Spring 2021

Have you ever talked to someone who recently came back from a trip to Las Vegas or to one of the local casinos? Have you noticed that when they share their stories, they only talk about how much money they’ve won and they don’t mention how much they’ve lost? There is a reason they don’t share the bigger number. While it is easy to boast about our winnings, no one wants to admit that before winning that $1,000 at the slot machine, they had already lost $2,000 playing blackjack. In essence, they didn’t really win anything.

Recently in the news, there was a lot of talk about the company, GameStop. Have you heard of them? I remember taking my son, Christian, to GameStop when he was growing up. He would save up his allowance to buy used video games at the store. He’s in his late 20’s now, and I guarantee he hasn’t been to a GameStop in over 15 years. The company’s business model is old and the company is failing, yet in January, they were all the buzz and their stock price rose to over $400 per share. The short story surrounding GameStop is that a group of individuals encouraged every day investors to purchase the stock. The premise was that if they could get the stock price to go up, it would be a detriment to large investment firms and hedge funds, forcing them to take losses on their investments. Over the course of a week or two, it was common to hear about many ‘regular’ people who were making money hand over fist off the rise of this stock, but just like the people who lose money at the casino, no one seemed to want to talk the other side of the coin. The Wall Street Journal recently profiled a young man (age 25) who was one of those other people. He took out a personal loan for $20,000 to buy GameStop at $234 per share. Not understanding how the stock market works and what he was doing, but going off the advice of this forum, he thought the stock price would go to $1,000. It fell to $50 per share and he lost big.

I share this story because it is easy to get caught up in the frenzy and excitement of making a quick dollar. Who doesn’t want to double their money in two days, but making a quick buck is not the purpose of investing in stocks. Stocks are long-term investment vehicles. Warren Buffett is famous for saying, “If you aren’t willing to hold a stock for ten years, don’t even think about owning it for ten minutes.” When Cliff and I evaluate your portfolio and give you recommendations, we are not gambling with your money. We are looking at research, fundamentals, and your personal situation to provide you with professional advice based on your goals and stage of life. It would be great if everything we recommended doubled overnight, but it would also require assuming a great amount of risk, because on the flip side, you could lose half of your money overnight. How much risk are you willing to take?

We strive to do an annual review with every household each year so we can discuss your personal situation. Have you heard from Kasey to set up your annual review but haven’t gotten back to her yet? Check your email or give her a call! We are still working from home, but that isn’t stopping us from working for you. Zoom is still a great way for us to review with you.

P.S. – We are hearing that many people are getting their vaccines or on waiting lists, but there are still many people left to get shots. Since our offices are small and enclosed, for your safety and ours, we are still working from home. Our hope is that we can gather with you in person later this year. We miss your smiling faces!