December 18, 2020
Merry Christmas: Even if you do not celebrate Christmas, I have always felt that Christmas is a holiday for everyone. In our home, we usually have a large Christmas Eve gathering with friends and family that are available to join. My grandparents, my parents, and now my wife Michelle and I carry on this “open house celebration of life and giving”. It is never restricted to people of a particular religion or belief system; after all, that would defeat the very purpose of a Christmas celebration.
How terrible will Christmas be during COVID? It will be different because many of us will not be able to celebrate with our family. Some of us will be alone, and that will be painful. My heart aches for people in this situation because we cannot change our current reality. There is only one thing to do, and I will go back to the phrase I used in August Wealth’s first ever commentary from March 18, 2020: Adjust Your Perception.
Unfortunately (or fortunately), I have become somewhat of an expert in managing pain. It is my reality every day. What I choose to do with that pain is what will bring either rewards or more pain. Many people experience far more pain than me; as a society, we celebrate people that overcome painful situations and seemingly insurmountable obstacles because it is hard for most of us to imagine it in our own lives.
Here is what I believe is the secret to making ANY situation better: Use your gift of choice. We have all been given free will; nobody can take it away from us, and that includes government, parents, friends, your own health, money, etc. Choose to truly accept reality. Pain comes from our desire for reality to be different than what it is. That is where my own pain comes from, and it is not easy to overcome. The more we accept our situation and live the best we can, the more rewarding our lives will be.
This pandemic is a perfect opportunity to choose to live as best you can during a challenging time. Thinking: “I just want to get back to normal”, does not equate to caring more than others about challenging times. In fact, all it does is detract from your ability to deal with reality as it is.The way you might manage your way through living in the pandemic, has parallels navigating market uncertainty and the investing process:
Plan for living through the pandemic:
What is the risk of contracting the virus?
How do I mitigate the risk for myself and others while continuing to live as fulfilling a life as possible?
If I contract the virus, what risk does the virus present in relation to other risks in my life and others?
I accept the reality and risks as assessed.
I act (live life) accordingly with full acceptance of the potential downside and upside.
I adjust my approach to life as the risk of Corona virus increase or decrease.
Investing Process:
What are the risks to putting my hard-earned money to work to earn a return on investment?
How do I mitigate those risks while continuing to earn the most money possible?
If I lose money, how does that outcome impact my standard of living and future goals?
I accept the balance of risks and reward.
construct a portfolio which seeks to achieve the most efficient plan possible with acceptance of loss and gain based on the assessment of risk/reward.
I change my plan accordingly as the risks change.
Instead to ask reflective questions to assess how you feel about the balance of risks. A true understanding of reality only comes from reflecting. Only then can we honestly assess how we will feel about certain outcomes, and only then can we plan accordingly. How do you feel about the following questions:
Do I worry more about the equity markets in the USA going up 20% next year or down 20%?
Assuming central banks, in conjunction with the federal government, continue to pump more money into the economy, do I feel safer:
Sitting in cash or low interest-bearing accounts at negative real yields?
Obtaining a guaranteed annuity stream that may not keep up with my cost of living?
Investing in financial and real assets that will pay through growth and income but have more price volatility?
Do I believe the US Dollar will maintain its value despite the supply of dollars increasing against a more limited supply (potentially) of physical assets?
Does the United Kingdom or the European Union have more leverage after Brexit (in whatever form)? Is the United Kingdom historically cheap given its dynamic political, educational, and legal structure compared to the rest of the developed world?
Am I more interested in exciting trends in private equity, hedge funds, SPACS and paying the fees for that access, or does it make sense to target a stead growth rate over time that achieves your goals with a balanced strategic plan?
Do I think real estate in major cities is dead for the next 20 years because people will continue to flock to the suburbs? How would I have answered this question if I asked it at the end of 2019?
Do I think interest rates will rise as the economy expands, or will the Central Bank find new ways to keep long end rates low for fear of ending the recovery?
Is it possible that the Federal Reserve has been given too much power by the government? That the economy relies on the Central Bank to take on ever increasing amounts of risk in any downturn? What if we had an inflationary expansion? Will the Fed be able to navigate the upside as well as they have the downside?
If you have not thought hard about these questions, or you feel they are too daunting to even think about, please do not hesitate to call us. We genuinely want to help; this is why we started August Wealth.
As I leave 2020 behind me, I want to profusely thank my clients that placed their trust in my ability to help them this year. I also want to thank my strategic partners in the USA and around the globe for their help in my investment process, and with legal, trust, and tax questions. I especially want to thank Stratos for believing and partnering with me, Christina George for your indefatigable work ethic and care for our culture and our clients, and Amanda Gilman for your diligence in planning and presentations.
August Wealth was nothing more than an idea in December of 2019, and it has grown well beyond my expectations. We believe in straightforward, simple, and transparent processes that allow people to realize that investing their money does not need to be overwhelming.
My hope is that we continue to build a culture that operates only in the interest of helping more families achieve their goals and reduce financial anxiety.
Happy New Year!
Joseph Cardello, Principal August Wealth Advisors, LLC The Loft, 101 Franklin Street, Suite A
Westport, CT 06880 Direct (916) 461-9451 toll free (800) 985-9477
jcardello@augustwealthadvisors.com
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