From Leonard's Desk

First order of business: 800-724-9866, that is our office phone number and you should use it at any time that you want to talk, during the current market stress or any other time. Your call is always welcome.

Second order of business: Merry Christmas, Happy New Year, Season’s Greetings, Happy Holidays. May 2019 be a good year for you and for all. Unquestionably, that is going to take some work given current events.

Now, imagine that you own a business – a professional practice, a retail business, a manufacturing business – and imagine that Donald Trump withdraws troops from Syria and shuts down the US government over a wall. Do you sell your business in response?

Imagine that you have made highly documented and legally securitized loans to credit worthy borrowers, and Donald Trump replaces the Fed Chairman. Do you sell your loans in response?

Imagine that you own a home worth $1 million, and real estate prices in your city soften by 10% so that the county now appraises your home at $900,000 this year. Do you sell your home and move out in response?

Most of you reading this would answer: “Of course not – that’s an insane reaction.” And yet when we react to headline news events and market gyrations by offering to sell our securities, that is exactly how we are reacting. When you own stocks you own shares in businesses, and when you own bonds you own structured loans. To offer to sell those assets to others who are ready to pay cash for them is to give Donald Trump more power than he deserves, and he already has far more power than he deserves.

What are things that might reasonably cause us to sell securities? Here they are:

  • Your securities are extremely overvalued

  • You need cash

  • Your financial circumstances have changed

In the past weeks since the onset of the current bear market, New Capital clients have not chosen to hand over more power to Donald Trump by offering up their assets for sale without good reason. Of approximately 80 client households, only a handful have contacted me to discuss portfolio changes, all have referenced their own needs per above, and no one has called in a panic. New Capital is lucky to have great clients.

I cannot tell you when the current bout of selling will end. It could go longer and farther. Who is doing the selling? More than likely, investors without advisors. Prices for stocks have gotten more attractive, but could get yet more attractive. Every share that has been sold in the past several weeks has been bought for cash by someone else. In 1974, Watergate brought down Richard Nixon; stock prices are now approximately 30 times higher than they were back then. I have sold nothing in my own personal portfolio and have no plans to; I am actually looking to put some cash to work in my retirement account.

Serving you and your family is one of the most important and satisfying parts of my life. When markets hit rough patches, I relish being here for you, fulfilling your trust, and working harder than ever to put matters into perspective for you.

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