long term investing

Looking Back from 68 
by Mark Leibman, President

Fifty-six years ago, I got my first paper route.

Forty-seven years ago, my first license to work with financial products.

Thirty years ago, the beginnings of what became the enterprise that serves you today.

Looking back from age 68, I realize that delivering something of value for money was at the heart of that first entrepreneurial endeavor—and remains core to our work at 228 Main.

I’ll never forget the speaker I once heard at a business conference, the one who began with a visualization exercise. Exactly how much money did we want to be making three years from now, he wanted to know. He told us to write the number down and to look at it morning, noon, and night.

His second point was about the importance of being client-centered.

I thought, “Hmm. You can only be ‘centered’ on one thing, and this fellow is centered on money.” Then I walked out.

From the vantage point of my 68th birthday, I see the compounding miracle of being focused on your outcomes. The better off you are, the better off we are—it is a win-win situation. And who knows how that arrangement might continue to build between now and my retirement at age 92? (Only 24 more years to go until that retirement party!)

Some financial types pander to people’s fears, so that they can “save” their clients with right “solutions” (which often happen to be their own products and services). We have always sought to build your confidence to invest successfully, to grow your buckets. Fear shuts down our ability to think—which is one of the reasons positivity pays, in our opinion. If we can keep our heads while all about us are losing theirs, we are in a contest of wits with unarmed opponents.

I still can’t envision walking away from the best clients in the world. If it doesn’t feel like work, is it really a job? And my associates are the best teammates in the world. We’ve built an enterprise; our capabilities as a team are vastly greater than what I had to work with at the kitchen table, back in the last century.

Thank you all, for everything, to this point. Here’s to the next 24 years. That retirement party will be in May 2048, details to follow.

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Looking Back from 68 – 228Main.com Presents: The Best of Leibman Financial Services

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

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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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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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

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Spare Time and Extra Money
Person looking out at the sunset.
by Mark Leibman, President

When we were a young family, two things seemed to belong in the the same mythical category as unicorns and leprechauns: spare time and extra money. These ideas sounded magical to us!

We usually had enough time and money to get by—usually—but life was often harried and hurried, and children have needs that sometimes require money to obtain. Then our children grew. The joys and pains of that chapter subsided over time, replaced by new circumstances and challenges.

There’s been an interesting theme to a few recent conversations with clients who are about my age—call it “sixty-something.” Reviewing their overall position, one person remarked they never planned on having so much money.

Another was trying to get perspective on the sense of buying a new vehicle to replace one with 100,000 miles. We came to the conclusion they had $600,000 more than they needed in their long-term portfolio.

And then there are folks scratching their itch to be more generous to causes and people than they ever imagined, with wealth they had never dreamed of.

It seems we caught the leprechaun. We saw the unicorn. There is such a thing as extra money. And the way compounding works, an extra half-million now might turn into an extra million, then two, if we live long enough. No guarantees, but in our opinion we’re liking the general trajectory.

This phenomenon brings deeper meaning to our refrain “invest wisely, spend well.” If you find yourself ahead of schedule on your goals, we’re more likely to put it this way: “Don’t pass up too many chances to have fun.”
Life is short, we’ve discovered.

Interestingly, the people we know with extra money now seem to have one thing in common: they invested 1) effectively 2) over a long period. They did not fall for the smoother ride to a poorer future; they knew that the ups and downs are an inherent part of striving for real investment market returns. In bad markets, they were not scrambling to sell out. They stayed the course—or added more!

No guarantees about the future, of course. Clients, if you would like to talk about whether or not you might be on track, please email us or call.

Oh, one more thing about spare time: it has remained elusive. Maybe it’s still out there, somewhere, with the leprechauns and unicorns.

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

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Spare Time and Extra Money – 228Main.com Presents: The Best of Leibman Financial Services

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Solid Ideas from an Absurd Sitcom

For a show where “nothing happens,” there’s still something captivating about Seinfeld! Maybe it’s how the characters show up for each other and keep at it, even when life is absurd. Is our own support system pointing us in the right direction?

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2024 Outlook: Opportunities and Threats?
A telescope on a stand

The start of the New Year is a natural time to take stock—and appraise the opportunities and threats we investors may face.

Many Wall Street firms, market pundits, and fellow investment advisors like to weigh in on what lies ahead. Some are quite detailed about which sectors of the market may shine or fade, whether interest rates are going to go up or down, and what the economy or the markets or the Federal Reserve are likely to do.

Here at 228 Main, we have a slightly different approach. Because our time horizon extends beyond the months ahead, we are thinking about how the next seven, fourteen, or twenty-one years are going to play out.

Just a few of our Research Team’s theories about companies, industries, and society illustrate this expansive timeline:

  • The leading player in a growing, fragmented industry is likely to continue consolidating the industry, gaining market share, and exploiting its economies of scale in the decades ahead.
  • The cost of connectivity and computing power and data storage will continue to fall—as they have for decades past—for many years to come. More chips in more places connecting in more ways than ever before are going to have an impact on companies that facilitate or profit from these trends.
  • In the future, we humans will still need places to live, ways to move around, and food to eat. Enterprises that meet those human needs will continue to see demand.

You may note that none of these depend on any of the details that most “2024 Outlook” reports focus on. We’re not all tied up in knots about the possibility of recession because we already know that the next one is coming (and so is the recovery which will inevitably follow.) And what will the Federal Reserve do? It literally does not matter, over our time horizon and yours.

The opportunity in 2024 is the same as always: to employ a longer time horizon than others, to be more patient with fluctuating markets, and to focus on the fundamentals of specific opportunities—not the frenzy about things outside our control.

And the threat in 2024 is also the same: the risk of getting caught up in short-sighted ways of looking at things, of following the crowd, of letting persistent pessimism into our brains.

In our opinion, it’s more fun our way!

All of us here at 228 Main want you to know that in 2024 we are going to continue with the values and principles that brought us to this moment, always seeking to refine our strategy and tactics as the future unfolds. That’s our “2024 Outlook.”

Please email or call, if there are things on your radar for 2024 that we should know about.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. Past performance is not a guarantee of future results. This material contains forward looking statements and projections; there is no guarantee that any forecasts made will come to pass.

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2024 Outlook: Opportunities and Threats? – 228Main.com Presents: The Best of Leibman Financial Services

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Three Words You May Need to Know: Required. Minimum. Distribution. 

If you are of a certain age and have certain retirement accounts, you probably need to know about the annually required withdrawals from those accounts. The IRS calls them “Required Minimum Distributions”—RMDs.

One special note: Clients, many of you are already treating your retirement account like an orchard, taking out the fruit crop each year to live on. The RMD is not an “extra” amount on top of the crop: it is just a minimum. If you are already taking out 5% in monthly payments to fund your retirement, you don’t need to worry about what happens at age 73.

We’ll talk about the details here, then how it works out in practice.

People born in or before 1950 with any form of retirement account (other than Roth IRA) have already begun doing this RMD process each year (or should have). People born in 1951 or later will have to begin by the year they turn 73.

The actual amount required is a function of age and the prior year-end balance. For example, a 73-year-old has to take out a little less than 3.8%. In round numbers, this would be $3,800 per $100,000 in the account. But that fraction goes up a little every year: 80-year-olds are closer to 5%, 90-year-olds have to take out more than 8%.

Basically, the RMD needs to be calculated for each retirement account you have (except Roth IRAs). You must take out the total amount required by December 31, and you will receive a 1099-R showing taxable income.

Clients, you know we pay attention to this and strive to keep you informed about what needs to be done. But there’s one thing to be careful of: take this as an opportunity to check whether there is some account somewhere that we don’t know about, like a 401(k) from a former employer, an odd IRA balance somewhere, 457 or 403(b) plans, and so on. It happens, but it would be a pain to get yourself into some trouble over an account that’s been out of sight, out of mind.

Some people may choose to use the onset of RMDs as a time to consolidate all of their retirement funds into a single rollover IRA, to make this process simpler going forward.

One of the advantages of Roth IRAs is that they have no RMD requirement. As a matter of good planning, it may make sense to convert partial IRA balances to Roth, pay tax when you choose, and whittle down that balance that is subject to RMDs in traditional retirement accounts.

There are lots of ways to handle things! If you’d like to talk about it, we’re here for it. Email us or call.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

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. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

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Three Words You May Need to Know: Required. Minimum. Distribution. – 228Main.com Presents: The Best of Leibman Financial Services

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Are We on the Ship of Theseus? 

The legend goes like this: after the Greek hero Theseus slayed the minotaur and saved a bunch of people, he escaped on a ship. Later, to honor him, the people of Athens would take the ship out each year and sail it on a pilgrimage. 

As time passed, the people had to replace an odd plank here and there. The boards of the ship would decay or break, as boards do. It’s basic maintenance. 

But a question emerged. After generations, the ship reached a point where none of its pieces were “original,” so to speak. So… was it still the same ship? 

This is mostly a philosophical question, but it offers an interesting puzzle about the nature of things in our everyday lives. This enterprise comes to mind. When I, Mark, started Leibman Financial Services at my kitchen table in 1996, there was no telling that the business would become what it is today. 

And yet, we haven’t changed anything fundamental about what we’re doing here. I set out to build something that would let me try to help people grow their buckets. I operated with the understanding that when others are better off, I probably will be too. 

Those things still stand, today. The ship is still a ship. 

But my life looks radically different from when I first set foot on this ship. Two of my co-owners were still children at home with me. (And we wouldn’t even meet our other co-owner for another decade and a half!) 

In what ways do things change—and how do they stay the same—as they grow? The ship remains, but it is not the same. 

This type of conversation might sound familiar. We’ve enjoyed talking about similar ideas before, like how things have the potential to become greater than the sum of their parts, how “teamwork makes the dream work,” and how we never step in the same river twice. 

No matter how you think about it, it can be amazing, this whole “life” thing. It’s a privilege to be here, building something with you. 

Come by to chat about this or anything else, any time. 

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Are We on the Ship of Theseus? – 228Main.com Presents: The Best of Leibman Financial Services

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