Month: March 2021

When the Going Gets Tough

photo shows warning sign for a rough road

Find the bargains. Own the orchard for the fruit crop. Avoid the stampede.

Our three main principles form a pretty clear constellation, guiding our practices here at 228 Main. They are action-oriented, so it’s not hard to tell day to day whether we’re sticking to them.

But what makes us stick with them, especially if we’re bracing for a downturn?

In life, when the going gets tough, our defenses can erode pretty quickly. Our energy flags. Anxiety kicks in. And loss can trick us into believing that good times will never return, that the hurt wins.

Writer and businessperson Arianna Huffington suggests a simple way to get sound decision-making back on track: choose love.

“You’ve got to make your heart bigger than the hole,” she says in her book Thrive. “You just have to make your decisions out of love. And when we make the decisions out of fear, that’s when we have problems.”

Trouble and triumph, set-ups and setbacks—those are constants, and our lives travel the roads back and forth to each. Why should we let fear take the wheel for any part of the journey?

Clients, we know that you’ve felt these truths: it’s part of what makes you the best clients in the whole world, after all. Let this be a reminder, then. We’re with you. We journey together.

When you’d like to talk about this—or anything else—please write or call.

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Catching FOMO: Homebuyer Edition

photo shows "FOR SALE" sign in front of house

With mortgage interest rates rising, some clients are feeling extra pressure to take action, to either buy a home or trade up to a different property. They have a classic case of FOMO… the “fear of missing out.”

We have a principle we strive to live by when it comes to choosing a home: optimize happiness, not money. In your ideal life, where do you want to wake up every day? The answer is usually not “in the place that optimizes my lowest possible mortgage payment.”

Interest rates can be a factor in the cost of home ownership, yes, but recent (and potential future) changes seem to be causing some undue angst.

The Primary Market Survey (accessed via YCharts, March 18, 2021) shows average 30-year mortgage rates have perked up about a third of a percentage point this year—from 2.67% to a little over 3%. This would make about a $50 monthly difference on a typical $250,000 mortgage.

The fear, then, is based mostly in what the future may bring in terms of higher rates. They can only go up from here, right?

The context of history may help, as it often does.

At the high point in 1981, mortgage rates topped 18%. Then they spent about a decade in double digits, followed by a decade mostly above 7%. Since 2000, a general slide lower and lower put rates below 3% for the first time.

Interestingly, back at that high point, nearly everyone with a fixed-rate mortgage they’d purchased in the past felt that they had a bargain. There were people paying 4% or 5% on mortgages from prior decades, while new loans were up in double digits.

If mortgage rates are facing a rise that is a mirror image of the past decline, borrowers in this era and for years to come may end up feeling the same way.

If you are striving to buy your first home or move up, our counsel remains the same. Think about where you want to wake up every day. If you find that place, figure out if you can make it happen. Optimize happiness, not money. (As with any consumption item, meeting one’s needs is preferable to wretched excess, of course.)

Clients, for detailed advice about home-buying, ask your trusted realtor; when you have questions about what a home purchase means for your financial plans and planning, email us or call.

Chart, line chart

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30 Year Mortgage Rate, powered by YCharts.

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Batter Up!

photo shows a hand holding a softball in front of a lit field

The return of baseball has us dreaming of summer days in the park. We’ve written about baseball and the markets before, as the rich history and data in both draw parallels.

We’re not the only ones; Uncle Warren Buffett himself has used baseball to think about Mr. Market.

As Buffett quipped, “The stock market is a no-called-strike game. You don’t have to swing at everything.”

Our “plate discipline,” as it were, has been strengthened by time. But the ability to let investment opportunities go by is only part of it.

Once you understand that you don’t have to swing at everything, you can discover your strengths. Our principles guide what “pitches” we swing at. We only swing when we think we can hit it out of the park. (Of course, like the best batters, it’s possible to miss from time to time).

Just as there are batters who seek out certain types of pitches, investors can do the same. We don’t pretend that our approach is the only way. If another batter likes the high ones, good for them—not for us.

Clients, if you’ve got a pitch you’d like to heave at us, give us a call.

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The Curse of Cash on the Sidelines

photos shows empty bench in a dugout

A recent theme among some financial types: lamenting the dilemma of clients who sold out of long-term investments in a panic a year ago, thus missing the following recovery.

The sharp drop in the markets at the beginning of the pandemic was a little unnerving, but those who sold low face a tough question: “When do I get back in?” With the best clients in the world, this is a question that does not come up here at 228 Main. It is worthwhile to consider the factors that lead us to this wonderful state of affairs. We believe there is one skill and one mindset that explain it.

The skill is being able to make decisions in the face of uncertainty. There are very few “lead pipe cinches,” as Grandpa used to say, no absolute certainty about how things will turn out. Investing is largely a matter of sorting out what may be likely to happen—a question of probabilities.

Clients, you know your portfolios inevitably will include some stocks that just did not work out as we imagined. It turns out that our crystal ball is not quite a crystal ball: we can’t know the future. Our experience and our hope is that those stocks that do work out—or perhaps even dazzle us!—will more than balance out the disappointments.

The mindset is that the United States will always get through its setbacks and challenges somehow, and we’ll emerge on the other side with opportunities for new growth and greater prosperity. (Also, if we are doomed to return to the Stone Age, as some portend, it isn’t going to matter what we own. Might as well be optimistic!)

This mindset, combined with that skill of being able to make decisions despite uncertainty, help us stay the course. We believe that sticking with sound strategy has helped us all in the past—and that it offers opportunity for the years and decades ahead. Clients, if you would like to talk about strategy and tactics, or about anything else, please email us or call.

Investing involves risk including loss of principal.

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Streams of Consciousness

photo shows four different driftwood fires burning on a Platte River sandbar

A pastime of mine is enjoying driftwood fires on the Platte River, just outside beautiful downtown Louisville. With the changes in the weather, a recent trip to the river got me thinking.

There’s an idea—often attributed to Greek philosopher Heraclitus—that suggests, “No one ever steps in the same river twice, for it’s not the same river, and they are not the same person.”

Each day, we experience new things. These events bring us joy, sadness, pain, elation. Some events change us by an inch. Others change us by a mile. Some changes are flighty. Others are permanent.

But we change daily.

The market has been acting like this proverbial river lately. From a distance, not much has changed. But if you look closer, you’ll see it differently. Small victories. Temporary setbacks. The ebb and flow of new information.

We have a sense of where the market is flowing. But just like an actual river, there are no guarantees (Mother Nature has her ways, right?).

As the river makes anew, it brings me more driftwood. Which allows me to continue my pastime. Which prompts me to recognize that each fire is different—and the observer is different too.

Clients, if you’d like to talk about this or anything else, email or call.

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Raphael, Donatello, da Vinci… Markelangelo?

photo shows paint jars and brushes on a painted surface

When you mow a lawn, or paint a wall, or run a race, every bit of effort moves you closer to the end. There is only progress. You see tangible, visible results: grass clippings pile up, or the paint covers more of the wall, or the finish line gets closer. 

Long-term investing is different. On nearly half of all days, the broad market averages go backward. This has also happened over whole years, about one out of four historically.  

When we paint a wall, there are no forces moving with us and wiping away one stroke of paint for every four we make! 

So in this respect, investing is more like creative work. An artist who paints might have to add layers over their earlier work to create the effect they want. They might even use a palette knife to—yep—remove paint and clear a space for something different. 

Maybe investing and creating both require a long view, guided by a vision of what might be. Both pursuits require the patience to work at it even when results come only in fits and starts. No guarantees in either arena, but we don’t know which ideas will pan out without the pursuit.

I’m no artist, but that sure is what investing feels like. 

A lap with the mower provides its own immediate feedback. When we make an investment, the early results could be positive or negative, and it may feel like a coin toss. Only as the months and years roll by do we see the fruits of our work. Some backward movement, sure, but we expect to see progress across the process. 

We cannot do this work for just anyone. It takes people who have perspective, the ability to take that long view, to have faith that we are on the right track even when temporary setbacks engulf us.

Fortunately, here at 228 Main we have the best clients in the world. We are grateful for you. 

If you would like to talk about progress toward your goals (or anything else), please email us or call. 

All investing includes risk including loss of principal.

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Raphael, Donatello, da Vinci… Markelangelo? Presents: The Best of Leibman Financial Services

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A Carousel of Goals

photo shows a colorful carousel ride of horses

Many of us have ridden on a merry-go-round, a carousel, at one time or another, haven’t we? In my earliest childhood memory, I regretted that I could only ride one of the colorful horses at a time. I knew which one I wanted first, but then there were others that I seemed to need a turn with. My folks arranged another ride, then another, so I could try a variety of them.

Life is like that, too. We tend to be consumed by different goals or interests at different times, even while others strive for our attention.

I spent a dozen years from age 40 on establishing the business at 228 Main; commerce was the theme of that chapter. Before that, my children received more time and energy. After that, a decade of snowbirding to Florida taught me to balance business with pursuits normally reserved for the retired. Family health issues then became the dominant concern.

Now, at an age when many are climbing on the retirement horse, I’m back on the business horse. Some of my contemporaries are spending more time in warmer places in winter, while I just sold my Florida home. It’s like I’m doing things backward, but don’t we all pick different seats on the carousel? Different preferences?

I wonder whether this is the latest manifestation of my contrarian nature, that approaching age 65 I am committing, more than ever, to my work and business. Or is this just a piece of a very old pattern, my intent to work to age 92?

I am not sure of the answers to those questions, but I do know this: I’m content in this chapter. My efforts are fulfilling; I have the time and space to do the things one might do to try to stay healthy; I am happy with my connections to you and others in my life. My life feels integrated, all aspects.

At the heart of this sense of fulfillment is being of service. No matter which goal currently has your attention, if there is something you would like to work on together, please email me or call.

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