• “We WANT to save, but once we pay our bills, there’s nothing left!”
• “Gee whiz…with inflation like it is, how are we supposed to find money to put aside?”
• “We’ve slashed our spending, but still can’t sack any money away! What should we do now?”

All of these comments reflect a faulty mindset.

They are looking at the “savings problem” from the wrong end of things. 

You see, it’s all but impossible to cut back when you see everything you buy as “essential.” You can waste a lot of time crunching numbers with one hand and clutching all that stuff “I-can’t-live-without!” in the other.

This explains why, as Forbes recently reported, “personal savings only accounts for 4.1% of disposable personal income as of April 2023.” And how in 2022, “Americans were able to save roughly $2,010 per person.” 

Those meager figures are hardly the path to financial wellness.

So, how can you buck the trend and make saving a priority? What can you do?

Begin at the end. 

You need to save 15% of your gross income. But let’s take baby steps and start with just 10%. Ten percent of your gross income. 

Let’s say you earn $72,000 per year. That means you need to save $7,200 annually, or $600 monthly. 

Before you do anything else, you pay your savings account that amount.

But, instead of figuring out how to FIND $600 monthly AFTER spending $6,000 (that math won’t work!), you set aside that $600 first and figure out how to get by on $5,400. 

(By the way, consider that not long ago you were actually earning 10% less than you are making today…and somehow you survived!)

“But,” I can hear you say, “Groceries! Gas! School supplies! Utility bills! Car payments!…”

I know. I know. But in a sincere effort to help you, I’m going to ignore all of those common economic moans and groans and ask you to look more closely in the mirror.

You cannot keep buying $5 coffee drinks, eating out five (or more) times a week, splurging on the latest technology, and trading in your vehicle every 3-4 years. 

Doing all that and thinking you’ll somehow “find some money to save” by choosing store brand plastic baggies isn’t going to work.

That kind of backwards thinking is what torpedoes most savings plans. It leads to a lack of willpower that results in living beyond your means, buying on impulse, trying to keep up with the neighbors, and not having adequate resources set aside for emergencies.

When people tell me they “can’t find the money” I never think they’re lying. No, indeed! I know they are speaking the truth—they cannot find the money.

That’s because they’re not serious about saving.

When you’re serious about saving, you don’t try to “find” the money. You TAKE that 10%—by force and off the top. You treat savings like a non-negotiable bill. That payment gets priority treatment. You pay your savings account first. 

Look, I know you are going to spend 100% of your income. And I know it is all going to be for good and justifiable things. 

So, what I want you to do is change the way you see that 100%. I want you to save 10% first, and then spend 100% of what is left over on all the other stuff. 

You’ll never know how effective this is until you try it. Let me warn you: You will not be able to make the math work out ahead of time. 

But once you start, you’ll be amazed at how creative you become. And you’ll see how certain “essentials” aren’t so necessary after all.

Get serious about saving.

Down the road you’ll be seriously glad you did.

And know this: If you choose NOT to save, you will one day face serious regret.

One final question around this serious matter of saving more…

As you’re setting aside money for the future, what’s your plan for turning those assets into retirement income?

If you don’t have one—or don’t have one you feel good about—email me at bmoore@argentadvisors.com. I’ll send you a link to take the RISA^® Profile for FREE. (RISA® stands for Retirement Income Style Awareness^®.) This quick and ingenious quiz can help you create a retirement income plan that makes fiscal sense and is a good fit emotionally. (You don’t want to spend your retirement fretting 24/7, right?)

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’ve got some money I’d like to leave to my grandkids. I want it to grow, but I’m not comfortable putting it at risk in the market. Meanwhile, safer investments like CDs seem like they’re barely keeping up with inflation. Do you have any suggestions?

It’s a classic case of competing demands. We want the growth that comes with risk, AND we want the safety that comes with conservative investing. Just the other day I had a guy tell me (smirking), “I just want steady ten percent returns, with no risk of loss.” 

(Right. And I want delicious ice cream that makes me lose weight.)

Investing doesn’t work that way. We can’t have massive gains and guaranteed safety too. But there may be a middle ground that’s attractive.

If you’re a CD person, you’ve probably been bombarded with sales pitches for tax-deferred annuities. These are accounts set up by insurance companies. You can set aside money for retirement, and one day it can be turned into a stream of lifetime income. 

The problem with most annuities? Most have large surrender fees. If you change your mind, or suddenly need your cash…or if interest rates jump and you want to move your money back into a CD with a better yield, you can’t do it the first few years without paying substantial penalties. It is common for annuity surrender penalties to last seven or more years. Some may be shorter, many are longer.

While most folks have heard of tax-deferred annuities, not many know about the lowly modified endowment contract (MEC). A MEC is also an insurance company instrument. It’s essentially a whole life policy stuffed with cash.

Because insurance companies don’t have the short-term liquidity requirements of a bank, they can often make longer-term investments, which in turn pay a slightly higher yield. This can translate into a higher return than one would get with a CD. (Obviously, the details on a MEC can vary, or change quickly, so you need to talk with an expert and get all the facts before doing anything.)

Like an annuity, MEC funds are tax deferred while left in the contract. And there is a federal government tax penalty for early withdrawal if you take money out before age 59 and a half. For that reason, a MEC is typically most appropriate for folks over that age.

Unlike an annuity, with a MEC the ability to get to all of your money comes much quicker, as in the second year. 

There is also a death benefit attached, so that proceeds pass income tax free to your heirs. Because of the death benefit, you have to go through a physical underwriting process to qualify for a MEC. My experience, however, is that most reasonably healthy older adults qualify. Again, talk to a trusted, licensed agent to learn all details.

Here’s an example of how a MEC can work. Suppose a reasonably healthy 65-year-old man puts $100,000 into a MEC. If the man died the day after the contract was in force, his beneficiaries would receive $175,000. 

Or, if he changed his mind, he could cancel the contract and get back his $100,000 plus some interest by the end of the second year. If he let the money grow and reinvested the dividends, his $100,000 would grow to about $150,000 ten years later, assuming current dividend rates. That’s about a 4% annual rate of return, with no taxation and no market risk. And the death benefit, according to current dividend yields, would have grown to $220,000 in the tenth year. Dividends, of course, are not guaranteed.

The same $100,000 placed in a 5-year CD might get close to 0%…or as high as 4.5%, depending on which bank you use. That is a huge spread, but that’s the rising interest rate environment we’re in right now. Penalties for early withdrawal vary from bank to bank.

MECs are more trouble to set up than CDs. They aren’t right for everyone. But for a long-term saver, looking to maximize returns for you and your loved ones, a MEC is certainly worth investigating.

If you’re like most people, when it comes to things like MECs, you’re not even sure what questions to ask! No worries. I’ve already done that for you. Email me at bmoore@argentadvisors.com and I’ll send you my free list of “30-Something Retirement Questions for People Who are 60-Something.”

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.

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.

A year ago, the stock market, as measured by the Dow Jones Industrial Average, closed at 34,390. Today (I’m writing this on September 30, 2022) the Dow stands at 28,725—about 17% lower! 

Meanwhile, the S&P 500 has been falling since early January!

A year ago, an economist wrote, “We believe inflation peaked in second-quarter 2021. Average core CPI inflation will likely slow from 5.5% in 2021 to 2.7% and 2.5% in 2022 and 2023, respectively.”

I bet that woman wishes today she hadn’t written those words. (I won’t be so cruel as to name her.) Clearly her optimism was misplaced; however, she has lots of company.

Rather than slowing, inflation has soared! This, in turn, prompted drastic action from the Federal Reserve Bank.

The Federal Reserve, or Fed, has as its mission, per Congress, “maximum employment, stable prices, and moderate long-term interest rates.” I heard an official from the Dallas Fed say once, “You can always count on the Fed to be like a bull in a China shop, late to the party and late to leave.” 

Timing and “gentleness” aside, no one should doubt Fed Chairman Jerome Powell’s commitment to bring inflation under control. Under his leadership, the Fed began aggressively raising interest rates in an attempt to put the brakes on inflation. 

But hiking interest rates 3% in just six months has been painful medicine—leaving the bond market in shambles. 

Bonds work like this: When interest rates go up, the value of a bond goes down. You don’t have to be a math whiz to realize that when investors have the choice between a bond paying 4% and another paying 1%, that 1% bond is going to have to be sold at a pretty steep discount for anyone to buy it. 

Okay, that’s enough looking backwards. 

What’s ahead? What can we expect a year from today? (Be forewarned! My powers of prognostication are only rivaled by my ability to grow hair!)

With the financial markets in bear territory (i.e., having fallen 20%), the question everyone is asking is, “How long will it take to recover all these losses?”

You won’t be comforted to hear me to say, “I don’t know.” 

But I don’t know. No one does. 

Some folks get attention (and make a nice living) announcing when the markets will bounce back; others by insisting they never will. History, I should note, is on the side of those who believe the markets will rebound. But as to when that might happen, don’t be fooled. No one can say for sure.

It’s worth pointing out that, historically speaking, the average bear market lasts a little less than a year. Maybe this time we’ll be so fortunate. 

What we do know is that the financial markets are the intersection of buyers and sellers all haggling over the value of the best run companies in the world. There is a built-in “survivorship bias,” meaning that, in markets, the strong companies endure. That’s to our advantage. 

What was true a year ago—and will still be true a year from today—is that financial markets, despite their uncertainty, remain one of surest, and most accessible methods for ordinary Americans to build and grow wealth over time. 

Bear markets are the price we pay to keep the financial markets healthy, pruned and productive. 

If you’re anxious about what all this means for your future, 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.

He was responding to my encouragement that he establish a regular saving plan.

How unfortunate. Because except for those rare souls who win the lottery or receive an unexpected windfall, I’ve never seen anyone achieve financial success without a commitment to saving money. 

Sadly, this young man isn’t a rarity. I see people all the time wrestling with NOMO, FOMO, and ROMO.

NOMO. Some people are unable to save due to NOMO, or “no money.” They simply do not earn enough to pay their monthly living expenses and save money too. These dear folks are not the focus of this column. 

FOMO. I think my friend who couldn’t (technically “wouldn’t”) commit to a regular savings habit is a victim of FOMO, or the “fear of missing out.” 

He’s not alone. As incomes have risen across our society over the last few generations, so have consumer opportunities—and consumer desires for immediate gratification.

Stashing money into some kind of savings plan doesn’t feel very fun, especially when our minds are wondering:

“What if I never get to…take that luxurious Hawaiian vacation…buy that new truck with all the bells and whistles…build my dream home…enjoy a new bass boat and a fishing camp?”

Be honest with yourself. Has the fear of missing out on something now caused you to avoid thinking and acting responsibly regarding your future?

FOMO is real, and it’s powerful. 

But you want to know what is even more real? ROMO.

ROMO is the “reality of missing out,” and that’s something that should make us tremble. 

When we don’t save now, we miss out on so many great opportunities later. That failure to save is like having a gold coin placed in our pockets each morning, only to have it evaporate at midnight due to non-use. 

Except, that gold coin isn’t money…it’s time. 

Here’s the sober truth: Money loses value over time. This isn’t just due to inflation, but also to inaction. Every dollar has an unseen “lost opportunity cost” attached to it. 

For example, my failure to save $100 a month over the last 20 years didn’t just cost me $24,000 (i.e., $100 x 240 months). It actually cost me over $80,000! That’s what I would have today if I’d invested that $100 in a large cap stock index like the S&P 500. 

The difference between $24k and $80k is a vivid picture of “lost opportunity cost.”

Listen, a saving plan is not a prison sentence. In fact, it’s just the opposite. When you save systematically, you have more money available for fun “once-in-a-lifetime” trips and the like.

FOMO has a way of blinding us to ROMO. It urges us to spend it all now rather than save some for later. It makes us forget all about planning for the future. 

But the future isn’t an illusion. It’s real, and it’s coming at us all like a freight train. 

Are you ready for it? Do you have a saving plan in place that will allow you live with long-term peace instead of eventual regret?

Actually, when you think about it, a good saving plan is a GOMO, a “giver of more options.”

If you’re worried about your financial future, I’ve got 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.

For me, that was a time of pimples, polyester clothes, bad hair, trying to impress girls, and Mrs. Lawrence’s English class. All not-so-fun experiences—a lot like investing is for most people right now.

For millennials and generations X and Y, this is the first experience with rampant inflation. Rising prices have been followed by the Federal Reserve’s predictable response of raising interest rates. Even our booming stock market couldn’t survive this one-two punch. 

The bond market has repriced itself. Bond prices this year are down over 10% in the U.S. 

Since higher interest rates tend to dampen corporate profits, and since inflation typically causes consumers to spend less, the equity markets have been spooked too. They’re down over 20% in the first six months of 2022 (as measured by the S&P 500 index). 

The only solace I can offer? If you’re like most readers of this column, you didn’t buy into Bitcoin hook, line, and sinker. That cryptocurrency is down over 60% this year!

Back to junior high. Eventually, the pimples, polyester, and greasy hair went away. (The hair eventually went completely away). My awkwardness with the opposite sex also diminished once I stopped looking at my shoes and started looking girls in the eye.

As far as, Mrs. Lawrence’s English class, I hated it! It was hard, and most junior high boys don’t like hard things. 

Today, however, I will rise up and call that woman blessed. By the time I finished 7^th and 8^th grade English, I was a grammar ninja. I could diagram a sentence, conjugate a verb, and spot a dangling participle at 50 paces blindfolded. 

Here’s my point: Investing right now is a lot like being in Mrs. Lawrence’s class. It isn’t fun. Living through a bear market is agonizing. We just want it to be over.

I would remind you—whatever generation you belong to—that this is not the first time markets have tumbled into bear territory. 

I don’t own a crystal ball, and my predictive abilities aren’t worth much. But I can read history. 

According to the Wall Street Journal, we’ve had a dozen bear markets since 1950. In every case (excluding our current situation), the market has recovered its losses and gone on to new highs. The only question is…how long does it take?

Here’s what history shows: In nine of the twelve bear markets, average investors have recovered their losses in one year or less. Not only this, but the median return one year later was over 20%.

I have written in this space that bear markets are the economy’s way of “pruning” itself. Weak and/or weedy entities get “pulled.” They don’t make it. And even healthy entities get “cut back.” This is how the strong get stronger and become more fruitful. It is a painful, but necessary process.

Kind of like junior high.

Both require time and patience. 

So here’s to persevering, and to the confident hope that the future will be brighter. 

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.

In late December, 2005, quarterback Drew Brees of the San Diego Chargers suffered a severe injury to his throwing shoulder. Many experts believed his NFL career was over. 

But after surgery and months of grueling rehab, Brees signed with a new team: the lowly New Orleans Saints. His presence changed the culture of the franchise. In 2009, he led the team to a Super Bowl championship. When he retired in 2021, he owned a number of NFL all-time passing records.

The moral of these stories? Sometimes big setbacks create opportunities for better things. 

That’s not always the case, of course. But it’s always smart to look for opportunities in and behind the problems we encounter. 

Case in point: The runaway inflation we’re facing now 

While pundits assign blame and recommend cures, the Federal Reserve is trying to put out this “economic fire” ASAP. Raising interest rates is the fire hose they are using. By dampening economic activity, they hope to stop inflation. 

It’s a tricky, delicate task. The markets are skittish. Higher interest rates increase the possibility of a recession. Recessions lead to lower corporate profits, and investors don’t like that.

So…we have a problem, which presents us with a choice:

1. We can bemoan the problem. (Not exactly helpful since we can’t now go back in time and prevent it; nor can we look into the future and see when it will end.)  

2. We can ignore it and do nothing. Assume the crash position, hold our breath and wait. Or…

3. We can look for surprising opportunities amid the smoke and embers.

Savvy long-term investors prefer option three. They realize there may be some long-term bargains out there. When markets fall, good judgment often flies out the window. All companies in a sector are often treated the same, even though they aren’t all equal in value. 

This means long-term investors may have an opportunity to get a bargain on good stocks that were a bit too pricey yesterday.

Investors who want income from their portfolios may also be staring at a silver lining. When the Fed raises rates, it means better returns for savers and fixed income investors. 

In short, even though the economic news feels bleak, smart investors could be looking at some great opportunities! 

Still, it’s important to be a careful shopper in this environment. In fact, now is a good time to enlist some professional help.

Don’t mishear me. I am not minimizing disastrous fires or making light of serious injuries. Nor am I dismissing the impact of huge financial shakeups. 

I’m saying that when problems strike you should control what you can and accept what you must. And never stop looking for opportunity. 

To help you think more clearly about your finances, I’ve created a free tool. It’s a comprehensive checklist of pre-retirement questions for people who are 60-something. Email me at bmoore@argentadvisors.com if you like a copy. 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.

On the bright side, if you had money to invest, you could get a 5-year CD at your local bank for 12% interest!

Never slow to a party, the financial industry designed products that would flourish in a high-interest rate environment.  

I remember being at one such presentation. I was a young man in a room full of older faces. 

“By a show of hands,” the speaker said dramatically, “does anyone in this room seriously believe we will EVER see interest rates below 10% again in our lifetimes?”

No hands went up. The audience laughed, so I did too, unsure why this fact seemed so certain to everyone else.

Of course, that period of hyperinflation didn’t last. That’s because economic conditions are in constant flux.

Case in point…

Like you, in recent weeks I’ve been paying $4 per gallon of gas—and grumbling. But do you remember just two years ago when crude oil was trading at -$37 a barrel! Thanks to COVID-19, no one was traveling, and nothing was open. For a brief time, owners of crude oil had to pay someone to take it off their hands!

My point is…things changed. 

They always do. Interest rates change. Inflation rates change. Tax rates change. The circumstances of your life change. Your health changes.

There’s a word for the mental trap we fall into when we see things going in a direction and assume they will continue in that direction forever. That word is “extrapolation.” 

Depending on its direction, extrapolation can lead either to overconfidence or extreme pessimism. In today’s market conditions, we’re seeing a good bit of the latter.

“My account is down 15% this quarter. If this continues, I’ll NEVER be able to retire!”

This is the flaw in extrapolating. It forgets that financial trends come and go. 

Concerning the markets, a review of history shows that markets typically trend in a direction…until they don’t. The overly optimistic investor fails to see the inevitability of occasional market corrections. The overly pessimistic investor panics on every down day.

Better to save and invest regularly and let market volatility work in your favor. How? By consistently putting a percentage of your earnings into your company’s 401(k) plan, you can benefit from market prices going both up and down. When prices are up, the steady dollar amount you invest buys fewer of the more expensive shares. When prices are down, your monthly investment buys more of the less expensive shares. 

To recap: The long-term direction of the modern age is progress and the creation of wealth. But that upward trend is anything but stable in the short-term. The pendulum swings both ways. And it does so unpredictably.

That’s why planning is so critical. Balance and risk mitigation are key components of any plan that participates in the financial markets.

While participation in the financial markets can bring great rewards, it can also exact a dear price on the poor soul that thinks that what goes up will never come down (not even temporarily).

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 could tell by the background noise he was driving with his windows down. I suppose calling to needle me seemed a good way to pass the time.

I didn’t take the bait. “Calls about what?” 

“This dang market,” he said. “Inflation is out of control. Fuel prices are double—just like every other commodity price.”

“No doubt about it,” I agreed. “And how are corn prices?”

“Well…they’re up too.”

“I bet that part doesn’t hurt your feelings too much, does it?” (I had to needle him a little, too.)

He ignored me. “But seriously—when commodity prices go up like this, it’s not long before the rest of the economy goes to hell.”

In 30+ years as a financial advisor, I’ve learned lots of lessons. One is that when someone believes the economy is about to go to hell, it never works to argue with them.

“That could be,” I said. “But then what?”

“Then what…what?”

“What happens after the economy goes to hell?”

He was quiet for a minute. “What are you getting at?” he finally asked.

“Do you ever plow your fields under?” I asked.

“Of course.”

“Why do you do that?”

“To get them ready for next year,” he said.

“Look,” I said, “What I know about farming would fit in a tiny basket—with room left over. But I know this: the plowing you do after harvest helps prepares the soil for next year’s planting season.

“It’s the same in the world of finance. When investment markets reach the peak of their growth in a given economic season, they naturally fall…sometimes quite a bit. The investing public typically views this as a problem, as if something has gone wrong.

“In reality, this is just the natural (admittedly painful) process of economic pruning taking place in the markets. Less successful companies recede into history. Successful companies sow the seeds of their future success. And startups, disrupters, and innovators appear on the scene as capital finds new places to invest.”

It was quite a speech. I was proud of it.

“Well, I’m still nervous,” he said.

“I know.”

“So, you don’t think I should do anything?” he asked.

“Not anything different than we’ve already done before today got here,” I said. 

“Remember, we put you in the investment allocation you’re in because of multiple factors: your age, your investment time horizon, the amount of risk you said you could take, and when you’d eventually want to turn this money into income to spend. None of that has changed, so we don’t need to panic just because the markets are doing what comes naturally.” 

Long silence. I could still hear the wind blowing through his truck windows.

“Okay. I guess I just needed to hear you say it.”

“I understand,” I said. “You still enjoying farming?”

“Wouldn’t ever think of doing anything else. It’s in my blood.”

“Good,” I said. “You’re feeding the world and doing the work of the Lord. Keep it up.”

“Thanks. Stay in touch,” he said.

“Always,” I agreed.

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 understand such feelings. 

Thanks to inflation, the Russian invasion of Ukraine, and other factors, the markets are more volatile than normal. The S&P 500 is a prime example. It fell 12% earlier this year. It has since recovered about half that year-to-date loss…but who knows what’s next?

So, yes, investing in stocks can sometimes feel like gambling. But there are big differences. 

Gambling is an activity in which winning is quite uncertain. In fact, if gambling didn’t result in most players losing most of the time, it wouldn’t be a viable business!

Think about it: The bettors put up the money, a few lucky players get back more than they wagered, and the house ends up being the real winner, day after day after day.

Investing, on the other hand, is purchasing a stake in a company. When the company makes a profit, all the stockholders (i.e., investors) get to share in that profit. 

Now, because of market conditions, short-term investments may or may not result in a profit. However, history shows that when a business is well-run over the long-term, its owners (i.e., stockholders) reap the rewards of their investment.

See the difference? Gamblers rely on hunches, gut feelings, and luck. Investors rely on facts, business fundamentals, and a company’s long-term performance. 

Investors look at data like this: In 2002 the average company in the S&P 500 earned about $50 per share. By 2022 that number was around $250 per share—a five- fold increase. 

Investors know that the price of a stock represents the collective opinion of the market. They realize that opinion is affected by wars, inflation, politics, the price of oil…and countless other factors. They understand how such opinions are often exacerbated by fear and greed…and can change quicker than a Louisiana weather forecast!

All this is why investors focus primarily on company earnings—not stock prices. Earnings aren’t driven by emotions or opinions. Earnings are facts. 

Years ago, a noted investor named Ben Graham said that in the short run, the financial markets are like a voting machine. They identify which businesses are popular and unpopular. But in the long run, the markets are like a weighing machine. They assess the substance of each company. 

Bottom-line, shrewd investors know that what matters is a company’s ability to earn money over the long-term—not the investing public’s fickle opinion about the company’s prospects in the short-term.

To be sure, gyrations of the markets can be nerve wracking. But when wise investors start feeling anxious, they focus on facts.

They look, for example, at the history of the Dow Jones Industrial Average, that famous index of 30 large, publicly owned companies trading on the New York Stock Exchange. 

What they observe is that America’s best run companies have a long-term track record of rising profits. In 1980, the Dow was at 1,000. In 2000, it was around 10,000. Today, it’s about 35,000. 

But currently, stock prices are volatile. And I’m not asking you to feel good about the account balance of your 401(k) plan going backwards. That stings! I am, however, asking you to focus on facts. 

For the last hundred years, long-term participation in America’s capital markets has been one of the best ways to grow and protect one’s wealth.

So, in anxious financial times like these, acknowledge your feelings. But don’t let them control your decision-making. Investing in good companies can sometimes feel like playing roulette. Over the long-term it’s actually a really smart bet. 

To help you think through such issues in more detail, 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. Just email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

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