long term investing

Raphael, Donatello, da Vinci… Markelangelo?

photo shows paint jars and brushes on a painted surface

When you mow a lawn, or paint a wall, or run a race, every bit of effort moves you closer to the end. There is only progress. You see tangible, visible results: grass clippings pile up, or the paint covers more of the wall, or the finish line gets closer. 

Long-term investing is different. On nearly half of all days, the broad market averages go backward. This has also happened over whole years, about one out of four historically.  

When we paint a wall, there are no forces moving with us and wiping away one stroke of paint for every four we make! 

So in this respect, investing is more like creative work. An artist who paints might have to add layers over their earlier work to create the effect they want. They might even use a palette knife to—yep—remove paint and clear a space for something different. 

Maybe investing and creating both require a long view, guided by a vision of what might be. Both pursuits require the patience to work at it even when results come only in fits and starts. No guarantees in either arena, but we don’t know which ideas will pan out without the pursuit.

I’m no artist, but that sure is what investing feels like. 

A lap with the mower provides its own immediate feedback. When we make an investment, the early results could be positive or negative, and it may feel like a coin toss. Only as the months and years roll by do we see the fruits of our work. Some backward movement, sure, but we expect to see progress across the process. 

We cannot do this work for just anyone. It takes people who have perspective, the ability to take that long view, to have faith that we are on the right track even when temporary setbacks engulf us.

Fortunately, here at 228 Main we have the best clients in the world. We are grateful for you. 

If you would like to talk about progress toward your goals (or anything else), please email us or call. 


All investing includes risk including loss of principal.


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Raphael, Donatello, da Vinci… Markelangelo? 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://228main.com/.

Big Chance and No Chance

photo shows dice on felt

We’ve written before about how the stock market is not a casino, and in light of recent remarkable events, other professionals are reminding the public too.

What had been a $4 stock recently ran up to over $400. Although we heard a hundred different ideas about what the episode meant, we can almost certainly understand that no, the company did not actually become a hundred times more valuable.

We do not know the future, so I can’t tell you that buying after it made headlines is going to turn out poorly, but (in my opinion) you’d have far better odds at an actual casino.

Let’s think about that for a second. Have you ever put a little money on something that had the chance to turn out really big? A long shot at the race track, a chance on a huge lottery payout, or stock in a company that might make a lot of money if it doesn’t go broke?

Our business in here is sound investing, not gambling or speculating, though I myself have considered the odds and laid my money down a time or two.

But this recent example buzzing in the news isn’t like that. It’s one of these situations where lots of people get caught up in something that has the same practical meaning as flushing money down the toilet.

It would be better to invest wisely, spend well, and plan for the long haul. For some, chasing those big chances can be fun in moderation. But we don’t advise it become a daily activity.

Jumping into something with even worse odds than those big chances? We wouldn’t count on anything longer than a long shot.

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


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Defining Our Terms: Who Is “the Investor Class”?

photo shows a badge reading "new member"

Theorists who study classes—whether they are economic, social, or political classes—have to be particular about the definitions and assumptions that inform their work. Without getting on the same page first, phrases like “middle class” would tell us practically nothing (except that maybe members are above some lower class and below some upper class?). 

We’ve recently been reminded of a term that’s now a few decades old: people talk about “the investor class,” or the group that has access to and takes advantage of stock ownership. 

In the past, the push to grow this “class” had political motivations. (The thinking went that if more of the electorate participated in the stock market, those voters would develop a new appreciation for certain policy goals regarding wealth and business.) 

So what defines this group, today? Who is “the investor class”? 

We can’t speak for all shops, but we already know who our clients. The portion of the “investor class” we work with is made up of, well, retirees and workers and truck drivers and executives and nurses and engineers and young teachers and former teachers and accountants and statisticians. 

They are married couples and widows and single people. They live in the Midwest and outside the Midwest. 

Some went to college. Some went beyond college. Some are high school graduates.  

Some start their investment journey with traditional pension plan contributions. Some start later in life when a sudden windfall arrives. 

Some like saving. Some like spending. 

At first glance, this may seem to be a poorly defined group. But hey… we’re talking about the work of growing your buckets, not anthropology or sociology. 

One characteristic does give structure to our definition of “the investor class”this group’s members are those people in the best position to profit from it over the long haul. In this niche market of the mind, we share a desire to own a piece of the action, in the form of shares of common stock, from nearly all sectors of the economy.  

Interested in this special but not-so-exclusive club? The barriers for entry have never been lower, and we’re glad to try to help anybody who wants to be here.  

Let’s talk: please email us or call. 


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Time to Get Off the Ride

We’ve all heard the basic maxim of investing: “Buy low, sell high.” And at 228Main.com, we have talked repeatedly about the perils of buying high or selling low. Just last week we asked, “Where are you on the ride?”

It is true that buying high or selling low can easily hurt you, and to avoid acting rashly, you do need to be able to recognize where you might be in a cycle.

The flip side may be true, too: you also need to be able to make timely moves when the time is ripe. Our philosophy focuses on value investing, and we are fortunate enough that you, our clients and readers, have internalized many of these notions. (So you know that we are not talking about “timing the market.”)

So the “buy low” part is relatively easy: hunting for bargains is fun and exciting! It is easy to look at a company trading at depressed prices and imagine the possibilities, even as you know that they may not necessarily come to pass.

The other part—”sell high”—is more difficult. A holding that has treated you well can be hard to get rid of. It is easy to get greedy and let it keep riding in the hopes of further returns.

But what goes up must come down. The more inflated prices get, the less sustainable they are. When prices enter an unsustainable bubble it is wise to protect your gains by selling while the selling is good.

This does not have to be an all-or-nothing process, though. You might still believe in a company’s long-term story even if prices look unrealistically high right now, in the short term. In this case it might make sense to hedge your bets by only selling part of your holdings. This lets you pocket some gains while keeping some exposure in case of future growth.

This becomes especially important when you have a high-flying investment. If certain holdings are outperforming the rest of your portfolio, they may swell up to become oversized relative to the rest of your holdings. Over time you may find yourself with too many of your eggs in one basket; periodically rebalancing away from a hot streak can help spread your risk around.

Of course, there are no guarantees. None of these strategies are magic. But letting your investments ride with a few big winners can leave them vulnerable to a big tanking at even a hint of bad news. Heck even totally decent news can spell a crash for a hot stock that’s being held up by unrealistic growth expectations.

How do we know when it’s time to get off the ride? Clients, when you have questions or concerns about your holdings, please call or email as always.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

How to Live in Your Life

photo shows a red pencil and two options with checkboxes that read "today" and "tomorrow"

In the spring, we checked in with friends and family as work and school and much of life was in upheaval. Some folks were struggling more than others. We talked with one friend who sat through meetings in the office about how the switch to remote work was going to be handled when (not if) the team went that direction.

“I heard what they were saying, but I didn’t believe it,” our friend said. Within days, the team was out of the office. The friend was home three weeks before it finally sank in: work had gone remote.

Have you ever felt that way? Like your body has moved somewhere but your mind is refusing to catch up?

“It just feels like I’m waiting for Monday, like we’ll be back any day now,” the friend said.

The shock of change can have lots of effects on us, and we do not fault anyone going through this thought process. It made us wonder, though… What is the pandemic teaching us about time horizons?

You’ve heard this from us before: “long-term investing” is a little redundant. as we believe better chances for success lie in longer time horizons. It’s easy to outperform a strategy for short-term goals if you’re playing the long game.

2020 has been a months-long lesson in this perspective, hasn’t it? As spring turned to summer, a lot of folks had to come to grips with the idea that we could be in this situation for a while.

We are all about taking things one at a time, about taking life one day at a time—but how would our day-to-day change if we were geared toward the long term?

“I could be here a while…”

How could that phrase change your home life? Your retirement goals? Where you want to wake up each day? Your grocery and shopping routines?

Clients, what a time of change and reckoning we’re living through. But we’d like to help you do just that: live through it. Live in it.

When you’d like to talk about this or anything else, please write or call.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

HOW TO RETIRE: PANDEMIC EDITION

photo shows a small wooden wall clock and a calendar with sticky notes and push pins

What a year! The events of 2020 have reached into every facet of our lives. Many careers have been changed or upended.

People working happily at advanced ages have told us they are leery of workplace exposures, so many are on leave or have retired. Others have been displaced from jobs they would have preferred to keep. And some are helping descendants cope with “distance learning” or a loss of childcare options instead of working at jobs.

One friend retired just before the pandemic, planning an ambitious travel schedule. That isn’t happening. And another, who had planned to retire, now works from home: they figure they might as well keep working, since they cannot travel or engage in activities they had planned for retirement.

No matter what 2020 has thrown at you, the basics of retirement planning have not changed. It is a five-step process. We need to figure out…

  1. how much money it takes to run the life we prefer,
  2. monthly income amounts and timing from Social Security or pensions,
  3. lump sums required for one-time goals or needs, like a bucket list trip or boat,
  4. lump sums available from savings, investments, 401(k) plans, and other wealth, and
  5. the sustainable monthly cash flow that might be withdrawn from net long-term investments, after the lump sums are accounted for (we help people with this step).

There are nuances to each step—options to analyze, lifestyle decision to make. Retirement planning works out best when it is a process over time. We have noticed that people learn more about their objectives and their finances as time goes on, and things change. So your retirement plan adapts and changes over time, too.

If the pandemic has shaken things up for you as it has for others—or if it has just gotten to be that time—call or email us when you are ready to work on your plans and planning. Clients, if changes need to be incorporated in your plans, let’s keep talking.

We’re glad to help.

No Fair-weather Fans

photo shows a young man with a baseball bat and

With the tenuous return of baseball this year, we’re thinking about what fandom means for the investing world.

One thing that strikes us is the redundancy of a phrase like “long-term investing.” Investing is already aimed at the long haul, right? You’ve heard it from us before: “Own the orchard for the fruit crop.” We have been explicit that our investment strategies are based on long time horizons.

But we dove a little deeper and came out with an even richer appreciation for this approach.

Turns out the most common notion of “investing”—using what we have to generate income or profit—is a fairly modern one. The phrase popped up in the 17th century and gained traction by the 19th, per the Oxford English Dictionary.

But a few hundred years before that? It was more literal. “Investing” was closer to its Latin root vestire: to dress or clothe, often in symbolic garments.

Even today, when the crowds aren’t allowed in their favorite stadiums, the word “investing” still has us imagining a sea of sports fans, adorned in those special garments of their favorite team. A sea of investors.

They dress in their team’s colors, and win or lose, by golly they’ll put them on next weekend too.

They’re fans for the long haul; they’re invested.

Like a fervent fan, the phrase “long-term investing” is cheering pretty loudly for a proposition we’re already on board with. It doesn’t mean we can’t be disappointed in our investments, nor does it mean the lineup will never change.

But when we buy in, when we wear the clothes of, this is no fair-weather enterprise; we’re here for the long term. Clients, if you’d like to discuss this or anything else, please write or call.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

Schrödinger’s Market

canstockphoto20919748

Quantum physicist Erwin Schrödinger once came up with a thought experiment to illustrate a difficult conceptual problem. Suppose you have an opaque box with a cat inside. In the box is a mechanism that is designed to release a poison gas based on the random actions of subatomic particles on a quantum level.

Now according to quantum theory, it is literally impossible to know what these particles will do in advance. You cannot even accurately measure what they are currently doing beyond general probabilities. In fact, until you observe them they act as though they are doing multiple mutually exclusive things—including behaving as though they are two places at once!

Hence Schrödinger’s box. Without observing the contents of the box you have no way of knowing if quantum action triggered the poison or not. Thus, until you open the box and look the cat is simultaneously alive and dead: a surprising conclusion, and a difficult paradox for physicists!

You and I can leave that problem to the scientists, but Schrödinger’s box can be a useful metaphor for other unknowable states. The actions of financial markets are theoretically not as complicated as quantum mechanics. But predicting market action is so far beyond our current mathematical understanding that they might as well be.

Like quantum particles, the value of a market cannot accurately be measured without interacting with it. This leads to a great deal of uncertainty and can sometimes make it feel like multiple conflicting realities are true at once.

Reading the financial press you will often be presented with competing headlines declaring that we are simultaneously in the midst of a great bull market and a terrible bear market.

As with the box, we prefer to leave these paradoxes to people with more time on their hands. Instead of trying to time the market, we believe in sticking to timeless principles like avoiding stampedes and finding bargains in the hopes of finding quality companies. We cannot predict what market prices will do from moment to moment, but we can guess at general probabilities.

Clients, if you would like to talk about this or anything else, please email us or call.