March 29, 2022
Spring is the time of change. We have been working diligently to ensure your portfolios reflect near term uncertainty and long-term economic growth. As discussed previously, inflation, monetary and fiscal policy changes, and geopolitical changes (potential movement from off-shoring to on-shoring), are all important changes being considered. We are still constructive on the long-term prospects of the US economy and the companies that will benefit from its success.
Considerations and questions being pondered:
Has fixed income risen enough in yield to finally become an attractive investment?
Has the inflation rate already peaked?
Is the worst part of the economic impact from the Ukraine war past us?
Is the U.S. government seriously being honest about how important fossil fuels and particularly natural gas are to world energy needs? Does this imply greater supply eventually?
If you have any questions on the changes on our positions or considerations, as always, please feel free to reach out to me directly to discuss.
This month I would like to take an opportunity to discuss a topic that causes anxiety this time of year, and that is college selection and acceptance. We are personally starting this process for the third time with our son Christopher. His interests are different than our other children, and he is more gifted academically. He works hard to give himself options that make sense for him, but he is not obsessed by it. He understands what is possible, and he knows there is more than one place where he could develop as a young man. We are happy he works hard, and he does his best, but we are most pleased that he does not appear to be too stressed about the process. We know jointly as a family that it will all work out.
I want to suggest that whatever college or university one ends up at, is a less important determinant of success than the following two factors:
How much the school is motivated to educate its students both in academics and in the promotion of a well-balanced and resilient character.
The effort your student puts in toward making the most of all the resources available to them once they’ve arrived at school.
Obviously, there are advantages in the short term from going to a school with a great alumni network and/or where top US corporations recruit.
High Schoolers are likely to have all kinds of expectations and desires about what the best school for them is, and how they envision their college experience to be. As with most thoughts about the future, it’s almost always different than our expectations. Your child likely won’t get into every school they want, and things will turn out differently than their expectations. Is that disappointing? It doesn’t have to be. Encourage them to accept their reality and to make the most of their time with professors, staff, opportunities available, and most of all fellow students.
I joked with my wife that college is a bit like marriage. Far from perfect, not at all what I thought, but it still turns out to be the foundation of all that’s important in my life. Why? Because we both choose to look beyond the other’s imperfections (I have more than my wife), and to focus on our commitment to give selflessly to one another. More than anything else, it’s how much of our hearts we put into the relationship that make it work.
The same should be true of college selection. Why does it matter how “selective” a school is? Of course, if you are gifted academically, you are more likely to end up at a more selective school. But let’s be honest, we know colleges are playing a game that looks more like managing a nightclub. They display a big line outside so everyone will want to come in. Isn’t it more important that your child find a school that is compatible with their interests and desires? For students: Ask yourself, are you choosing a school mainly because it’s more selective, and others will have a more positive view of you? If yes, perhaps you are just trying to impress others? If that’s the case, I would suggest being more introspective. Do what your gut tells you; be true to yourself. The people I have known over the years that have chased someone else’s version of success are generally the least content people I know. Many are good people, but they end up at a place in midlife and wonder why they are unhappy or not at peace with their lives. Often, they will make a big change later in their life that will cause collateral damage to the people in their lives. For the student considering college selection: Be True to Yourself.
I think people tend to admire people with strong self-awareness. Colleges will hopefully help students find this self-awareness if they allow themselves to be open minded and vulnerable. People with self- awareness understand their skill set, they develop these skills through effort and heart, and they don’t have time to waste considering how others feel about their life choices. They are busy making the most of their own unique gifts. They understand life is short, they push forward without regret, and they thrive.
It is also worth considering how committed a college or university is to the education of the full person despite the obstacles Covid brought during the past couple of years. I have had numerous conversations with many parents who were extremely let down by the lack of commitment these schools made to students paying $70,000+ per year in tuition. In the name of safety, many top schools in the country failed these students because of Covid. It’s easy to excuse the behavior, but it’s legitimate to consider the balance of effort that went into ensuring in-person classes and safety. Most educators understand the importance of in person engagement, yet many schools allowed the risk of Covid to override their mission.
I have written numerous times about my frustration (likely annoying many of you) with Covid “safety” measures causing more harm than benefit; particularly among younger people. Society is starting to be honest about that harm: According to an article in the NY Times by Roni Caryn Rabin on March 22, 2022: “Among adults younger than 65, alcohol-related deaths actually outnumbered deathsfrom Covid-19 in 2020” (link is below to the article).
Why point that fact out? Instituting policies that caused collateral damage to so many young people to mitigate against only the risk of Covid should not be excused. Just because many institutions were going along with Covid risk mitigation strategies, does not mean it was the right thing to do. This was the perfect time to demonstrate leadership. In my opinion, Merrimack and Providence Colleges demonstrated leadership. Of course, they were committed to Covid safety measures, but they were also committed to in-person learning. For full disclosure, I serve on the College Leadership Council at Merrimack College and our family is a supporter of Providence College through our son’s memorial scholarship. I had insight into the commitment they made to students while considering all the risks and fears. At one point during the height of the pandemic, on a zoom meeting with Merrimack’s Leadership Council, the President wondered aloud why other colleges and universities with far more resources did not make the same preparations to ensure in-person instruction. I am sure other colleges and universities made a strong commitment to their students. Shouldn’t this commitment to students be a serious consideration when selecting a college or university?
As a parent and a student, shouldn’t we desire a school that commits to its students, educates the complete person, and teaches how to learn? Developing one’s heart as well as one’s mind and fostering relationships among faculty and students, seems to me to be an important foundation for a young person’s future. If you are making such a large investment, ask yourself: How committed is the institution to the student?
For parents that are paying these large tuition bills, should you be considering and balancing the desires of your student with the cost of education? Of course! Many families will not have financial constraints because college cost has only a small impact on their overall finances. However, many families should consider the following hypothetical example:
College A and College B are similar in their mission, and they meet most of the considerations important to the student. Assume they will both accomplish the same objectives for thestudent, and they both cost $75k / year for 4 years.
The student wants to attend College A because it is far more selective than college B.
Let’s assume College A is more selective because of: o Current student desirability. o National attention in sports presently. o Other factors.
College B offers full tuition for 4 years (equivalent of $300,000) because they want to attract your student to boost their own desirability: o You come from a state where they want to boost representation from. o High GPA and test scores.
How do you approach such a scenario? We all want the best for our child, and they really want to go to College A. It’s not just about the money. Perhaps it makes sense to sacrifice financially to send them to College A? There is no right or wrong answer, but I believe some objectivity is required. Ask yourself: What message are you sending your child if you spend $300,000 extra on what is essentially the same education and experience? If you are willing to spend $300,000 so as not to disappoint your child, it bares consideration and explanation as to why. This is not a judgement of anyone making such a decision, but I do believe it would be a mistake not to consider the circumstances and to discuss this with your child.
The messaging is important. Here is why:
The $300k is a sunk cost that can be zero cost.
If you invest the $300k upon graduation for 10 years at an assumed 7% annual return, the money doubles to $600k. (Assuming the hypothetical return for illustration and emphasis of my point).
$600k allows for a lot of options when you’re in your early 30’s.
You have a degree from College A
You do not have an extra $600k in your early 30’s.
For Student’s, it’s about you and your effort:
For anyone that will remain stressed during these times of testing, essay writing, tours, selection, admittance, waitlisting, and rejection, I urge you to step back and remember that it’s all just a journey. Do your best, assess your options, and enjoy the process. There are many reasons you might be rejected from a school. This may have little to do with your accomplishments. Don’t waste time on taking such rejection personally. Wherever you end up, the resources available to you will be abundant. You will get a lot out of college if you put a lot into it. A far larger determinant of your success, wherever you end up, will be YOU and YOUR effort. Be open minded, explore topics that interest you, and have fun.
Lastly, recognize what interests you, and what seemingly comes easy to you, is a gift. Your gift may not interest others (took me a long time to figure that out), and they may not appreciate it because they don’t understand it. My advice, treat your gift as if it were gold and develop it as much as possible. Don’t waste time considering the judgment of people who view your gift as impractical. There are many paths to success and financial freedom; there is only one path to finding your true self.
Joe Joseph Cardello, Principal August Wealth Advisors, LLC 51 Riverside Avenue, First Floor Westport, CT 06880 Direct (916) 461-9451 toll free (800) 985-9477
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