Penny Here, Dollar There- Alan Naiman lived a frugal life: He wore old shoes held together by duct tape and drove jalopies. But when the Washington state social worker died at age 63, he left behind an $11 million estate- most of which he bequeathed to charities helping sick, poor, and abandoned children. Naiman built his fortune by squirreling away money from his $67,200 salary, working side jobs, and saving the millions he inherited from his parents. When he was diagnosed with cancer, he began researching charities to include in his will. “What a generous, loving man,” said Jessica Ross of Treehouse, a foster care group that received $900,000.
White Washed- Authorities in a Russian coal-mining town have been accused of literally whitewashing their air pollution problem—painting blackened snowbanks white to conceal soot and ash from residents. The conspiracy in Mysky, located in Siberia, was unraveled after a woman brushed a snowbank with her hand and found it coated in white paint. “You can see the stain…it even sticks,” she said. The revelation prompted the town’s leader, Dmitry Ivanov, to order the paint removed and to apologize “to the townspeople whose New Year mood was spoiled by this.”
TSA Gets a Makeover- Transportation Security Administration officials are replacing bomb-sniffing dogs with pointy ears with those with floppy ears, to ease the anxiety of airline passengers. Floppy-eared breeds such as golden and Labrador retrievers can sniff out drugs and explosives just as well as pointy-eared breeds such as German shepherds, said TSA officials, and “we find the passenger acceptance of floppy-eared dogs is just better.”
Weekly Focus – Think About It
“The wind comes across the plains not howling but singing. It’s the difference between this wind and its big-city cousins: the full-throated wind of the plains has leeway to seek out the hidden registers of its voice. Where immigrant farmers planted windbreaks a hundred and fifty years ago, it keens in protest; where the young corn shoots up, it whispers as it passes, crossing field after field in its own time, following eastward trends but in no hurry to find open water. You can’t usually see it in paintings, but it’s an important part of the scenery.”
– John Darnielle, Musician and author
Investors will think of the last quarter of 2018 for years to come, but they won’t remember it fondly. The Economist described it like this,
“After a rotten October and limp November, the S&P 500 tumbled in value by 15 percent between November 30th and December 24th. Despite an astonishing bounce of 5 percent the day after Christmas, the index finished the year 6 percent below where it started…”
Last quarter’s volatility and the slide in share prices owed much to uncertainty about economic growth. Investors were concerned about a variety of issues, including:
- The Federal Reserve making a mistake. Many in financial markets worried the Fed would raise rates too high, too quickly and stifle economic growth. Last week, the Fed put those fears to rest when its Chair, Jerome Powell, suggested the Fed was willing to stop increasing rates during 2019 if there were signs of economic weakness. Investors rejoiced and the three major U.S. indices experienced significant gains on Friday.
- Weaker corporate profits. Companies were remarkably profitable during the first three quarters of 2018, in part because of the boost from tax reform. However, there were worries fourth quarter earnings would be weaker as the effects of the stimulus faded. Last week, John Butters of FactSet reported, after three quarters of 25 percent or higher earnings growth, the estimated earnings growth rate for fourth quarter 2018 is 11.4 percent.
- A slowdown in global economic growth. Trade wars and tariffs clouded the outlook for global growth throughout the year. The Economist reported there were signs of economic slowdown in China, and one American technology firm attributed a sharp downturn in its profitability to weaker economic growth in China. There were also signs of economic weakness in Europe.
- A slowdown in domestic economic growth. Investors have been worried that trade issues, the government shutdown, and other matters could negatively affect economic growth at home. If the government shutdown is resolved quickly, these worries may prove overblown. Last week, Taylor Telford of the Washington Post reported, “…According to interviews with several analysts: The economy is fundamentally strong, and the stock market has overreacted to concerns about a modest slowing.”
As anxiety rose during the fourth quarter of 2018, some investors rushed to the perceived safety of bonds. High demand pushed the yield on 10-year Treasury bonds lower. It dropped from 2.99 percent to 2.69 percent during December, according to Yahoo! Finance.
While increasing bond exposure may have been a prudent portfolio adjustment for investors who were taking more risk than they could bear, those who moved out of stocks on fear missed out. The Standard & Poor’s 500 Index and the Dow Jones Industrial Average posted their biggest one-day point gains on record on December 26, reported Emily McCormick for Yahoo! Finance.
At this point, some investors feel overwhelmed and worried about their ability to reach personal financial goals. If you’re one of them, please give us a call. Sometimes, reviewing life and financial goals, and the reasoning behind portfolio choices, may be reassuring. We look forward to hearing from you.
What is Midwest nice? The Economist recently explored whether there was a basis for the idea that Americans who live in mid-western states are more congenial than people from other states. The publication explained ‘Midwest nice’ this way,
“It is apologizing involuntarily when scooting past someone, both to warn of your presence and to express regret for any inconvenience your mere existence may have caused. It is greeting people as they step into a lift and wishing them well as they leave. It is a strong preference for avoiding confrontation.”
The Economist found it all depends on how you measure ‘nice.’
If the standard is volunteerism, the Corporation for National and Community Service reported three of the five states where people volunteer the most are in the Midwest:
- Utah (West)
- Minnesota (Midwest)
- Wisconsin (Midwest)
- South Dakota (Midwest)
- Idaho (West)
If the standard is personality, the Midwest shares the blue ribbon for friendliness. A group of researchers from the United States, Britain, and Finland mapped the psychological topography of the United States and found people in Middle America and the South to be friendly and conventional, while those on the West Coast, in Rocky Mountains, and along the Sunbelt were relaxed and creative. Americans in the Mid-Atlantic and Northeast regions were temperamental and uninhibited.
When it comes to charitable giving, Utah and the Southern states come out on top. Southerners give the highest percentage of earnings to charities. The money primarily goes to churches.
The preponderance of the data considered by The Economist suggest that ‘Midwest nice’ has a basis in reality.
John Klevens, CFP
Sources: The Week Magazine,
Portions of this newsletter has been prepared by Peak Advisor