Tactics

Something Wonderful is “Afoot”
by Mark Leibman, President

Each of our feet has 19 muscles, 26 bones, and 33 joints, but we usually do not think about a single one of them when we take a step. Coordination and balance are elements that happen beneath our consciousness. We are free to enjoy our walk, to daydream or reminisce or plan.

Can you imagine trying to think about what each of 19 muscles should do with each step?

Meanwhile, each of our portfolios has between twenty and forty holdings. We make adjustments every few months to pare some back and add to others, to buy new opportunities and sell out of others. We’re reading SEC filings, quarterly reports, economic news, and investment research to inform our efforts.

You—the best clients in the world—do not have to think about any of that while you are living life. Whether you are investing for the day you can live on your capital or already “living on the fruit crop” after a career tending the orchard, we are busy coordinating and balancing the elements to help build your wealth.

I like to walk; my feet are rather important in that process. But I appreciate not having to think about the flexor digitorum brevis muscle… or any of them! I’m free to think about anything else while I’m out on the trail or walking around the lakes or on the riverbank.

In case you do want to learn more about what is going on behind the scenes, our blog posts and videos and podcasts are a good way to learn about our philosophy and strategies and tactics. And you can always call or email us when you want a one-on-one conversation—we are here for it.

In the meantime, just like your feet, we’ll be working to get you where you want to go.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss.

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Something Wonderful Is “Afoot” – 228Main.com Presents: The Best of Leibman Financial Services

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What Happens on the Research Team… Goes in Portfolios!

Clients, this week we’ve got a little behind the scenes tour: what happens in our in-house research process?

Here are some of the things we like to think about (so that you don’t have to!).

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Larry, Serendipity, and the Building of 228 Main 

The way events might occur by chance, to our happiness or benefit, is called serendipity.

It’s coincidence. 

It’s good luck. 

And maybe sometimes it’s providence. All of these could define the word “serendipity.” And all describe our long association with Larry Wiederspan. 

Mark met Larry in one of his earliest incarnations in business, as a life insurance agent working with country banks and bankers. The owners of a small chain of banks sent him out west to see one of their branch office managers at a location 200 miles away, in the middle of Nebraska, to implement a benefit plan. 

They hit it off. Mark worked with Larry and his wife Marilyn on their plans and planning. They not only came along as Mark’s solo practice grew into an enterprise; Larry played a key part in that transformation. 

Serendipity struck a dozen years ago, when Mark learned that the Wiederspans were thinking about a move to our neighborhood after Marilyn’s retirement. Larry’s integrity, diligence, good faith, attention to detail, and friendliness were things our shop needed. 

At the time, increasing regulatory requirements meant that files needed updating and business processes became more cumbersome—precisely when family health issues took Mark out of the shop for weeks at a time. 

But things came together. Larry and Marilyn moved closer to their grandchildren, Larry started helping Greg and Mark take care of business through trying times, and you got the benefit of getting to know Larry.

It was a big win for everyone.

Larry retired a couple years ago, but it didn’t stick. He tells us now the time has come—for sure. We’ll soon be short the regular company of this conscientious and pleasant fellow who means so much to us. We are still here in part because he was here for us. 

Mark’s gratitude will never repay the debt he feels to Larry.

In the meantime, clients, we’re continuing to work on our business with you—and planning for the future. Call or email us about anything you might need. 

Cheers to you, Larry!

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Larry, Serendipity, and the Building of 228 Main – 228Main.com Presents: The Best of Leibman Financial Services

This text can be found at https://www.228Main.com/.

The Ship of Theseus

In this video, Mark’s thinking about how things change—and how they stay the same—as they grow. It’s a business question, a philosophical question, and just kind of fun to think about! Join us on a little trip to the Greek Isles as we try to make sense of things.

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Declare a Financial Wellness Day
A red push pin pinned to a calendar

Maybe you’ve heard of a mental wellness day, or maybe you’ve taken one yourself! It’s an intentional break for work, school, or regular commitments to unplug from the world and take a breath. We know that it is impossible to be hustling and grinding every minute of every day. It’s nice to set aside time every once in a while just to relax—and remind us what we are working so hard for. 

What if we incorporated the idea of a mental wellness day into a day of financial planning? Why not schedule yourself a financial wellness day?  

Instead of looking at a review as just another chore, we can make a day of it! We can get our minds right and get our plans in order. We could take some time away from work, grab breakfast at our favorite spot, and get some perspective on our financial lives. For those with kids at home, maybe trade some babysitting with another family to buy a few weekend hours of focus. For partners, consider scheduling  a financial wellness date! 

No matter how you make it happen, focusing on financial wellness doesn’t have to be intimidating. You could work your way into reflection by asking a few questions: 

  1. What’s the current state of things? This first step is all about getting the lay of the land, no fancy tools required. 

You could start with a list or spreadsheet that includes a sketch of your monthly inflows (income) and outflows (spending). Jot down your current account types and their balances, as well as any other assets. If they’re weighing on your mind, you can also include any major outlays or projects coming up. 

You can go as deep as you’d like: review the last 3 months or the last 12. Choose whatever level of detail will help you get the major parts of your financial life on the table. What kind of snapshot do you want to review? 

  1. How well are things working? Once you’ve got all these different parts in front of you, this step is your chance to take stock. Is anything surprising you so far? What are you feeling, now that you’ve got a sense of the state of things?  

You may notice that there are things that “don’t add up,” places where how things have been going is not lining up with your values or your goals. Maybe you’re spending more in one area than you would’ve guessed—and would much rather have those resources going somewhere else. Maybe you’ve been focused on the long-term more than you need to and can loosen up in some areas; maybe you’ve been thinking about the short-term more than you’d like. 

So, what’s working well? What could use some more thought? This is a great time to get perspective on the big picture and start dreaming up any bigger plans that will take some runway. 

  1. What’s next? Take this step in whatever direction makes sense for you. It could be time to do some research, to see what opportunities might be out there—different types of accounts, new goals or plans or changes you’re imagining. It might be time to call in some support. Whether it’s a trusted confidant, a tax professional, or an investment adviser, think of who might be able to help you keep things moving. 

For any list-lovers out there, this could be the time to collect any tasks that have popped up during the process: double-checking an employer’s retirement plan match or other benefits, naming beneficiaries or working on legacy planning, or canceling any subscriptions or services you’re no longer using. 

Or consider giving yourself just one follow-up action. It could be as simple as a calendar reminder, set for a week or two after your financial wellness day, that says “call a friend to tell them about what I’m learning from my financial planning day.” The key is to plant a seed for yourself. 

We know that these topics sometimes bring a little apprehension, so it pays to set yourself up for success. Figure out what will help you get into the right headspace—and where you might start.  

We can also take heart that tending to our finances is one of the ways we take care of ourselves and the people we love. Time spent like this can pay dividends. 

Have questions before or after your financial wellness day? Reach out, any time. 

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Play the audio version of this post below:

Declare a Financial Wellness Day – 228Main.com Presents: The Best of Leibman Financial Services

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

The White-Knuckle Way

We can make flexibility a part of our lives and our financial planning. Our day-to-day is forever changing, and so it’s important to take some time to re-evaluate and make sure we are on track to get where we want to be. If our lives require a different plan, we make one! No one can white-knuckle their way to their dreams. 

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Warren, Charlie, and Us: The Rights of Owners 
AP Photo

The hallmark of our investment strategy is ownership of companies whose outlooks are favorable, in our view. A share of stock is a piece of the action: ownership of a fraction of an enterprise.

We own businesses in very old lines of work, like manufacturers of farm equipment. And companies in new lines of work, like cloud services. We are in software and chipmakers, miners and medicine.

Owners have rights. We elect directors. We receive our share of dividends paid. We get annual reports, and have the right to attend shareholder meetings. Most of us pay little attention to the trappings of corporate governance, with one exception.

Warren Buffett holds one of the largest annual shareholder meetings on the planet, with tens of thousands of people descending on Omaha for the festivities.

On the first weekend in May, information about Berkshire subsidiaries and products they offer is available at the meeting venue. You can buy everything from GEICO insurance to treats from Dairy Queen and learn about companies as diverse as Burlington Northern and Clayton Homes. Did we mention? Shareholders also get discounts at Nebraska Furniture Mart and Borsheims.

At the May meeting, Buffett and other key people will entertain questions from shareholders for hours, before conducting the business of the shareholder meeting. Some say that Buffett is among the most successful investors in the history of the world; at 94 years of age, there are only so many more chances to witness him at this event. (Charlie Munger, former vice chairman, passed away in 2023 at age 99.)

Clients, if you have an interest in being part of this, you’ll need shareholder credentials. In past years, there has been a postcard to order those included in the Annual Report, or you can let us know if we can help you obtain credentials. Stay tuned for more details in the weeks ahead.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. The payment of dividends is not guaranteed. Companies may reduce or eliminate the payment of dividends at any given time. Companies mentioned are for informational purposes only, and this communication should not be considered a solicitation for the purchase or sale of their securities.

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2024 edition: Warren, Charlie, and Us on the Rights of Owners – 228Main.com Presents: The Best of Leibman Financial Services

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

The Comfort Zone: Overrated or Underrated?

There’s nothing wrong with wanting more… unless it clouds the beauty in what we already have. We can be grateful for what we’ve built and still be ambitious to make ourselves and the world around us better.

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The “Company” We Keep
A group of magnifying glass
by Billy Garver, Data Analyst

How many strangers do you know? This isn’t some Zen riddle, but this question is trickier than the gut answer of “zero.” At one point, wasn’t your best friend a stranger?

As we meet new people, we may decide to remove the “stranger” label in favor of “acquaintance.” We learn the basics of the person at that point—name, occupation, and so on. We may develop a closer relationship, learning more intimate details. How’d they get where they are? And how are things going now?

We take a similar approach when building portfolios. When an investment opportunity arises, we may or may not have any prior experience with the company. We start by getting to know the basics—what they do, why they do it, how long have they done it, and so on.

From there, we may opt to remove that “stranger” label and start going deeper. When getting to know a company, understanding the company’s management, cash flows, and debt loads gives us a clearer picture. Only then does a company have a chance to enter your portfolios—the real inner circle!

Our relationship with the company doesn’t end there. Quarterly, we review each holding—making sure their business hasn’t deviated too far from what we expected. We check whether our understanding of the fundamentals is playing out.

Why does all this matter? Well, especially in the bumpiest of economic times, you don’t want any strangers in your portfolio. A swift change at the macro level can completely upend a business model. One thing that helps us weather the storms is knowing how our crew might navigate their way through them.

Being friends with the companies you own—being familiar with the details of their operations—helps prevent some of those big surprises in the long run. (Of course, it never eliminates the possibility of a surprise; friends can change and friends can make mistakes).

But, in the long run, it may pay to be careful of the “company” you keep.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss.

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The “Company” We Keep – 228Main.com Presents: The Best of Leibman Financial Services

This text can be found at https://www.228Main.com/.

Catsup, Ketchup, or Catch-Up?
graphic shows a piggy bank looking on curiously at a bottle of ketchup

One of these is not about tomato-based condiments.

In the world of IRAs—Individual Retirement Accounts—we consider the beginning of January through tax filing day “catch-up season.” Whether Roth or traditional, if we are eligible to make contributions, then we can catch up on our 2023 contributions even though 2023 is over.

Those just learning about the power of Roth IRAs can use this season to make two years’ worth of contributions at once. The limit on contributions is $6,500 for 2023 plus $7,000 for 2024.

Another note to know: for people who turn 50 by year-end, there is an extra $1,000 per year that can go in—a “catch-up” contribution.

Imagine if you had $13,500 in a regular account (in which you pay tax on earnings) and were eligible to contribute to a Roth IRA for 2023 and 2024. If you won’t be spending that money in the next few years, the question comes down to whether you would like to never pay tax on earnings on that money, ever again, for the rest of your life.

If that value were to double over the years and double again, as sometimes happens with long-term investments, there might be $54,000 available later with zero tax. And if you didn’t spend it, your beneficiaries would receive it, free of income tax.

No guarantees, of course: the markets go up and down.

The way Roth IRAs work, after five years your contributions can be withdrawn without tax. At the later of five years or age 59½, the earnings may be withdrawn without tax. There is a maximum earnings limit on Roth contribution eligibility; we’d be happy to visit with you about your eligibility. Simply email us or call if you have an interest in learning more.

There is a whole world of other lifetime tax reduction strategies related to Roth conversions; we’ll talk about those another time.

For now, happy catch-up season, one and all!

Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA.

A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss.

This information is not intended to be a substitute for specific individualized tax or legal advice. Neither LPL Financial, nor its registered representatives, offer tax or legal advice. We recommend you discuss your specific situation with a qualified tax or legal advisor.

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Catsup, Ketchup, or Catch-Up? – 228Main.com Presents: The Best of Leibman Financial Services

This text can be found at https://www.228Main.com/.