dollars in assets with clients all over the United States, as well as clients in Europe and Asia. It has been a remarkable run of accumulation of assets and we are truly blessed with the clients that rewarded us with their hard-owned assets and allowed us to grow those assets for them. 

At the beginning of every year, I give you my projection for the upcoming year for investing. It is impossible to project for 2021 based upon any type of documented price/earnings ratio. All these calculations are totally out of whack because of the extraordinarily low interest rates that we are enjoying today and the earnings that were unfairly punished during the pandemic in 2020. What would be different in 2021 is that we expect the earnings to come roaring back as the economy loosens up and we return to a normal lifestyle in the second half of 2021. But interestingly, we do not anticipate a large increase in interest rates which would normally be the result of a strengthened economy in 2021. 

Morgan Miner and her cat, Drake, 
who is on the naughty list this year 

Since the Federal Reserve has essentially guaranteed low interest rates for three more years, it appears that will allow the economy to accelerate based on its earnings without interruption of governmental intervention. Therefore, I expect that during 2021 we should see another excellent investment year that will be very satisfying for your long-term retirement needs. I see the S&P 500 Index ending the year at a level of 4400, which would mean that it would gain 644 points during 2021. This would be a total increase of 17%. In addition to that, the annual dividend rate of this index is roughly 2%. So, I project today that the total return for the S&P 500 for the year 2021 would be a total return of roughly 19%. This would be another extraordinary excellent year. I really hope I am correct. 

What I do not expect to happen is that this really nice gain in 2021 will be straight up. I fully expect that it will be choppy along the way and there will be periods of time where there will be extraordinary volatility. Once again, I want to point out that any short-term disruption in the market is likely to be very short-term. While you will always have traders attempting to move the market to their benefit, just exactly where are they going to go to invest? As illustrated above, we do not believe that bonds form a reasonable alternative to stocks and the very low rates of returns on cash are not very attractive. Therefore, while the traders may move in and out of stocks, it is unlikely that they will be out very long. So, while you may see major swings of the market, these will only be temporary and will lead to a very satisfactory year before year-end. 

We are also seeing strength throughout the world as the economies recover. Already in Asia, their economies are back to full capacity. You are seeing major advances in Vietnam, Indonesia, Malaysia, and Southeast Asia. Already China is back in full production even though their political issues continue to overwhelm their financial markets. While Europe is not fully recovered, they are making significant progress. With the advent of the rollout of vaccines throughout the world by the summer of 2021, virtually all economies will have at least stabilized and start to move higher. All of this will lead to a worldwide rally in stock markets which is likely to be unprecedented in its coordinated move higher. Make no mistake that this coordination of higher economies is solely due to the assistance with the central governments of all those countries flooding their economies with liquidity. If for whatever reason the central governments elect not to continue to fund the economy, this projection may change. However, I highly doubt that any change will be in the offering in 2021. 

Musciano-Howard twins, Mitch and Marti (16)

So, in summary I am very optimistic for 2021 as compared to the pessimistic view held by many. One of the things I have been able to do to successfully invest, is to separate my feelings regarding most everything and rely upon all my instincts of economics regarding stock prices. Every time I hear a client express the negativity of restaurants not being open as a reason why the economy will not succeed gives me greater confidence that I am correct. As we went through 2020, we suffered huge economic declines, buy yet cash continued to accumulate in peoples checking accounts. Even though many will forever distain the activity of 2020, the vast majority of investors have benefited even from the turmoil of that year. 

I fully expect 2021 to go through major ups and downs, but by the Fall of 2021 the outlook should be much clearer and more positive than today. For those of you that are not invested and refuse to invest due to your perceived conceptual idea of stock prices being too high really are not taking into account the economic benefits of the gusher of money reaching the economy by the Federal Government.      

On that note, come visit with us and discuss your goals and financial plans. If you are interested in discussing your specific financial situation, please feel free to call or email.

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

Best Regards,
Joe Rollins 

Friday, December 18, 2020

“It Was the Best of Times, It Was the Worst of Times, It Was the Age of Wisdom, It Was the Age of Foolishness, It Was the Epoch of Belief, It Was the Epoch of Incredulity, …” – Charles Dickens, A Tale of Two Cities

Hopefully, Charles Dickens will forgive my use above of his famous quote from A Tale of Two Cities, although written in 1859 it seems to readily apply to today’s feeling in the U.S. As we move quickly into the, supposedly, “merry” holiday season, I began wondering why so many people have such a bad attitude nowadays. We have so much to be thankful for this year, even with all its problems and concerns. In my opinion, the list of things that are just great far exceed the things that are just bad. However, for reasons unclear to me, the public seems to have such a bad attitude about virtually everything. You have to think that from a stock market perspective, this lack of optimism is a true indicator of better things to come. 

I decided to write this blog and try to remind you of all the good things that are going on, as compared to the bad. I sat down and made a list of the things I could quickly think of as positives and the negatives hardly create even a list. This has been nothing short of a fabulous investment year, yet all we hear about are the negatives in the media about things for which we had no control. So, I decided since no one else will do it, I will give you the list of positives I see in the current economy. 

Dakota and Ava looking at a wonderful Christmas light display

Additionally, I visited the Pro Football Hall of Fame in Canton, Ohio recently and I thought I would share my thoughts on that famous building. Also, just to point out, much of the memorabilia we have here in our office is sports related, but we have other pieces that I think you would find of interest as well. I could not write about all of these things without also commenting on the progress with COVID-19 and the incredible successes made by the government in trying to control this terrible virus. I know it is a lot to cover in four short pages, but I thought I would at least give it a try. Always seems like plenty to discuss. 

Before I jump into those more interesting topics, I must reflect upon what was just a fabulous investment period during the month of November. I wish I could even quantify the number of clients that told me they did not want to be invested during the election month. I tried to explain that regardless of who wins the election, economics would win, and the economy was strong and getting stronger, and the earnings were high and getting higher. This almost assuredly would outweigh the political influence of who wins the election. The results for November soundly supported my conclusion and led to record gains in the month of November. 

The Standard & Poor’s Index of 500 stocks was up 10.9% during the month of November. Year-to-date in 2020, it is up double digits at 14%. The increase in this index is 17.5% for one year and, on average, 14.2% over the 10-year period. The Dow Jones Industrial Average was up 12.1% in November and is up 6.1% for the year 2020. The increase for this index is 8.1% for one year and 13.5% for the 10-year average. The NASDAQ Composite was up 11.9% for the month of November and up a sterling 37.1% for the year 2020. The one-year total return is 42.1% and the 10-year average is 18.5%. 

Just for purposes of comparison, the Bloomberg Barclays Aggregate Bond Index was up 1.1% in November, up 7.8% in the year 2020, the one-year total return is 7.4% and the 10-year average return in the bond index is 3.7%. As you can see, any three of the major market indexes is three to four times higher than the bond index over the last 10-year period. Even as I dictate these returns, I think it is important that you realize that the year 2020 has been a stock-pickers paradise. Even though the S&P 500 Index is up double digits through November, virtually all the best managed mutual funds are up two to three times higher than the S&P 500 Index. It is years like this where highly qualified stock-pickers can vastly beat the index returns. This year virtually all well-run mutual funds with qualified managers have returns far in excess of the indexes noted above. 

I thought I would just make a list of all the things that are going well in 2020 as you may not get this information anywhere but here. We have enjoyed a fabulous stock market in 2020, which has turned out to be one of the best total return markets of all time. The United States led the world in developing a vaccine for COVID-19 in a period of a little over six months and now this vaccine is rolling out in the United Kingdom and the U.S. beginning this week. Not only was this vaccine developed in record time and with a new and novel approach, but its efficiency level is also at a historic high, believed to be greater than 95%. I will comment further on the current state of the virus later in these writings. 

Corporate earnings have recovered and for the third quarter of 2020, were actually higher than they were in the third quarter of 2019. Who would have thought, given the depth of the recession that we suffered due to governmental shutdowns, corporate earnings would recover and even be higher than the previous year? We have record low interest rates, fueling a huge increase in home values and making refinancing available to everyone. Not only are interest rates low, but the Federal Reserve has promised to keep interest rates low for another 2-4 years. 

A beautiful Florida sunset

We have an inept Congress that is split totally on an ideological basis, which can be nothing but good for investors. The less Congress does, the better it will be for investing. If it were not for a split Congress, the newly elected administration most assuredly would try to increase tax rates, making profits lower and, by definition, the stock market would be less robust. We are thankful to have the inept and mixed Congress, so as they are not likely to do that much harm. 

We have a great economy in the U.S. that has rebounded completely from a recession back to a booming economy. Corporate profits are increasing, and entrepreneurs are able to issue stock on new and exciting ideas at record prices. As the stock market goes up, citizen’s 401(k)s are increased, increasing the likelihood of strong retirement years. GDP for all of 2021 is forecasted at 4.2%, excellent. 

In just a few short years we have seen the conversion from internal combustion engines to electric cars. Even a decade ago, it was a wild dream to think that someone could produce an electric car that was efficient and have a daily mileage limit that would be useful. These cars now exist, and every major car manufacturer is falling over themselves to produce them. As more electric cars are on the road, we solve one of the great problems of America; air quality and the very destructive production of fossil fuels to create gasoline for automobiles. You do not have to look too far in the future to see that electric vehicles will be prominent in the decades to come. Notwithstanding their inability to do anything useful, there is a high likelihood that Congress will pass an additional stimulus bill which will help many small businesses get back on their feet and open for business. 

If you go back and read the blogs I wrote in March and April of 2020, I implored you to avoid all the headlines and, as is often quoted from Jerry Maguire, “Show me the money”. Since I have studied basic economics all my life, the one thing that we absolutely know for sure is that if you inject cash into the economy, eventually that cash will show up as commerce that will eventually find its way to investing. During March and April of 2020, the Federal Reserve, along with the CARES Act and its buying bond program, ejected roughly $3 trillion into the U.S. economy. If you understand the velocity of money, which argues that money is spent seven times before it is saved, that would imply an injection of capital of $21 trillion over a 90 day period. Just to put that into perspective, that amount of GDP is greater than the annual GDP of China, which is the second largest GDP country in the world. 

Treasure Island, FL, a view that never gets old

I argued at that time that there is no way that $21 trillion worth of stimulus would not create a better economy. Almost immediately we saw businesses employing people and retail opening to the public. As the economy strengthened due to the governmental money the stock market came roaring back and recently the Dow has passed the 30,000 level and all major market indexes have hit all time highs early in December 2020. You might ask how I felt so confident about that turn around. It has nothing to do with politics, but it has everything to do with money. If you put money in the economy, people will spend it to create commerce and eventually they will save it to create higher stock prices. It is estimated still that there is $4 trillion in cash sitting on the sidelines waiting to be invested. If you knew no other number other than that one fact, you have to feel good about the stock market going forward. 

I am often asked what my projections for the future are regarding the market and what would be the driving forces of the market’s advances. It is pretty simple to look up the expected earnings of the S&P 500 stocks. It is estimated that the earnings for 2020 will be $156/share. In 2021, that number is supposed to be $182/share, a 16% increase and in 2022, $200/share for another 10% increase. A couple of those excellent numbers, with the pledge of the Federal Reserve not to increase interest rates for the next two years, and you can see that the potential gains on the market could be substantial over the coming two years. Given that interest-sensitive investments (bonds and CDs) at the current time appear to be a loss leader, higher interest rates will not draw money out of the stock market, but rather low interest rates will force money into it. Given that scenario, it is highly likely that stock prices will continue to go up over the next two years. 

So, while we sit around for all of 2020 feeling sorry for ourselves and bemoaning the fact that we cannot go on vacation, eat in restaurants, or go to movie theaters, what has happened to the net worth of Americans? Due to the strong effects of the stock market and the housing market, the effects have been electric for household wealth. During the 3rd quarter of 2020, household wealth went up by a cool $3.8 trillion. If you say it did not happen to you, you just have not thought about it recently. With the strong gains in the stock market, your 401(k) went up significantly and the value of your house increased due to the strong housing market. 

It is now estimated that the net worth of the households in the United States is $123.52 trillion, as estimated by the Federal Reserve last week. Roll that number around in your mind awhile and realize we are talking about trillions of dollars that is spread through the 338 million residents of the United States. It is estimated that residential real estate went up by a cool $30 billion in the latest quarter alone, and that over the course of this year in 2020 due to the abnormally low interest rates and strong housing market, the net equity in real estate by all Americans will have gone up by $1 trillion by the end of the year. So, I guess it could be said that while you were sitting around feeling sorry for yourself in 2020, your net worth went up substantially without you working too hard to increase it. Are you starting to feel wealthier now? 

Carter and Ava enjoying a day at the park

I really get irritated sometimes when I read the talking points about how the stock market only affects the wealthy and not the average American. It is now estimated that over 100 million Americans save in a 401(k) plan. Back in 1990, that number was 19 million, so it has gone up five times over the intervening 30 years. In addition to 401(k) plans, there are many savers in IRAs, 403(b)s and 529 college savings plans. Before, it could be said that roughly one out of every three Americans have a direct link to the stock market and the success of the stock market but I see this changing in kids coming out of college today. They all understand the value of saving early and often, unlike their parents who waited until later in life. Considering a large portion of the population are minors, if you broke it down into households, it is more likely one out of every two households were directly invested in one of these investment vehicles, which would be their primary form of income once they reach retirement age. When President Trump took office on election day in 2016, the S&P 500 stood at 2140. Right before the market plunged due to the coronavirus shutdown, the market had increased close to 60% during the intervening three and a half years. As I write this, the S&P 500 is at 3700, a 73% increase. 

Think about the wealth that was created during this time period due to the increase in the stock market valuations. Also understand that this increase will lead directly to better retirement years for senior citizens and a better way of life for Americans in retirement. Those that argue that stock markets are only related to the rich clearly do not understand the broad appeal of 401(k) plans today. Any plan to increase taxes to the detriment of stock prices would have a detrimental effect on 50% of Americans and clearly would have a detrimental effect on their potential retirement. 

You cannot help but read the articles everyday regarding the current impact that COVID-19 is having on Americans. Of course, I am a skeptic of these articles because I really cannot understand what their motivation is. For instance, as of today, there are 16.5 million cases of coronavirus in the United States, according to the famous website on the subject. How exactly does the fact that 16 million cases, many occurring back in March, April, and May, provide us any additional information now that these people are well. What is a more important consideration is how many active cases are there today and where we stand in connection with protecting the public’s health. Based on this website, there are roughly 6.6 million active coronavirus cases today. You have to keep in perspective that that is only 2% of the population in the United States. Therefore, if you had a room with 100 people, only two of those 100 people, on average, are likely to be infected. 

Pro Football Hall of Fame in Canton, Ohio

What we also know now is that the governmental actions to limit the spread of the virus were totally ineffective. I look back over this time period and wonder exactly what someone could have done to help the matter. I hear so many outspoken critics say that the U.S. completely mishandled the virus to the detriment of Americans. I do not hear any of these critics saying what they would do differently. It seems to be a common trend that these critics argue that the only way to snuff out the virus would have been to have a complete and total shutdown of the U.S. for a prolonged period until the virus was gone. Economically, that is complete and total nonsense. 

Economically, you could never have shut down the American economy for that period without severe economic consequences. And it does not appear to have even worked anyway. If you look at California and New York, which suffered through very long government-enforced shutdowns, it really has not helped their situation. California has banned indoor dining, sporting events, theme parks, or any type of public gathering however, their number of virus cases continue to grow at the highest level of any state in the United States. New York once again has shut down indoor dining, creating devastating effects on millions of hospitality workers, yet their virus numbers continue to grow. How well did that work? 

So, if we agree that shutdowns are ineffective, what exactly could we have done to stop the virus in America? It seems to me that what we did was exactly the right thing. We used the government’s money to fund the creation of a vaccine in record time in order to vaccinate the public. When I was growing up, we used to have what was termed “polio days.” We would have an outbreak of polio in the community and people would stay home from school to avoid polio. Vaccinations have eliminated polio in the United States. Vaccinations are the answer for many diseases such as the elimination of smallpox, chickenpox and the measles as well. 

The issue was how do we get vaccinations to the public as quick as possible, and the government did an excellent job in providing the money necessary to make that happen. What went wrong in this process is that local governmental officials thinking they knew more about public health than they obviously did and forced absolutely crazy rules on businesses, creating economic strife for families and industries. In retrospect, I doubt very seriously that the results of this virus would have been much different if we had not shut down at all. 

A concert ticket, song list and book of 
The Beatles from their show in Atlanta

I hear people all the time saying, “let’s follow the scientists and determine what they say.” If we had followed the scientists that forecasted over two million deaths in America, think about how bad of economic consequences we would have today. It is true today after almost nine months of the coronavirus that if you are under the age of 40, you have a statistical zero chance of dying from this virus. Yet, to this day we still have shut down our colleges and public school systems to accommodate a fear of death that absolutely does not exist. I am not arguing that this is not a terrible disease that many people have died from. All I argue is that it was such an unknown that I really doubt anyone could have done any better to prevent the consequences that we see today. But with the hope of vaccinations, we will lead to normalcy by spring. 

I happened to be in Cleveland, Ohio recently and decided to go by the Pro Football Hall of Fame in Canton, Ohio. I guess I have heard about the Hall of Fame my entire life and I have never been in the area or never wanted to make a special trip to see it. First off, Canton is pretty much out of the way and the area where the Hall of Fame sits is not a booming economic metropolis. After paying my $25 to get in, I walked through the exhibits for several hours. What I found was that, for the most part, their idea of “exhibits” was jerseys of famous players during their eras. I think I have more signed jerseys in my office than they do in the Hall of Fame. 

For the most part, these jerseys that are on exhibit at the Hall of Fame can be purchased from virtually any source. They do not even have a Joe Namath signed picture, but I do, several in fact. Sometime when you are in the area, maybe you could take a tour of our offices. We have other pieces other than sports memorabilia. In 1965, The Beatles actually played in Atlanta at the old Fulton County stadium. They played 11 songs that night and were on the stage for 21 total minutes. I actually have the program from that concert, the original ticket from the concert, and the playlist posted in my office. You could have bought that ticket to see that concert in 1965 for $5.50. See above. 

The Beatles right after their famous Pan Am flight

In 1963, The Beatles came to the United States for the first time. Their famous landing at LaGuardia Airport on a Pan Am flight was legendary. One of my clients was the original beat reporter for Life Magazine on the tour of The Beatles when they first toured the United States in 1963. I have a picture posted in my office that was in the original Life Magazine of The Beatles in the Pan Am plane that was taken by her. I also have the trademark of Life Magazine that indicated the picture belonged to them. We have many other interesting memorabilia pieces that you are welcome to view on your next visit, including a picture of the Enola Gay signed by the captain, Paul Tibbets. 

In summary, as bad as 2020 has been for all the reasons above, it has been a quite spectacular year financially. Virtually all Americans have increased their net worth, even with the hardships imposed upon them by ill-informed governments. I am very excited about 2021 and 2022 economically. If we can avoid governmental intervention and an ill-informed Congress, there is a high likelihood that we will set additional stock market records in both 2021 and 2022. You will not set any records sitting in cash.   

On that note, come visit with us and discuss your goals and financial plans. If you are interested in discussing your specific financial situation, please feel free to call or email.

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

Best Regards,
Joe Rollins