oracle of louisville

122 Out of 7 Billion

© Can Stock Photo / thesupe87

Of the seven billion people on the planet, more than three billion have access to the internet—including 286 million in the United States1. Any of these millions and billions may read our work and our thoughts here at 228Main.com, no cost.

The funny thing is, we started out writing with a specific audience of 122 households in mind. These are the people who trust us to manage their portfolios and help them frame their financial issues. We began writing these articles to improve our ability to communicate with and serve 122 of you, our existing core clients.

It turns out that there is a pleasant side effect to this process. We find that making it easier to connect with you has improved our capacity. We used to think that the 122 households were about our limit for how many we could take on without compromising service. But as our operations grow more effective, we believe we have been able to deliver better and better service. We now believe we may have room to grow to 160 client households.

We don’t know who will wind up filling our excess capacity, where they live, or what their circumstances are. But we do know a few things about them already.

They will have effective attitudes about investing, or be willing to learn them. In other words, they will fit into our niche market of the mind. They will have a few hundred thousand dollars available for long-term investing, or more. They will understand that we put all of our efforts into trying to grow the buckets and communicating with clients, instead of spending some of our time organizing wine tastings or delivering smoked turkeys or chasing prospects around.

We have long thought we have all the business we need. We do not know what the future holds, though, and the regulatory environment is constantly changing. We do not always believe in the conventional textbook wisdom. Regulations based on the textbook approach may potentially make business more difficult for those of us who would rather try something different. The increased scale afforded by our newfound capacity might be helpful in handling regulatory compliance down the road.

Our work for our core clients is extremely gratifying. If you are one, thank you for the opportunity to serve you. If you may be one of the thirty-eight future clients, please soak up all you can here at http://www.228Main.com. Feel free to get in touch with us via phone or e-mail. And for the rest of the millions and billions, we’re glad you are here, too—you are welcome to eavesdrop while we talk to our clients.

1Data from http://www.internetlivestats.com


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 Are All Connected

canstockphoto8203425

Much has been written about the polarization of American society. While noisy disagreement and entirely human behavior has always been part of our fabric, the whole “us” versus “them” theme seems to be a bigger part of our social discourse. It seeps into our politics and economics too, it seems.

Yet everything is connected. What many miss are the interests we share.

If you hope to be collecting Social Security benefits many years into the future, you might have an interest in making sure that each child today grows up to be a healthy and educated and productive citizen. Why? They will pay more Social Security taxes if they do—and better work towards your financial future. You are connected to the next generation.

Some seem to assume that big companies are always out to get them, and favor any new regulation or restraint that might be proposed to limit their activity. Yet if we needed to fly across the country, would we dare do so in an artisanal airplane, built with locally-sourced materials by a local craft person? You are connected to big companies.

Likewise, the largest oil companies in the world routinely spend more than 96% of their revenues helping people get back and forth to work, powering their homes, and providing materials used in everyday life. If you use gasoline or electricity or plastic, you are connected to them.

“Wall Street”—to some, the only villains in the last financial crisis—presents another example. Communities building schools or sewers, employers building facilities or buying machinery, teachers hoping to retire on their pensions, people saving for retirement or living on their capital in retirement: all these depend on services from the securities industry. We are all connected.

Is this an argument for turning a blind eye to bad behavior or hurtful policies or injustice or anything else that cries out for change? No way. We each should challenge the things that deserve to be challenged, and support the things that deserve to be supported. We won’t all agree on which is which.

But perhaps our differences would more often get us to a better place if we each kept in mind that everything—and everyone—is connected.


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

When Dark Clouds Fill the Sky

© Can Stock Photo / pzAxe

Warren Buffett’s latest shareholder letter contained a remarkable paragraph:

“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do.”

Long-time clients saw how this worked in the recovery from the 2009 crisis low point, and the post-9/11 lows in 2002. You are a remarkable group: when others panicked and sold out, many of you stayed the course. There is no guarantee, of course, that history will repeat, or that past performance indicates future outcomes.

Like great chess players, we need to be thinking many moves ahead. In our opinion, the economy in the US and around the globe is pretty good. We do not buy the whole stock market, we pick our spots. And we are excited about those spots.

But we do need to be steeled to both occasional market corrections of up to 10%, and the deeper declines that occur from time to time. They cannot be reliably predicted. What is in our control, however, is how we react. Do we sell out at low points, or get in position for a possible recovery? We are taking steps that may mitigate a general market decline—no guarantees, of course.

We are a little more prone to keep a little cash in reserve, to diversify into lower-priced markets, to continue to prune holdings that may be extended and add names we believe to be bargains. Most of our holdings are not sitting at all-time highs, although overall market averages are–the S&P 500 for example reached a new high as recently as March 1st1. You can read about our current themes here.

In the very best case, markets and our account values fluctuate. This is the tradeoff we accept in order to seek the returns we need to pursue our goals.

We have a great partnership with you, our amazing group of clients. You understand living with volatility can lead to long term rewards. We think we know what to do, whether the skies are blue or the dark clouds have gathered. If you have questions or comments, please write or call.

1Market data from Standard & Poor’s


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.

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.