Month: June 2022

Lessons from the Open Road: Just Change the Tire
photo shows a car with a flat tire on the side of the road

As spring fades and summer draws near, some of us are gearing up for road trips. (Although we know gas prices might affect our plans!) We’re thinking lately about life on the open road—and what lessons it might offer investors. 

Imagine you’re going along a winding road, and the car gets a flat tire. There are some choices available here. Some might hop out and swap the flat for the spare. Some might get a hold of a car service or a trusted friend in the area and have them change the tire. These approaches at least get you back on the road. Reasonable enough, right? 

But there are other choices available. We could, for instance, slash the other three tires. We could dump a can of gasoline on the whole darn thing and light it up! We could declare it a lost cause and walk away. We could take the flat as the confirmation we were looking for that this journey was a mistake after all.  

We can abandon the endeavor. 

It sounds outrageous, given the facts of the matter. The trip was your plan: you got in the car, loaded the supplies, and set out. Sure, this moment could be a fabulous excuse to turn back, but if that’s the case, it seems to be more about the driver’s relationship to the journey—and not their relationship to the setback. 

It’s not black and white, of course. There are approaches that we might employ along the way that we choose before we make the bigger, more crucial decisions. We might kick the flat tire. We might shake our fists at the sky. We might call someone to say that we are frustrated or scared or sad. Yes, you bet! Sometimes we need to vent stress out of our bodies before we make decisions. 

But how many endeavors do we deny a fighting chance when we refuse to just change the tire and get back on the road? 

You can go the whole journey this way. It will get you where you’re going. 

Clients, maybe you can already hear the lessons for managing a portfolio and working with downs as well as the ups. We let our resources carry us, for the long haul. 

Want to talk more about this—or anything else? Call or write, anytime. 

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Lessons from the Open Road: Just Change the Tire – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

The Impossible Journey to Normal

The novel coronavirus is two years on, so what’s the deal with “the return to normal”? Some historical context and a few reminders.

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The Dragon and the Hobbit

Do you remember The Hobbit? If you ever read J. R. R. Tolkien’s novel or watched the movies, you may remember the scene where the title character discovers the dragon Smaug sleeping atop an enormous pile of gold and treasure. 

It’s a striking image: the entire wealth of a once-prosperous kingdom, gathered up, a bed for a giant dragon. Tolkien uses this splendid scenery to good effect, exciting the reader’s imagination with his description of riches. In the story, after reclaiming the dragon’s hoard, the hero Bilbo Baggins is able to ransom an entire city with just a one-fourteenth share of the treasure. 

You have to wonder… what good did owning such unimaginable riches actually do for Smaug? After all, he was a dragon. It’s not like he had shopping to do or bills to pay. Piling it up to make a nest for naptime just seems like a poor use of the assets. 

What’s more, the misused treasure had become a burden over time. When Bilbo first encountered the dragon, he managed to steal a single gold cup from the hoard. The loss of even this smallest part of his holdings made Smaug miserable and furious. For all his vast wealth, Smaug spent all his time and energy worrying about it. 

We don’t know many dragons or hobbits, but wealth is certainly important to the humans we know.  

Money can buy a better bed than a pile of gold (for a lot less, too). But money can also be a source of stress and frustration, from unexpected home repairs to medical bills and car accidents. It can feel like life keeps sending hobbits to pilfer the hoard you worked so hard to accumulate.  

But these moments are precisely what we saved for in the first place. As stressful as paying bills might be, it is less stressful than having bills and not being able to pay them. 

A pile of money can make your life easier, but only if you let it.  

At the end of The Hobbit, Bilbo returns home only to find that his house and possessions have been auctioned off in his absence. He is forced to spend his remaining fraction of the treasure buying his own belongings back from greedy relatives. 

Where Smaug lost sleep over a single gold cup, Bilbo feels only relief at giving up his hard-earned treasure to secure the happy and comfortable hobbit life he wants for himself. 

It’s no burrow, and there’s no tea kettle over an open fire, but you’re always welcome to our office in beautiful downtown Louisville, where there’s always a pot of coffee going. 

Call or drop by anytime: we’re glad to share the adventure. 

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The Dragon and the Hobbit – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

Research Team Q&A: Challenges and Opportunities in Rough Markets

Clients, what do we do when things get so churned up in the markets? We go bargain hunting, of course! In this special message, the team talks bargains, the long view, and keeping the faith through a downturn. Reach out with questions, anytime.

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Getting Stuck on the Ground Floor

“Getting in on the ground floor” may sound enticing. We humans like to be first, best, and on top of things. But just remember that the view is usually better from higher up.

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Never the Same Normal Twice
photo shows the word "normal" highlighted in the dictionary

At the start of 2020, few people could have guessed the whiplash and lasting impact the novel coronavirus has caused. The pandemic has affected each of us in different ways, some minor and some profound.

“The return to normalcy” has been a stated goal for many individuals, leaders, and communities. And different people have different perspectives on the types of costs they are willing to pay in the interest of the return to normalcy.

But what is normal?

Some of you are reading these words on the screen of a cell phone. A few decades ago, this moment would’ve sounded absurd. Our website is available online: 50 years ago, the internet was still firmly in the realm of science fiction. Heck, a century ago, the notion of an electronic programmable computer itself was beyond imagination.

Many things that we take for granted in our lives, it turns out, are hardly “normal” at all: in the big scheme, our everyday circumstances would be new and alien to those who came before us. The routines of our daily lives, the things that feel so comfortable and natural to us, are often a product of a specific time and place in human history.

The oldest among us—just at the edge of living memory—were born in a world that would have found many of our habits and rituals unrecognizable.

Other things, however, they would recognize in an instant. Survivors of the 1918 influenza epidemic would have been keenly familiar with wearing face masks in public and witnessing the ongoing debate about their usefulness and appropriateness. Stories about overcrowded hospitals and overworked doctors and discussions about “flattening the curve” would not have been new (or surprising) to them.

It turns out that not only is our “normal” actually abnormal, but our “abnormal” is more normal than we might think.

Someday, hopefully in the not-too-distant future, we will be able to close the chapter on this pandemic and our lives will return to normal.

… Which is to say, they will be different, new, and unprecedented. Just like always.

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Never the Same Normal Twice – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

Fantasy and Reality: A Huge Lesson from a Tiny Creature

One of the most striking images from Tolkien’s stories is of the dragon Smaug curled up on top of his massive treasure hoard. How far did his riches get him? Some real lessons from fantastic fiction.

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Pump Up the Prices: Putting Inflation in Perspective
graphic shows a dollar bill inflated

We’ve been hearing plenty out of the Federal Reserve Board from the business news outlets in recent weeks. Every wiggle of the Consumer Price Index has been dutifully tracked and reported, for those on inflation-watch. With recent inflation measures above the FRB’s 2% target, the finger-pointing becomes bigger news than the numbers themselves.

While we have fingers that are capable of pointing, we know they have better uses. One such use is preparing your portfolio to account for inflation. And this may actually take less energy than pointing and wagging our fingers after all!

When inflation dominates headlines, straight-line thinking starts taking over: how will we afford to buy groceries when gas is $300 a gallon? (I’m going to guess that we would find cuts elsewhere, like our cable bill, well before we starved.) And investors sometimes hop out of the market because the cost of doing business gets higher.

And those high-growth, pre-profit darlings will take a hit because a rise in interest rates—nominally to combat inflation—means these companies will pay more for the money to continue their pre-profitable journey.

When we invest in individual companies, we’re able to spot those holdings that benefit from a position of strength, whose business gives them the pricing power to ride out inflationary pressures. We’re excited about these holdings, and since we’re investing for the long haul, we’re expecting to ride along through multiple periods of rising and falling rates.

When we stretch out our time horizon, these major events look more like occasional bumps on the road to wealth.

So, in a way, we’re already investing for times of higher inflation. We make no guarantees that our way is better than any other, but we recommend caution when anyone acts like they have a crystal ball for this topic.

Let’s zoom out even more. At its core, asking about “when to get out” means that an investor will also have to ask “when to get back in”: success would require the investor to be lucky twice. We don’t prefer any scenario that slashes our odds so unnecessarily.

Clients, when you have questions or concerns, please reach out.

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Pump Up the Prices: Putting Inflation in Perspective – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

The View from the Top
photo shows a city skyline from the perspective of a rooftop viewfinder

In movies and popular media, there are certain images associated with investors. One of the character tropes is the well-to-do friend racing around in their fancy sports car.

Picture it with us. The car, bright and shiny, has a vanity license plate: it notes the ticker symbol for the holding that made them rich. If the story gives away any more information, it’s that the friend benefitted from a hot tip about a tiny tech company on the brink of striking it big.

Outside of Hollywood, it’s true that some of the most successful investors have done something like this. They happened upon that one hot investment that more than made up for all the mediocre ones. (The bad ones, too, for that matter.) They happened to get in, early.

Clients, we’re seeing newer industries with many possible pathways to growth over the next 7, 14, and 21 years. It’s exciting, but within each of these sectors, there might be dozens of public companies vying to become the next big thing. They all want their ticker on the license plate. The problem is, there is no way to tell—in the moment—which single company it will be.

If a growing industry is going to prove to be important, there’s no harm in waiting for the field to narrow. Time will tell, and so will experience, performance, management, debt, and competition. The companies that aren’t built to last? They’ll be winnowed out soon enough.

The car, the license plate, those aren’t the goal: we believe in investing because it’s getting a piece of the action. It’s providing capital to endeavors we can get behind.

So while getting in on the ground floor sounds enticing, there’s no promise that the building will ever be built—and it’s hard to beat the view from the top.

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Play the audio version of this post below:

The View from the Top – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.