fundamentals

Reviewing the Essentials: What’s in the Kit?

photo shows a hikers legs and feet moving over rocky mountain terrain

I’m in my line of work to talk all day. I love spending time getting to know you, getting down to the essence of your financial situation. With new clients, it’s a bit like jumping on the train with you and asking, “So where are we headed?”

Clients, you know it takes some trust and some time to get down to the essence of your situation. And the exciting thing is that the essentials can change on us.

“Wait, wait, wait,” you might be wondering, “Aren’t the essentials essential for a reason?” Yes. The fundamentals are always in style… but the circumstances can (and do!) change. And so we revisit our systems, our assumptions, and our resources.

Any seasoned traveler will recognize the ways “the essentials” can shift over time. Taking inventory of first-aid kit, for instance, you notice that some supplies can expire, wear out, or become obsolete as your life and your activities change.

So it goes with the companies we screen, too. As we search for potential investment opportunities, some of our favorite qualities help us identify what resonates with us. But a bargain doesn’t keep its bargain status forever: that label is useful to us, but we actively monitor our holdings as things change.

It’s a dynamic line of work we’re in. There is no “set it and forget it,” really. We’re all about the fundamentals, those values that guide us, but keeping our practice geared on the essentials—and only the essentials—is quite an active process.

And a lot of fun for us, to boot.

Clients, what are we missing? Is it time to take a closer look at something together? Write or call, anytime.


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Reviewing the Essentials: What’s in the Kit? 228Main.com Presents: The Best of Leibman Financial Services

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Timeless Design

photo shows paint and material samples arranged on a tabletop

Tastes come and go. It’s never bothered me much, as I’d rather sit and watch the fads go by than participate.

Thinking more lately about my home, and its gorgeous mid-century modern style, has me wondering about what makes a style last. I don’t know that anybody’s born with “good taste,” so it must be something in the design that makes the difference, huh?

A sound design—an actual plan—isn’t the same as a touch-up. Anybody can change the drapes or paint a wall. These are surface-level changes. They don’t change the shape of things or how a person might move through this life.

A designer needs to know about the heart of the issues. They might ask…

  • How do you want to use this space?
  • How do you want to feel when using this space?
  • What are your needs now, and what needs do you anticipate?

These questions are sounding familiar. They are fundamental to our conversations about your money and your life!

I’m no designer, but I like the idea that there may be fundamental principles to sound design and to sound financial planning. We collaborate, get the crucial elements on the table, and then get to work.

Maybe I’ve got more style than I thought!

… But maybe I’ll stick to the basics, just to be sure.

Clients, when we need to come back to the plan or think about its design, please write or call.


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What To Do with Stupid Questions

photo shows room of business people with hands up to ask questions

For a lot of people, there is nothing scarier than raising their hand—in the classroom, in the boardroom, wherever. 

“What if I ask a stupid question? Everyone will think I’m totally lost…” 

“What if what I’m asking for is outrageous? Everyone will think I’m greedy, delusional…” 

We’ve known plenty of teachers who trot out the old line that “there are no stupid questions.” Our fear of judgment, of facing what we don’t know, of owning our dreams—that feels way more real than pretending that no one will judge us. 

Sometimes, though, we are our own best foil. We talk ourselves out of what we want before we even let ourselves say it out loud! We go into negotiations muzzled by our fear, so we ask for less than we want. We refuse to raise our hand, so we never get the answers we need. 

But we’ve got a trick for this, and we practice it in every conversation. Whether we’re working with each other on the staff, with you, or with our friends and colleagues at LPL, we wield a powerful tool that can defeat any stupid question. 

Curiosity.  

Curiosity is by far the best treatment for that fear: you just have to let yourself be more interested finding solutions and gaining understanding than you are afraid of how you look. 

And clients, we think it applies to you, too. When we work on your financial plans and planning, honest answers take us farther. Where are you headed? What are your dreams? What ideas and questions do you have? 

Why lowball our goals before we even get to work on them? Let’s give them a fighting chance. 

Clients, when you’re ready to talk about this or anything else, write or call. 


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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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STOCK SPLITS AND SWEETS

photo shows a variety of individually-wrapped taffy pieces

Arithmetic is important in our line of work, but its lessons can be found all over.

My older brother gave me one such lesson when I was very young. There was a particular joy in convincing any of my siblings to share candy or treats with me. One day, my brother offered to split a piece of taffy.

“Mark,” he said, “how would you like a fourth of this piece?”

“Yes!” I said.

“If you think that sounds good, what about a tenth of this piece?”

I didn’t know much then, but ten was definitely bigger than four, so this development was promising. I nodded.

“Great! But how about a twentieth of it?”

I could barely contain my excitement. What a deal!

By the end of this process, we settled on a figure. My brother tore me off the tiniest corner of the taffy, and I learned a valuable lesson about math.

At the risk of oversimplifying, we thought of this story again with this news of some major companies executing stock splits.

A stock split is what it sounds like: a company increases the number of shares issued to holders by splitting each existing share into some fraction. Apple recently split four-for-one; Tesla just split five-for-one. (Unlike the taffy lesson, they don’t keep the other pieces! Shareholders went from owning one share to owning four or five, respectively.)

Why split stocks? In years gone by, the idea was that soaring prices made some companies out of reach for smaller investors. A stock split on an expensive company made a single share more affordable, and in theory more investors could get a piece of the action.

Today, many trading platforms allow investors to purchase “fractional shares,” which are also just what they sound like: even if you can’t afford a whole piece, plenty of platforms will still sell you a corner of it.

So why a stock split? Even if it’s not doing much to make the company more accessible to more investors, the move still communicates that idea. It’s a strong marketing campaign for valuable companies.

What does it mean for us? Not much. Remember, we want a piece of the action: any way you slice it, the ingredients and quality of the piece haven’t changed.

A stock split changes the mechanics of how the company is traded. It does not change the mechanics of the company—its outlook, its output, its fundamentals.

Math will always be important in our work, but in this case, we’re not going to let the numbers complicate the situation. Whether we’re splitting the taffy in two pieces or twenty, we know what we’re getting.

Clients, if you want to talk about this or anything else, please write or call.


Stock investing includes risks, including fluctuating prices and loss of principal.