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Why did I name my company New Capital?

While I believe in tradition, habit, and age, I also believe there is nothing like renewal, in trying new things, in entering a new phase, in making changes.  This is the lifeblood of the universe – dynamism – not stasis.  And so I try new things all the time, and encourage you to do the same in your life.


This year, New Capital sponsored the Knights of Neartown Little League, our first time doing this.  August played shortstop, pitcher, and catcher – all new positions for him – and made the All Star team, and I was an assistant coach – a new role for me.  We made new friends, learned new plays and techniques, and importantly made new mistakes while improving.  Baseball, an old American game, renews itself every spring.

New things are not only happening on the baseball diamond.  There are many new things going on at New Capital, and in the next few paragraphs I would like to highlight them for you.

As we have discussed in a recent webinar and newsletters, we are now offering our Passive Pure model portfolios to go along with our established Passive Plus model portfolios (which most New Capital clients are now invested in).  Passive Pure are ultra-low-cost portfolios designed to very precisely track their benchmarks and indexes.  While Passive Pure may sacrifice potential long-term outperformance of broad markets, many investors are satisfied with broad market performance and wish to eliminate as much tracking error as possible.  If you think you might want to convert your Passive Plus portfolio into a Passive Pure portfolio, let me know and we’ll analyze what it would take.

New Capital is adding insurance advisory services.  For many years, our clients have sought our input on all manners of insurance.  Working with our partner DPL Financial Partners, we are now able to provide detailed analysis of existing policies, and present and implement new-term life insurance, permanent life insurance, variable annuity contracts, and other instruments.  In many if not most cases, we will be able to save clients substantial amounts by working with low cost, highly rated carriers like TIAA, Ameritas, and Jackson National.  As a fiduciary, we will never “push product” – and we will continue to refer clients to insurance professionals who are part of our proprietary ProNet network.  At the same time, we are pleased to be able to offer this capability, because we know clients have wanted us to provide this service.  I’ll have much more to say in the near future about our insurance advisory services. In the meantime, feel free to ask.

Does your company need a 401(k) plan, or do you have a plan that you would like to replace with a lower cost, easier to manage plan?  New Capital is now offering 401(k) plans in conjunction with our partner Guideline.  We installed our own Guideline plan over a year ago and have been so impressed with it that as soon as Guideline recently released their advisor-enabled plans, we signed up.  We are now equipped to help you evaluate, implement, and manage your own plan, which features low administrative costs and low-cost funds from Vanguard and DFA.  Let us evaluate your current plan – we may be able to save you and your employees substantial amounts of money in an area where costs have traditionally been both opaque and high.

Clients sometimes ask me: can I invest my IRA in something other than stocks and bonds?  My answer is always yes, but if you are serious about it, we need to talk about it first to see if a self-directed IRA is right for you.  We were introduced to Strata Trust, our new self-directed IRA custodian, through a client’s self-directed investment, and recently formalized a relationship with them.  Please note that just because you can invest in private, alternative assets with your IRA does not mean that you should, as there are a number of issues and risks with private investments that are almost always greater than those with public investments.  Still, I am pleased that we now have a formal partner with whom we can help those clients for whom such transactions make sense.

Finally, I know that the tariffs being imposed by the Trump Administration are concerning to many people.  Tariffs are not new, and have a long history dating back centuries in America, including a very prominent role in and around the Civil War (Abraham Lincoln was a strong proponent of tariffs).  In those days, tariffs had a dual role: to protect nascent American industries from competition with British industry, and to raise funds for the US government (tariffs then accounted for as much as 50% of government revenues). 

In recent decades, of course, tariffs have fallen all over the world as trade has liberalized.  It’s important to note that since 1934, the President has had enormous purview over tariffs because Congress passed the Reciprocal Trade Agreements Act, which ceded Congressional power in the wake of the disastrous Smoot-Hawley tariff laws.  The goal of the RTAA was to empower the President to liberalize trade in bilateral negotiations with other countries, and to move away from protectionism.  The use of the RTAA by President Trump to dismantle liberal trade is therefore a perversion of the law that he inherited.  In the past, the United States has prospered both in times of high and low tariffs.  It may well be that the time has come to raise tariffs from historic lows.  However, I believe the time has also come for Congress to reclaim its original power to assess tariffs, as presidential management of American tariffs has, in my judgment, run its course.  If you agree, contact your Congressional representatives and let them know – your portfolio will thank you.

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