Our stuff is not the most important part of our financial planning, but it can certainly be part of it. As you look around at the things of your life, we hope that you see them as a reflection of and tool toward your goals—as part of a happier, healthier, and more sustainable financial future.
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Spring cleaning has given way to garage sale season in many communities. What a thrill for the senses! Whole rooms, stages of life, and past eras get arranged outside for our neighbors to consider.
I myself lean more minimalist, in general. Less stuff means less to manage. But having moved a few times in a few years, I’m thinking more about our relationship to the stuff our lives—and what it might highlight about our wealth more generally.
Maybe you’ve read about or seen the Netflix show from Marie Kondo: she’s a Japanese “tidying expert.” In her method, people have to confront their relationship with things they keep.
Does each item spark something in you? Does each item have a home?
The spark is typically joy or energy, but it could be a basic appreciation. (I wouldn’t say my toilet brush “sparks joy,” but hey, I’m glad enough I own one for when I need it!)
There are no formulas about what fraction of your wealth you devote to the stuff of your life, from furnishings and clothes to gadgets and books and fine art and gardening tools and… whatever it might be. You might, however, think about whether there’s a fit between what you have and the life you’re living. Does anything feel like it doesn’t fit? Do you get the sense something’s missing?
Our stuff is not the most important part of our financial planning, but it can certainly be part of it. As you look around at the things of your life, we hope that you see them as a reflection of and tool toward your goals—as part of a happier, healthier, and more sustainable financial future.
Think of it from the other direction: if you’ve got stuff around that’s not really part of your life, you’re paying for it to live rent-free with you! (How’s that for crystalizing the financial cost of keeping stuff around?)
Clients, no judgments from us: when you’re ready to talk about how we can help realign your money with your life, write or call.
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In the spring of 1902, Brooklyn printers by the name of Sackett & Wilhelms had a problem. It is doubtful whether anyone realized the vast ramifications the solution would bring.
When the humidity changed, the printers found that the paper expanded and contracted, causing their four color printing process to come out misaligned. Wasted days, wasted paper–it was a pretty big problem. Fortunately, a young engineer at the Buffalo Forge had an idea.
The engineer drew plans for a device to control the humidity of the print shop, and the crew from Buffalo Forge installed it. It was the first of its kind. By the end of the summer, the device had been a success.
It took four years for someone else to come up with the name “air conditioning.” Systems spread to other commercial enterprises, and eventually to other businesses, homes, and even to automobiles. As we approach the summer months here in the 21st century, it is hard to imagine life without air conditioning!
The engineer, who was just a year out of college when he drew the plans, later founded and ran his own company. You might have heard of Willis Carrier’s air conditioning company.
Every day, somewhere people are working on solutions to problems the cost us money, time, health, or some other resource. Others are working on things that may improve our lives, or entertain us, or provide some other advantage. Our everyday lives contain scores of things that did not even exist twenty or forty years ago.
For most of history, this is not how things worked. Life was nasty, brutish, and short. Generations came and went, but little changed. Then modernity unleashed human creativity and potential like never before.
This may be the key factor behind the seemingly perpetual upward tendency of the equity markets, all the way back to their origins.
We have mentioned this before, but it bears repeating: stock markets are volatile. They go up and down. There are no guarantees. But they may represent a way to invest in human potential. Clients, please call or write if you would like to talk about this.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Coffee is one of the most widely consumed beverages in the world, ranking only behind water and tea. Whether or not you are a coffee drinker, the story of coffee contains a great lesson. Why business works—let’s take a look.
According to Gallup, 64% of U.S. adults drink coffee, an average of 2.7 cups per day. This is a popular drink.
Coffee is grown in Central and South America, Asia, and Africa. Top producing countries include Brazil, Vietnam, Columbia, Indonesia, and Ethiopia. Coffee is also important to the economies of Uganda, Guatemala, Costa Rica and other places. Virtually none is grown in the continental United States.
Americans drink a lot of coffee, but none grows here. Farmers in other lands grow the beans, and we wake up and smell the coffee. How does this work?
Of all the people and enterprises involved, not one is a charity. The farmers, truck drivers, buyers, exporters, processors, millers, roasters, grinders, coffee companies, grocers, waiters and baristas—they all have the same reason for being involved. Every single one makes a living by providing a good or a service for which other people voluntarily pay.
Think about it: a product that starts its journey on one of three other continents is a popular beverage here in America. Why? Because there is money to be made in providing goods and services that others need or want.
Another part of the story of coffee is about change and transformation over time, to meet the desires of the marketplace. Fifty years ago, for most Americans, coffee meant Maxwell House or Folgers, brewed at home in a percolator. Today coffee might mean a trip to the popular chains or local independents, cafés, fast food places, or truck stops—to enjoy fresh-ground or gourmet or organic and a wide variety of other types of coffee.
Why did these sweeping changes in the coffee market occur? Clients, you know how this works: there was a buck to be made in bringing us what we want.
Decades ago, one coffee advertisement had a jingle that went “the best part of waking up is Folgers in your cup.” Seems to us that what is in the cup is actually capitalism at work.
Clients, please call or email us if you would like to discuss this concept, or any other idea of interest.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Imagine what a world we would have, if the surest path to prosperity required each of us to be of service to the rest of us. But looking around, we may not even have to imagine it. I’m pretty sure Main Street already works on precisely that principle.
Jeff the grocer can only build sustainable increases in wealth and income by helping more people feed their families. He could try to raise prices or skimp on service or pass off inferior goods, but his trade would soon dry up and he would go broke. Customers would simply shop elsewhere. So instead he works to stock the foods that people want, at fair prices, as part of a pleasant shopping experience.
Likewise, Bob the car dealer can only prosper by helping more people get where they want to go, to and from work and shopping and entertainment and on vacation. He certainly could make more money in a short amount of time by tricking customers into bad deals, but most people can only be fooled once. The trickery would doom his business.
Kevin in the auto parts store is legendary for his ability to put the right parts and tools in the hands of his customers, so they can fix their troubles. He helps people take care of their vehicles and keep them on the road.
Leibman Financial Services is not immune. Competitors abound. We have to work hard to deliver more value per dollar of cost than anyone else can, to help people pursue their financial goals.
You see the pattern, right? We prosper by helping one another. If we aren’t of use to our customers, we don’t keep the customers. When we do it right, everybody benefits. Everyone is better off. When we don’t do it right, the discipline of the marketplace is harsh and swift. All the other businesses on Main Street, and the professionals offering medical and dental and pharmacy services, are in exactly the same circumstances. We prosper by helping one another.
This is the moral basis of capitalism.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
The modern world developed from a society of subsistence farmers. The metaphors of nature, crops and orchards and seasons and livestock, have deeply rooted appeal. They remind us of a simpler time. But the metaphor in this story is personal history, not a fairy tale.
As a child I was privileged to visit the Omaha Stockyards from time to time in the company of a friend and his father, a “commission agent” who bought and sold cattle for farmer clients. Mr. G was a master of his work and he loved it. The stockyards were the largest in the world. The vast collection of pens and chutes and loading facilities were a temporary home each day to thousands of cattle, in transit from one place to another.
One might say the stockyards presented a rich tapestry for the senses. The fragrance of thousands of cattle in close quarters is one of those things that cannot adequately be described with pen and ink, or electrons.
Upon my introduction to this sensation, I first heard the words thought by some to be only a cliché. But they came from Mr. G, smiling broadly, breathing deeply, with a twinkle in his eye: “Smell that, son? That’s the smell of money!” For Mr. G and his colleagues and companions, the hundreds of workers at the yards and the customers they served, it was true. And there is value in this old tale to investors today.
As contrarian investors, we are mindful that the sentiment of the crowd is a contrary indicator. High levels of optimism may be associated with market drops ahead. Rotten sentiment sometimes points to future gains. When everyone expects the same thing, that expectation usually does not come to pass.
These days, the country seems to be in the grip of pessimism and foreboding. Sentiment about the future in general and the prospects for the markets in particular is poor by many measures. It stinks.
This too shall pass, sooner or later, and the mood of the country will improve. But for now, in the spirit of Mr. G we smile broadly, breathe deeply, and say “Smell that rotten sentiment? That’s the smell of money!”
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
We all seem to know intuitively that rent on a residence covers all the expenses of ownership, plus a profit for the landlord. Hence most people prefer to own their homes rather than pad the landlord’s wealth.
And yet when we buy a gallon of gasoline, we are paying all of the oil company’s expenses plus a profit for their owners. We pay the cost of refining crude oil into gasoline, transporting it to retail locations, or running the store at which we purchase the gasoline. Not to mention the cost of exploring for and pumping the crude oil and shipping it to refineries.
But if we own a piece of the action (in the form of shares of common stock) in an oil company, we indirectly own a share in the oil wells and refineries and transportation and everything else needed to put a gallon of gasoline within our reach. Own or rent? We prefer to own—and by the way, if you prefer to rent, thank you for doing business with our oil company!
We and our clients own phone companies and clothing manufacturers and car makers and raw material producers and major retailers and airlines and nearly every other segment of the economy. From the time we wake up and brush our teeth, put on clothes, go to factories and shops and offices, use energy through the day… we are doing business with ourselves. We are owners, not renters.
It is our opinion that a person who owns no common stock or other business rents everything: the refineries, auto manufacturers, food distributors, trains and planes, communications networks. They are paying rent for everything that goes into their life, without receiving any benefits of ownership.
Rent or Own? You might want to own shares of companies for the very same reason you prefer to own your home. We are available to discuss whether this philosophy fits into your plans and planning—call or write.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Stock investing involves risk including loss of principal.
Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
Since the 2007 financial crisis broke, we’ve been hearing a lot about the carelessness and greed of our financial system. The pursuit of corporate profits, we are told, led our economy to ruin and apparently will do so again in a heartbeat. Big corporations and financial institutions are crushing the middle class underfoot and choking the life out of the American dream. These are the sound bites we hear daily
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Corporate malfeasance certainly played a role in the crisis and we are gratified and relieved when we see it punished. But these excoriations of our financial system overlook one important fact: capitalism is a fundamentally democratic institution. All of us reading this blog can—and in most cases, do—participate fully in the capitalism system.
When you purchase shares of stock, those shares represent a unit ownership in a corporation. What’s more, the shares you buy are fundamentally identical to the shares that those “greedy” Wall Street banks and hedge funds are buying, with all the same rights and privileges. They might have more shares but the rewards of ownership are divvied out proportionately. When a corporation pays out dividends every share of the company gets its fair piece; they can’t pay out some owners and not others.
Some of our readers may be thinking, “This is all well and good for the rich people who own stocks, but what about us little folks?” The beauty of this system is that many of us little folks also own stocks. Many of us contribute money out of our paycheck towards a retirement or pension plan, through which we are beneficial owners of stock market investments. That makes us capitalists.
And it’s a good thing, too. Through our collective investments, millions of modest savers are pooling their money to create capital. Our investments and retirement savings turn into factories, datacenters, and hospitals—all of the machinery of modern life. Whether you realize it or not, if you have any investments you may very well own a tiny slice of many of those things. So when you feel you’re being gouged by an overly greedy corporation, just remember that their “unfair profits” are also funding the retirements of millions of regular workers just like you—and possibly you, yourself.
We know the system isn’t perfect. We can’t guarantee that corporations will always act wisely or ethically, and it’s important to remain vigilant. We believe the best and surest way to make sure that our interests are represented by the system is to participate in it. If you want to get involved, call or email us.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Stock investing involves risk including loss of principal.
It is unquestionably good that we have farmers to raise our food, shopkeepers to bring the things we need within reach, nurses to nurture us back to health, and so forth. We know instinctively that any pursuit that benefits others, or helps to meet the needs of society at large, is a worthy pursuit.
Is investing in the same category as worthy labor? Some people tend to think it is not. We offer the following perspective for your consideration.
Many of us have known route drivers for overnight and package delivery companies; long-tenured ones become part of the fabric of a community, well known to all. They clearly perform a worthy service. Yet how valuable would their efforts be without the trucks, planes, terminals, software systems, and the rest of the capital investment that supports their jobs? How much delivery could get done if the only equipment was handcarts?
The two largest such companies have billions of dollars of assets invested so that hundreds of thousands of employees have the tools and resources they need to do their jobs. This capital at work, about $100,000 per employee, is what makes the efforts of the workers so valuable. Where did the money come from?
Companies issue stock and bonds to finance their capital investments. The buyers of those investments, the investors, are ultimately the ones who provide the tools used by the workers to increase the value of their efforts.
And who are these “investors?” We know hundreds of them personally. They are workers saving for retirement, the retired, widows, families saving for college expenses, and everyone else trying to put money away for a rainy day or leave a legacy.
So do these friends and relatives and neighbors deserve a return on their investment? Presumably we all agree that a return on investment is only fair.
People at work and investments at work are to the world as teachers and classrooms are to education. Both are needed, both are useful. In the sense that necessary and useful things are good, both are worthy.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investments involve risk and may lose value.
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