Next week Americans will celebrate a holiday truly bespoke to our heritage, dating back to 17th century New England. Times have surely changed us from our monochrome-dressed ancestors. Life is good, and the food is better. Electricity has replaced kerosene, kerosene has replaced whale oil, whale oil replaced pitch. As a foodie and a history buff, I love to read about what the early Americans ate. In Gervase Markham’s The English Housewife, which dates to 1615, there are recipes for chicken, turkey, goose, duck venison and cow tongue.They seemed to have an affinity for stuffing one food with another, perhaps to stretch the meal, as meat was often sparse. Perhaps that’s where the “stuffing” tradition came from. Pilgrims were the original Survivors. And they scavenged for mussels, lobsters, and even pilfered the natives’ corn stash to survive the winter. They ate what they could get.
Today, those of us fortunate enough to live in the land-of- plenty and blessed to partake of its bounty are more likely to crowd our Thanksgiving table with casseroles, breads, potatoes, deviled eggs, turkey and ham, and of course, drown it all with copious amounts of GRAVY! We always have a houseful, and love to share our Thanksgivings with people from diverse backgrounds. One of my favorite guests was (and is) our dear friend Banjo from Nigeria, who spent some time studying at ULM. Before he went to Harvard, Banjo introduced us to moi moi, a bean pudding that can be shaped and baked into balls or served as a casserole. It is still one of my all-time favorites.
No matter what you put on your plate this Thanksgiving, one thing is certain; it will be diverse. And that diversity is what makes this meal so special. I think we all agree that no one would ever load up on only turkey, or only cranberry, with such a culinary array set before them. If they did, someone would surely ask, “why.”
In much the same way, some people load up on one or two types of investments. I have encountered clients with one stock or one sector that has grown larger than the rest of their portfolio. This can happen unintentionally, especially if we aren’t paying attention over time. Sometimes people will “load up” on annuity, expecting the benefits to outweigh the cost. Too much of a good thing can burden them with high expenses and doesn’t always fit the need. In time, these investors may find themselves with less turkey because their portfolio got “gobbled” up.
But the most common indulgence I see is one that many of us have been guilty of (even myself) is that of safe money. Cash and CD’s, while effective at preserving wealth, have historically failed to produce purchasing power. This would be the equivalent of only drinking water when you could have true sustenance. In time, the statement might look stable, but the dollars will weaken. This has become more evident this year. With core CPI-U being reported by the U.S. Bureau of Labor Statistics as rising 7.7 percent in the last 12 months as of November 10, those dollars are fading in strength. Weaker dollars buy fewer goods, and safe money almost never keeps up with inflation. At that rate of decline, those who load up on cash may discover the erosion of inflation is worse than they expected, especially since there is no “inflation write off” so taxes will still have to be paid on any earnings.
Also, bear in mind this warning: inflation is a rate, just like miles per hour. That means the longer the pain is applied, the more costly it gets. It’s like driving to grandma’s house with a crying baby. We can handle a few minutes, but three hours?... not without therapy. Therefore we should always limit short-term money to fit short-term needs. No one knows how long this inflation trip will be and each month is costly.
So, what can we do at times of inflation and contraction? Diversify. Lean into quality and income. Rebalance.Take losses where needed. Take gains where needed. Adjust our spending. Admit that our favorite investment can become our worst enemy, given the right circumstances. And as always, talk to a trusted financial or tax advisor before making drastic changes. If you don’t have the answers that you need, keep seeking. Smart people are smart because they ask a lot of questions.
I would like to encourage my Candor family to think about “a little bit of everything” as rule to live by. Circumstances will change, and are beyond our control, but history shows that those who maintain diversity in their portfolios often fare better than those who chase returns.
Someone once said, “we may not have it all together, but together, we have it all.” May your Thanksgivings be full of togetherness and lots of gravy. God Bless, and Happy Thanksgiving!
Always with Candor,