Author: Leibman Financial Services

Portfolio Themes: December 2020

photo shows airplane at an airport at sunset

Our investment research process is bottom-up: we look first at individual companies, screening for bargains and dividends, checking out ideas, reading SEC filings and news reports.

But certain themes do tend to emerge, as favorable opportunities often cluster in one industry or sector.

Thinking about the big picture, it seems to us that inflation may surprise on the upside in the months and years ahead. The COVID-19 pandemic—suppressing activity on a global basis—may give way to a synchronized global recovery. With not enough production capacity attempting to supply material and goods through a transportation network constrained by the crisis, shortages may lead to higher prices.

Record tides of debt and monetary stimulus may create more purchasing power than there are goods and services to purchase. Therefore, we are striving to avoid low-interest bonds and other investments that expose us to the risk of loss from inflation.

Our most recent additions to the “buy list” reflect favorable valuations in companies we believe to be durable—and fundamental to our lives. We will still require food and shelter and medicine in the future; finding bargain prices in profitable, dividend-paying providers is a joy.

We have revised an older theme—airlines and related companies—to focus on those with the most durable balance sheets. The airline industry has faced new challenges in the pandemic, and an industry under stress presents an opportunity… but we need the companies to survive in order to live through the current difficulties. (Hence the focus on only the strongest.)

Certain natural resource holdings have become market darlings. We began investing in them years ago, sometimes adding at lower prices as we waited for the turn to come. Our patience is being rewarded, and we believe this theme has years to run.

This is not a comprehensive list, of course, but covers some of the dominant themes we are seeing today.

Clients, if you would like to discuss these or offer additional ideas, please email us or call.


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The Surprising Benefits of Hanging Out in the Gray

photo shows a black pencil on a white background next to a white pencil on a black background

In psychology, “black-and-white thinking” is a defense mechanism that helps the brain cope by pushing things to their extremes. If there is a crisp division between “right” and “wrong,” things are easier, yeah? It’s not so overwhelming to decide how to behave if we can boil a situation down to two basic options. 

Like a lot of fairytales, it sure does sound nice on the surface. 

But so few things in life are truly black-and-white, all-or-nothing, either/or. The problem with “black-and-white thinking” is that it’s almost always a logical fallacy.  

And a logical fallacy is just that: it is false, illogical. You can‘t reason with a fallacy. You reject it and find a frame that suits the situation better. 

So why do people avoid hanging out in all that gray between black and white? Because gray is blurry. There are way more decisions to make when we navigate the gray. 

I’m sorry to say it, but life is already mostly in the gray in-between. And it is no time for us to splinter into camps when we all could stay on the same team. Nebraskans are suffering tremendously as COVID-19 continues to move through our communities and swamp our hospitals and care systems. 

What if we didn’t splinter in the face of such challenges? It is easier to hang out in the gray when we accept that we are here together. The extremes get lonely: we’d rather face reality and work through it with each other. 

Across the coming years, we will learn more about the science of this pandemic and the damage it will continue to inflict even on those who survive. In the meantime, we don’t need things to be totally “black-and-white” to move in the right direction.  

Stay safe enough. 

Avoid unnecessary risks. 

Use our resources as wisely as we can

What do we stand to gain when we hang out in this blurry space? We get share each other’s strength in this tough time. We get to hold out some hope for the road ahead, the other side. 

Clients, we’re grateful to get to work with you, even in this tough time. Have questions about your own options? Let’s talk. 


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Have Your Cake, Eat Your Cake

photo shows a yellow cake with rainbow sprinkles with one piece gone

They say you can’t have your cake and eat it, too. Once you eat the cake, the cake is gone. No surprise, right? 

The same thing might be said of your retirement fund. It is there for you to spend as you see fit—but once you spend it, it is gone.  

How quickly you go through your retirement savings is a much bigger decision than how quickly you go through a cake. No one can tell you what the right answer is. Your retirement lifestyle might look very different from your neighbor’s retirement lifestyle.  

Some people hope to leave as much possible in their estate to provide a legacy for children and grandchildren. Others plan on spending as much as possible to enjoy the fruits of their own labors.  

Some people might plan to save the lion’s share of their savings to offset the healthcare costs they anticipate in their later years. Others plan to spend a big chunk up front, while they still have the good health to enjoy some options. 

None of these plans are inherently superior to any of the others. It is your money, after all. For many of you, retirement savings are the sum of an entire lifetime of work, and you alone get to decide how to direct them.  

What’s our wish for you? That you navigate these choices with your eyes open to the consequences.  

So here’s one important difference between your retirement savings and a cake: when you set aside a certain amount of cake for later, you will have exactly that much cake in the future: no more, no less. When you invest your nest egg, over time it may generate extra income and potentially appreciate in value, giving you more to spend in the future.  

There are no guarantees, of course. Depending on how aggressively you invest, you risk losing some of your value. This is just another tradeoff you need to weigh in planning your retirement. 

When we make our retirement choices carefully, the consequences are never a surprise. You can have your cake. You can eat your cake. Your call. 

Clients, when you have questions about this or anything else, please call or email. Let’s talk. 


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Don’t Let Anybody “Should” All Over You

photo shows a stop sign with a blue sky behind it

Trying to lose weight? Maybe you could focus on exercise, on diet, or on a combination of factors.  

Trying to repair something around the house? Maybe you could watch a tutorial and try your hand at it, or maybe you could hire out the work. 

But which way should you do it? 

The thrilling answer for many of life’s challenges and goals is that it depends. Lots of paths can lead to success. When we work with you, our clients, on your financial challenges and goals, the same is true.  

  • “What should I be doing to plan for retirement?” 
  • “What should I do with this inheritance?” 
  • “What should I do about this account?” 

It depends. That’s why we’re here to work with you, wherever you are in your process. 

Telling people what they “should” do with their money seems, to us, kind of gross. And we don’t want anyone to “should” all over you! 

I first heard this advice years ago from speaker and author Amy Florian, and it has roots with German theorist Karen Horney who talked about the “tyranny of the shoulds”: if we get too wrapped up with what we imagine what we “should” be doing, we lose sight of what we have and what’s within our control. 

The idea comes to mind whenever I read or hear some supposed expert on whether you “should” pay off your mortgage early or “should” retire at a certain age or “should” do anything. (I believe, quite often it comes from financial planners who seem to think they’ve been ordained to tell people how to live.) 

We think the first priority when you engage us on any issue is to outline the range of possibilities; then we can look together at the options and their ramifications. We’ll tell you what we think, but we will not tell you what to do.  

It is your money, your choice. What will help you sleep easy each night? What dreams are worth  pursuing each day? 

So what “should” you do? Well, we’d gently recommend that you not let anybody “should” all over you! 

Clients, let us know when we can help you address any of those “should” type of questions you may have.


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Gone Phishing

photo shows hands holding a cell phone showing "Unknown Caller"

The winter holidays are a busy season for everyone—including scam artists. One of the most common forms of fraud is known as “phishing.” Phishing attempts may happen as emails, texts, webpages, or automated phone calls that sound like they come from an official source.  

Identity thieves have been known to pose as businesses or government entities to trick consumers into sharing their information with someone they thought was an authority. Often identity thieves will claim there is some sort of problem and that you need to cooperate with them. (You can understand how someone might panic if they got a phone call suggesting they were in trouble with the IRS, right?)  

Another tactic may be telling you that you are entitled to money or other rewards, if you only give them what they need. 

The best way to protect yourself against identity theft is to stay calm and view the situation for what it is. Not sure whether you may be dealing with an imposter? Consider… 

How is the message arriving?  

  • Government agencies that have important matters to discuss with you will contact you via certified mail on official letterhead, not in a call or text. 
  • Expect official correspondence to sound professional and not contain obvious spelling or grammatical mistakes. 

What are they asking for?  

  • There is no reason for government authorities to ask you for your personal information such as Social Security number or date of birth. (They already have access to it: officials would be able to look it up themselves!) 
  • If someone is legitimately trying to give you money, they should not need money from you to facilitate the payment that is supposedly coming your way, nor would they need your Social Security number or other compromising personal details in order to send you money. 

Are they hurrying you? 

  • If you owe money to the government, officials will not try to get a credit card on the spot, and they will definitely not ask you to use PayPal or other online money transfer services.  
  • Remember that time is on your side. Very few legitimate issues are so urgent that you couldn’t hang up and take time to verify the situation.

Bundle up: add layers for protection. 

One way that we work to protect your accounts in case of identity theft is LPL’s Trusted Contact system. If we ever suspect that a request is fraudulent or that you are being manipulated, your trusted contact is someone we have permission to talk to about the situation to make sure that you are not being defrauded of your hard-earned money.  

Trusted contacts do not have authority to make changes on your accounts, but they can help verify that requests are actually coming from you and are on the level. It is up to you if you want to designate a trusted contact with us, but it is another layer of protection in case your identity is stolen. 

Clients, when you have questions about this or other topics please reach out. We’re here to help.


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The Cost of a Shortcut

photo shows a tunnel through brambles

You’ve heard us say it before: we are not a sales organization. Instead, our aim is to try to grow our clients’ buckets. 

As such, you don’t hear us bragging about our “monthly numbers,” our quotas, or other short-term goals. We’re all about the long term. 

Does that mean we don’t have an edge? 

We’ve been thinking that maybe the stuff we skip is part of what helps us focus. Plenty of businesses right now—inside and outside the financial world—are working hard on getting folks on board. We get pop-ups offering 20% off our first purchase… once we sign up. We see ads for that special welcome gift… once we sign up. 

Notice anything? These deals are aimed at the business’s short-term goal (getting you on board). They are not necessarily about your long-term wellbeing. They want you in the club, but once you jump in, it’s usually on their terms. 

We love a bargain or a good deal as much as the next person… but we also know our worth. Our time is valuable. Our resources are supposed to be tools for working toward our goals. We believe the same things are true about you, our clients. 

A shortcut, a leg-up, or priority treatment—they only matter if they’re heading the same direction you are. Otherwise, you may be accepting a shortcut to a dead-end. 

Clients, want to know more about what this means for you? Reach out when you’re ready. 


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