Here’s a vote for “the new normal.” 

(“At the end of the day” runs a close second.)

Pundits talk endlessly about “the new normal” in healthcare, politics, foreign relations, sexuality, the climate, the workplace—you name it.

One exception is the financial world where I’m seeing a swing back towards “the old normal.” 

In the old normal, you got paid for letting other people borrow your money. (That’s really what’s going on when we deposit our money in banks or buy bonds, either from the federal government or from a local municipality.)

We lend our money to these institutions, and they promise to pay it back at a future date. Along the way, they pay us interest for the privilege of using our money.

For most of the 20^th century, most people put their money in banks or bought bonds. Maybe they bought a certificate of deposit (CD) which paid interest of 5% per year. Or they invested in U.S. government bonds paying 6%. Or they put their money in a bond issued by a blue-chip Fortune 500 company, paying 7%. 

The income was predictable, and the principal was safe. 

Then came 2000. A new millennium with new ways of thinking. And—you guessed it—”a new normal.”

Following the dot-com stock market crash of 2000-2002 (and again after the financial crisis of 2008), the Federal Reserve realized, “We can lower interest rates and stimulate the economy back to life.” That became a go-to strategy.

Of course, this was done on the backs of conservative investors. After saving for a lifetime—and counting on their bank accounts and bonds to earn decent rates of interest—retirees found that the Fed had pulled the rug out from under them.

In 2020, when COVID hit, the Fed had its “stimulus” playbook ready again. They pushed rates down to near zero. But this time, they got an unexpected result. The economy flamed out of control. Suddenly we were engulfed in runaway inflation! 

“What?” everyone moaned. “We thought inflation died back in the 80s—along with parachute pants! We thought ‘the new normal’ was inflation-proof!”

We thought wrong.

The Fed stepped in. To try to slam the brakes on inflation, they raised interest rates. Repeatedly and dramatically. Rates jumped from near zero in January to over 4% today and may be (may be) on the way to 6%. We’ll see. 

Consequently, many retirees are waking up, not to a new normal, but to an old one. 

The spike in interest rates may have hurt their bond investments—but it also created new opportunities. 

For example: Let’s say that before this latest downturn, I had $1,000,000 in assets paying me a meager 1% interest–or $10,000 annually. Now, if I have $850,000 (I lost some money, remember?), but I can earn 4%, I’ll make $34,000 in interest! 

In short, less money + higher interest rates = more income! 

I’m embracing this return to “the old normal.” It may not last long, but I’m going to squeeze as much lemonade out of this lemon-y economy as I can. 

If you’re a retiree (or within 15 years of retirement), things have changed. Given today’s new (old) realities, it may be time to recalibrate. 

When you do, you may find the old normal isn’t so bad after all.

To help you think through such issues, I’ve created a comprehensive checklist of pre-retirement questions for people who are 60-something. It’s free if you’d like a copy. Email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

I am hearing this response nearly every week from someone else afraid to make a decision with a financial impact.

In my career I have lived through the elections of Ronald Reagan, George H.W. Bush, Bill Clinton, George W. Bush, Barack Obama and Donald Trump. 

The runup to each election was filled with drama and non-stop attack ads proclaiming the end of mankind and civilization as we know it if the wrong person was elected.

Taxes would go up, regulation would intensify, the national debt would swell, the stock market would swoon, the environment would be trashed, the poor would suffer, violence would increase and America would be taken in the wrong direction…

The day Ronald Reagan took office (January 20, 1981), the Dow Jones Industrial Average stood at 946. 

Eight years later, George H. W. Bush took office and the Dow had risen to 2235.

Bill Clinton convinced America he was the better choice and when he took office after just one Bush term, the Dow had climbed to 3253.

After eight Clinton years, Daddy Bush’s son got his chance at running things in 2001. When Dubya took office, the Dow was 10,578.

America’s first black president Barack Obama took office on January 20, 2009 and this time the markets had pulled back since the start of Dubya’s first term. It stood at 8,228.

And to everyone’s seeming surprise (but his own), Donald Trump took office on January 20, 2017 and the Dow stood at 19,827. 

As I write this, the Dow stands at 27,386. 

No matter who may be reading this, you’ve been down following at least one election day. Your guy didn’t get elected. Democrats and Republicans, conservatives and liberals have both been disappointed by the results of one presidential election or another. 

Presidents and their administrations are powerful. But by design, they are not all-powerful. Our political system, whose flaws are well-known and oft-castigated, still operates on a system of checks and balances, holding back the excessive inclinations of either political party.

More importantly, our markets are largely free, our laws are generally fair and most Americans want the prosperity that comes with hard work and smart choices. These are not fundamentally political qualities that change with administrations. 

Should you make an investment? Start a business? Build a house? Move to a different city? Design a financial plan? 

Too often, the answer I’m getting these days to these questions is “I think I’ll just wait until the election is over.”

Before any election, there is controversy, accusation and worry about the future. That’s what gets voters to the polls and that’s what gets people to tune into the news. 

But after the election? There will be controversy, accusation and worry about the future! The only question is, which side will have the big microphone of the presidency?

Presidents and their elections are important. Work for and vote for the person you believe will best serve our nation. 

But presidential elections are no excuse for procrastinating decisions. 

Your future is coming…not matter who is in the White House.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

It can cause fever, cough, body aches, fatigue; sometimes vomiting and diarrhea. Most cases are mild, but others are quite severe, even fatal in rare cases. 

Around the world, nearly 1 billion people come down with this malady…9 to 45 million in the US alone. Between 12,000 to 60,000 die of the disease each year in the US alone. 

You’ve heard of this disease, right? 

It’s called “the flu.” 

Not the one you were thinking of? Oh, right, you were thinking of the new one…what’s it called…Coronavirus. Or COVID-19 as the official name is abbreviated. 

I’m not making light of either the flu or COVID-19. I had the flu this year and for about six hours I thought I might be one of the annual fatalities. It was awful. 

But if you read a headline that said, “Over 1,000 may die of COVID-19 in the US alone!”, you might spark a panic. Change “COVID-19” to “flu,” and you get a yawn. 

The fact that no one sees into the future causes outsized responses (panics?) to new risks, like COVID-19. We don’t know how bad it could get, but our imaginations can work in overdrive to fill in the blanks. 

Yet history surely has something to teach us.

In the last 30 years, there have been too many worldwide disease panics to mention here, but a small sampling may include some you remember: swine flu, SARS, Avian flu, Ebola 1, Zika and even HIV/AIDS. In each case, commentators wondered aloud and in print, “What if we don’t find a cure?”

And in each case, we did. Or at least a response that worked. 

Nearly 100 years ago the Spanish flu killed more people (over 20 million!) than did World War I, which was taking place at the same time. 

None of this is to say COVID-19…or the next significant viral outbreak around the world…isn’t serious. If you or someone you know is sick or dying, it is serious business (no matter the cause). 

But we can tend to give financial markets too much credit for their ability to properly analyze and appropriately react to “new things,” like COVID-19. We assume financial markets are made up of super-intelligent people who make rational evaluations of all these new risks that appear suddenly. 

Yes, there is plenty to spook us. Not only is this disease new and unknown, it originates from China, which now accounts for about one-third of global trade. 

So, the stakes (as always) are certainly high. If the virus abates and the economy can sustain growth, then the recovery will begin quickly.  If the virus continues to expand around the world, profit growth will suffer as will financial markets. 

But the historical perspective has been very consistent…non-financial shocks to the financial system have been short-lived. Real, but short-lived. 

No one can tell you this time won’t be different. But a lot of money has been lost by optimists and pessimists alike telling themselves, “this time is different!”

If you are investing with the faith that free markets are still the surest way of seeing that wealth is created long-term, the short-term gyrations of market pricing are just a distraction. It’s nothing to get sick over.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information at https://ruston.argentadvisors.com/important-disclosure-information

That seems like a long, long time ago. 

Today we often refer to Facebook and other such websites as “social media” or “social networks.” The idea is that the Internet facilitates the interaction and even collaboration of disparate people in far-flung locations who may otherwise have no other way of interacting. 

It’s a miracle, right? Except when it’s a total waste of time, but I’m not going there. 

It’s a mistake to think this all started when Facebook began in 2004. 

I’ll argue that the original social network still in operation today started in Siena Italy in 1472. And it wasn’t a website, it was a bank. 

Banks, and other financial institutions, have as their common function the cooperation of individuals to do together what they could not do apart. 

In any economy, the banking system is like the heart, pumping blood (and in that, oxygen) to every corner of the body, keeping it alive moment to moment. Banks pump money everywhere, nearly instantly, going where it is needed to keep the economy alive. 

But banks are only able to do that because individuals agree to cooperate by depositing money in the banking system, effectively loaning the banking system some of their wealth. The bank agrees to keep their money safe, pay them some interest and give it back to them whenever they want it. 

Remember the scene in It’s a Wonderful Life when George Bailey tries to explain to a panicked crowd how bank liquidity really works… “the money’s not here…why, your money’s in Joe’s house, right next to yours, and Mrs. Kennedy’s house and a hundred others…you’re lending them the money to build and they’re going to pay it back the best they can…” 

Banks provide a safe place for depositors to store their money while providing a source of cash to borrowers who want to spend that money and pay it back at interest. 

But it is the social aspect of it that makes it all work – no one person could accomplish that by himself. It takes cooperation. Social cooperation.

The same can be said for insurance companies. They collect premiums from a large number of insureds and agree to pay the few that experience the protected catastrophe. What would happen if every insured house burned? There isn’t an insurance company in the world big enough to survive that. 

But that’s the whole point – all houses don’t burn down at once. Every bank depositor doesn’t want all their money at once. A large number of people, cooperating together, can provide for economic growth, or economic protection, in a way none of them could have done it alone. 

The same could be said for mutual funds and other investment funds. Large numbers of people cooperate to achieve a degree of financial diversification (and therefore safety) complete unachievable by any but the wealthiest individuals. 

In many ways financial institutions provide the foundation and support superstructure that makes our lives, businesses and economies survive, thrive and reproduce. And they do it all by helping strangers cooperate. 

They were the original social networking sites.

Argent Advisors, Inc. is an SEC registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information at https://ruston.argentadvisors.com/important-disclosure-information