​This Easter weekend I would like to speak to the younger generation, those who in this very difficult time wonder about their future, or if they will even have one.
 
When I got married, I lived in Las Vegas at a time when the nation was suffering through a very painful recession. Unemployment was high and the future looked dim. Being an optimistic person, I always believed difficult times held opportunity for those willing to work for it. One particular day I was driving around town and I came upon a partially framed home on a lot overlooking the city. It was clear the project had been abandoned for some time. When I found the owner, he was thrilled someone might be interested in it. We made a quick deal and the next day I stopped by my bank and secured a construction loan at the very unreasonable interest rate of 18%.
 
At the young age of 23 I had a theory that with so many builders out of work, I could probably secure cheap labor and materials to complete the project. My theory played out well because no sooner did I commence work on the property than a steady stream of contractors and suppliers stopped by to offer their services, at almost any price. My home was quicky built and I was able to secure permanent financing at a very attractive 12%. (You young home buyers today are totally spoiled)
 
While building the home a friend asked why I would attempt such a project when experienced contractors were unwilling to do so. After a brief pause I responded, “The gold eggs in life are usually found in the nest farthest out on the limb. Those who would have them must be willing to climb out after them.”
 
That answer stuck in my head for years until I finally decided I needed to write a book about it, a book that both young and old could learn from. Thus was the inspiration for my first children’s book, “The Gold Egg.”
 
The principles I learned while building my home many years ago are still true today. Life is full of challenges, and we can either let them get us down, or we can rise up and find the opportunity in them. I work with many people who became successful investors, not because things always went right, but because they never stopped climbing. Behind every successful retirement account is someone who stuck with it, through good and bad, finding opportunities in both. Things didn’t always go well for them, but they never stopped climbing.
 
Young people, don’t worry about the troubles in the world around you. Identify your gold egg and start climbing towards it. Work, learn, save and sacrifice and you can be the master of your own destiny. Sometimes it will be easy and sometimes very difficult, but success comes to those who keep climbing. Happy Easter!

​The nations’ largest retail chains made their fortunes by appealing to the human desire for a bargain. Entering the store, the first items you see are usually the ones on sale. And people rush to buy them. Wall Street has a sale rack too but often many investors try to avoid it, oddly preferring to seek out those hot stocks that are most expensive.
 
I saw an interview by investment personality Jim Cramer on the topic of the new millennial investors that I found to be quite inciteful. He said, “If you pay no attention to the Fed or the bond market, which is pretty much the status of the newer investors, and you buy every dip, you can make out like a bandit…Those who have been around forever don’t like it, but ignorance is bliss and more profitable than intelligence.”
 
I am not sure about ignorance being more profitable than intelligence, but what Jim had noticed was that younger investors were ignoring all the market noise, and just doing what made sense. They were looking for bargains. Perhaps they learned this while shopping with a parent at the local big box store. There is a solid principle here that more “educated” investors might learn from. For example, in 2020 the stock market averages were driven up by relatively few high-tech stocks, while more traditional companies struggled. The market averages kept climbing as those few stocks attracted more investors, perhaps fearing they were missing out. All the while many of the long-standing traditional stocks were left behind, quietly becoming cheaper compared to their soaring high-tech counterparts. Younger investors in internet chat rooms began talking about, and then slowly buying up some of those overlooked issues.
 
Now in 2021 we have watched the opposite happen as the high-tech sector fell while the rest of the market has played catch up. This week the Dow Jones average is flirting with another record high, yet many of last year’s big hitters have been moving downward. What has happened? It is what market followers call a “rotation” which is when money rotates out of one area of investing and into another. I have often said money does not disappear, it just moves. As this rotation has occurred many younger investors who were picking up bargains a few months ago find themselves sitting on top of big winners. So, is ignorance bliss? I suppose it would be more accurate to say that sometimes too much information gets in the way of good common sense. The millennials were just being good bargain hunters.
 
Market rotations can lead to bargain opportunities for investors, especially these days when they tend to happen more frequently and with greater magnitude. We are already seeing some of last years’ highflyers starting to appear on this years’ Wall Street bargain rack. Maybe we should look at investing more like a big box store. When something is on sale, take some time and give it a look. The younger generation certainly will.

​During my early years living in Canada, I adopted the tradition of playing marbles on the playground at the first sign of Spring. Marbles was a game but also serious business. Marbles were our currency. We collected them, traded them and invented numerous games to win them from each other. The social hierarchy in my elementary school revolved around an individual’s marble collection. Quantity was important but quality was key. Certain types of marbles were difficult to obtain. The most valuable by far were the ones we called “beauty boulders” which could only be obtained in the United States. These were large opaque marbles with multi-colored designs on them, and few students had any.
 
One day a young girl named Sophie returned from a trip to the States with a huge box of new beauty boulders. Our eyes nearly popped out of our heads at such a beautiful sight, and soon she was trading her marbles for anything we school kids could come up with. It was a glorious day and I remember going home that evening holding my very first beauty bolder. Late that night I carefully wrapped it in a cloth and slept with it at my side. I had thousands of marbles, but this was my greatest treasure.
 
The following day at school I pulled the beauty from my pocket to show a friend on the playground. I was amazed at his lack of interest. The once rare marbles had become so plentiful that no one even wanted them anymore. Attention at the marble games had turned to the now much rarer crystal boulders. Despite her good intentions, Sophie had destroyed the market for the once great beauty boulder.
 
Congress recently announced another round of stimulus spending. The most recent is a staggering $1.9 trillion, on top of the trillions already spent. No human is even capable of comprehending such numbers. These stimulus packages continue in spite of the fact that the economy is already recovering as the virus effect continues to decline. The governments’ move, unnecessary in this financial advisor’s opinion, will have long lasting effects. At the very least, the flooding of the nation with trillions of new dollars will make the dollars in existence less valuable. Less valuable dollars cause prices to go up. The government recently announced the prior twelve-month inflation rate was 1.7%. Seriously? Where do these people shop? Have they looked at housing prices, rent, fuel, healthcare, food, vehicles (if you can find one)? Would someone please email me about anything they can buy today that is not substantially more expensive than a year ago.
 
I wish legislators had spent a little time in my Canadian elementary school. It may have helped them better understand the consequences of dumping all those extra dollars on our economic playground. In the meantime, it is left to investors to find ways to convert their “less rare” dollars into assets that are more likely to maintain their value in an age of uncontrolled deficit spending.

​I want to follow up on my recent column regarding cryptocurrencies, and for the purposes here I will call them all, Bitcoin. Given the rising popularity of this new asset I feel there are a few things people should know before making a decision. Let’s begin with how you might actually own it.
 
Bitcoin ownership is typically anonymous, which is one of its main attractions. The digital coins are tracked on a system of decentralized computers where they reside as alphanumeric codes, known only to the owner. The most confidential way to store the codes is in your personal possession such as on a piece of paper or a thumb drive. This is known as a cold wallet. Storing this way requires that you do not lose the codes. If you do, they cannot be recovered, and your coins will be lost. This happens frequently. Consider how many times you have lost a password in the past and had to have it restored. With a Bitcoin cold wallet there is no restore option.
 
Another way to hold Bitcoin is at an exchange. For many, this will feel more like an online banking experience with access by personal ID and password. If you forget the passwords, they can usually be restored. The risk however is that if the exchange is hacked, and it has happened, your crypto could be stolen and once again, lost forever. You also lose some confidentiality by using an exchange.
 
More recently Bitcoin can be invested in indirectly using a publicly traded fund. Read the prospectus carefully as you don’t actually own the coin and thus the value of your investment is based on demand for the fund. It does not move in perfect sync with Bitcoin and sometimes has varied widely. There are also annual fees that you wouldn’t pay if you held the coin personally.
 
Another significant risk to owning Bitcoin is the risk of theft. Many choose to hold their Bitcoin codes in a cold wallet as described above. One downside is, suppose a bad individual wants to steal your coin. All they need do is threaten you until you give them your codes. They can then transfer your coins to their “wallet” and since ownership is anonymous, there is no evidence the theft ever happened. Law enforcement would be helpless to solve the crime. I hear people all the time talk about owning Bitcoin. I caution as strongly as I can, if you own Bitcoin, do not talk about it. You are putting yourself and your investment at risk.
 
Given these challenges I suggest extreme caution before entering this new digital currency world. Prices are volatile and there are many risks. Some of these digital coins may eventually become mainstream as they offer real potential benefits, but this is a new and hazardous industry. Those interested should study it carefully, learn the risks, and only invest money they can afford to lose. 

What is risk? The dictionary defines it as the possibility of loss. Sports fans understand risk. Even the best teams lose games. When the Tampa Bay Buccaneers won Super Bowl LV this year, no one complained that they had lost 31% of their regular season games. It is the final result, not the occasional losses along the way that define champions.
 
Investing involves risk. Some investors think they can avoid occasional losses because they don’t understand the nature of risk and the laws that govern it. Risk means the possibility of loss, and where there is a possibility, given enough time some loss will be realized. Most investment literature says, “you may lose money.” I usually correct that for investors and say, “you will sometimes lose money.”
 
Jeff Bezos is one of the world’s wealthiest individuals. The successful company he founded, once launched a highly anticipated product which turned out to be a colossal failure. When he was asked to explain the disaster he responded, “If you think that’s a big failure, we’re working on much bigger failures right now.”  Bezos understood that risk means sometimes you fail. But he also understood that growth requires risk and perhaps the biggest risk would be to take no risk at all. Without it there can be no gain.
 
As an investment professional I regularly deal with risks on behalf of myself and my clients. That means sometimes I will be standing with Mr. Bezos and explaining to a client that we ended up picking a stinker. Sometime risk gets you. When it happens, it doesn’t mean you didn’t do your homework and it doesn’t necessarily mean you made a bad decision, because the decision is always made with risk in mind. It simply means that risk got you that time. If you invest regularly, sometimes you will just have to say, “Wow, why did I buy that?”
 
But here is the magic of it all. It doesn’t matter that the Championship team lost some games during the season. It doesn’t matter that investors occasionally pick a loser. What matters is if your portfolio is doing what you need it to do, according to the goals you have set, which goals should always take into account the risks involved.
 
One of my most rewarding activities is doing annual reviews with our clients where we compare their goals with the results. It would be nice to have had an undefeated season that year but in reality, I never plan on it. Taking risk means we will sometimes get investments that don’t go as planned. I am not ashamed of that. But I would be ashamed if my clients couldn’t enjoy a comfortable retirement because we didn’t take the necessary risk to obtain it. Like in sports, investing is about the overall victory, not the occasional losses along the way. Embrace reasonable risk, focusing not on the few times it bites you, but rather the bulk of the time where it pays off to your financial benefit. 

​The flight from our California office takes me on a route travelled daily by thousands of others. Last week while enroute I was alerted to a Gulfstream G3 jet passing above me. I was flying my normal 300 mph but the G3 was doing closer to 500. I watched the gap between myself and the G3 increase as he pulled away. I was a little jealous of his speed, but realized I was still moving pretty quickly myself. His speed had no effect on my own progress. His going faster did not make me go any slower. If by chance he would have slowed down, it wouldn’t have benefitted either of us.
 
Statistics used improperly can be a dangerous weapon. One that has always annoyed me is what is called the “wealth gap.” This is the financial distance between different economic classes. It is often used to show that the gap between the top 1% and the bottom 50% of Americans keeps getting bigger, as if that’s a bad thing that needs to be fixed. It is often used to portray American capitalism as unfair, but I see it as a deceptive use of statistics.
 
In my airplane example, if the G3 is travelling any amount faster than I am, the gap between us will continually get larger. Just as if someone makes more money than you do, the financial gap between you and them will grow. It is basic and unchangeable math. The only way to stop the growth of the wealth gap would be to equalize wages and financial holdings nationwide. Such action is not only impossible, it would also be extremely destructive.
 
As I flew home that day, I decided the most important statistic was not the growing distance between myself and the G3, but the shrinking distance to my destination. I was moving forward at a very good rate, and that is all that mattered. Envying the G3 pilot could not improve my situation.
 
On the road below me were also people in cars doing about 70 mph. This wonderful eastbound journey was filled with travelers in various modes of transportation, but they all had something in common. Each was moving towards their destination and benefitting from the freedom to travel. Worrying about how fast someone else was going, or worse, trying to slow them down to make the journey “more fair,” would serve no one.
 
Many investors focus on the gap between them and someone else or get jealous when others make money on something they missed out on. These negative feelings often lead to poor investments decisions such as taking an unreasonable level of risk. We are seeing quite a bit of this type of investing behavior right now and I strongly discourage it.
 
Ignore the so-called wealth gap, except the one between where you are today and where you reasonably would like to be in a few years, and work on that one. And be grateful you live in a country that gives you the opportunity to do so.

​A few years ago, one of my sons who has always been very tech oriented introduced me to Bitcoin, which was trading for about $10 at the time. I felt his pain as he struggled to teach this “baby boomer” about the new digital technology which he insisted was going to flood the earth. In his words, “Dad, the nerds will soon run the world.” In more ways than one I have watched that odd prediction begin to come true.
 
As I struggled to understand the concept of digital currency my son wisely pointed out that 99.9% of my monthly spending was probably already digital. He was right. And so, I set out to understand crypto currency, skeptical at first but over time appreciating the benefits it might offer the world.
 
In my office we do not make recommendations on investing in crypto currencies like Bitcoin, but we are happy to share what we know about them to those who are interested. One of the most common questions we receive regards whether Bitcoin will ever replace the American dollar as the worlds’ currency, as claimed by some of its advocates. The answer to that question begins with how the dollar got to where it is in the first place.
 
Imagine you have a home to sell for $500,000. Would you sell it to someone who offered to pay you in Bitcoin? The vast majority would not, for this reason. Despite its recently soaring price, Bitcoin is extremely volatile. It’s price routinely fluctuates in double digit percentages even on a daily basis. If you accepted Bitcoin for your home, its value by the time you closed the sale would likely be significantly higher or lower than it was on the day the contract was signed. This volatility would make it very difficult for both buyer and seller, not knowing the final price until the day the sale closed.
 
The US dollar is the world’s most accepted currency because it is highly stable. If you agree today to buy a house for $500,000, those dollars will not have noticeably changed in value 30 days later when the deal closes. The stability of the dollar is what makes it desirable for financial transactions at home and abroad. The instability of Bitcoin makes it attractive to high-risk investors and speculators, but much less desirable as a currency with which to perform routine transactions.
 
Bitcoin or other crypto currencies may one day be widely accepted for regular financial transactions, but that won’t likely happen until prices stabilize. Ironically, that stabilization would make them less enticing to speculators. In the meantime, keep an eye on this new technology. As it evolves, I suspect many uses will be discovered not only for the coins, but the blockchain technology that drives them. My son was right. Our world is rapidly changing as “the nerds” take over. Investors should stay informed, so they are ready to invest when appropriate opportunities arise.
 
Investing in Bitcoin or other Crypto Currencies is speculative and carries very high risk. Our office does not make recommendations regarding these types of investments.
 

​When I was 15, I spent a summer living at my cousin’s house working for a local farmer. Farm work is hard but the task that was particularly difficult for me, on an emotional level, was when he sent us out to thin the peach trees. We climbed ladders up into the trees loaded with beautiful young peaches and were given the assignment to pick and toss to the ground 50-75% of them. I was a city kid and couldn’t make any sense of the request to throw away perfectly good fruit. The farmer insisted however, that the trees couldn’t support all the peaches, so thinning was necessary in order to produce a healthy crop.
 
In my logical 15-year-old mind the math just didn’t add up, so I would pick a few peaches and move on, only to have the farmer send me back to my prior trees to thin them again, and again. It wasn’t until the end of the summer when we harvested the large and delicious peaches that I came to appreciate and embrace the value of thinning the trees.
 
The concept of thinning applies to our investments as well. Over time a portfolio can get bogged down with too many different assets. We pick up various positions along the way that start to add up and pretty soon it is difficult to keep track of them all. Although diversification can be good, it is also true that you should not hold more assets than you are able to properly manage. It’s better to own 10 good companies you can keep track of than 100 that you can’t. There is a Wall Street saying that anyone can buy a stock, but it takes a genius to be able to sell one. In other words, we tend to accumulate more than we can manage because we get emotionally attached to our positions and have a difficult time parting with them.
 
Last year was profitable for many investors as the initial virus scare drove the markets down and opened up buying opportunities. This resulted in investors winding up with more positions than they would normally hold. As new companies and more opportunities emerged from the crisis it seemed that a case of FOMO, (fear of missing out) began driving some investor decisions.
 
The new year may be a good time to take a lesson from the farmers. Just because there are countless potential investments out there, doesn’t mean we should own them all. From time to time, it is useful to thin down your portfolio to a manageable number just as a farmer thins a peach tree. Getting rid of investments that have made you money, or that you have held a long time may not be easy, but sometimes it is necessary so that you can give your best attention to the ones you keep. On a tree bursting with young peaches, less is often better, and so it is in investing as well. A strong harvest requires a good thinning now and then.
 

​In the Bible a conflicted Pontius Pilate posed the question, “What is Truth?” Those three words sum up much of the human experience. The year 2020 will be remembered as an often-heated battle to find truth. The virus response, racial tension and numerous areas of political debate deeply divided our nation. With each declaring the “truth” by which they claimed the higher ground, the contests were often intense. States argued with states, cities opposed neighboring cities and family and friend relationships were sometimes strained to the breaking point over the search for, or denial of, truth.
 
Two-thousand years after Pilate’s question, the internet with its unlimited resources should have finally provided the answer. But sadly, this avalanche of knowledge seems to have made truth even more elusive.
 
Take the recent GameStop (GME) fiasco. On one side, a group of mostly millennial investors connected in real time through social media joined together like a digital army to take on some of the most powerful financial organizations in the world. Rallying the troops using internet forums that gave them instant access to millions of like-minded individuals, they rapidly gained the upper hand as they drove the price of their favored GME stock to astronomical heights. The rapid attack caused significant financial casualties to their hedge fund foes. It seemed the battle would be swift and decisive. I communicated frequently with millennial warriors who believed their victory would reward them with what they excitedly described as “stupid” levels of wealth.
 
But then, as quickly as it began the enemy struck back, taking the weapon that had been used against them and turning it on the millennial army. Infiltrating the same internet forums that had been used to launch the attack, they spread their own version of “truth” in an attempt to weaken the resolve of their opponents. The public conversation became so confusing that it was impossible to distinguish truth from error. The hedge funds knew if they could get the GME fanbase to begin asking, “What is truth?” their ability to continue the attack would be thwarted.
 
This experience should be a reminder to all investors of the value in finding truth and sticking by it, if they are to be successful. And where is truth to be found? Many internet sites are driven by anonymous contributors, as in the now famous Reddit® forums, but when people are anonymous there is no way of knowing whether they are reliable or not. It is the same lesson 2020 tried to teach those who seek political truth in social media posts from anonymous or questionable sources.
 
Using the GME debacle as a guide, may I offer some guidelines for finding that elusive investing truth. 1 – Reject anonymous sources. 2 – Seek your own knowledge rather than trusting that which is pushed upon you. 3 – Avoid making decisions when you feel your emotions rising. 4 – Run from greed. 5 – Trust what you know to be right, not what is currently popular. 6 – Invest long term, ignoring the daily side-shows.

​In the mid 1950’s a mutual fund family was approached by a convent of nuns who had a couple million dollars to invest. Because of their religious beliefs, they didn’t want any of their money supporting businesses involved in the sale of alcohol, tobacco, or gambling. The fund family had no existing offerings that qualified so they decided to create a new fund for the convent, one which exists to this day. It was an early attempt at a socially responsible fund, created long before they were popular. I suspect few who own this well-known fund even know it still bans investing in those types of companies.
 
I have written a few times this past year about the new millennial investor, and their impact on the markets. I mentioned that I grew up analyzing companies for profitability and invested accordingly. About a decade ago, we started getting more inquiries from clients regarding the specific products and services of the companies we invested in. Like the nuns of the 50’s, they seemed more interested in social values, politically correct attitudes or diversity of management than revenue and profit margin. I thought for a while that it was an anomaly, but in recent years the trend has become more mainstream. Especially with younger investors, we are often seeing them more concerned about how their money is being used to make the world a better place than about profits.
 
A decade ago, a retail video gaming company named Gamestop (GME) was a favorite among the young generation. Now, facing bankruptcy due to changing markets, the company came under attack from a couple of hedge funds attempting to profit from driving it into the ground by short-selling its stock. Enter a massive group of mostly millennial investors who were determined to save their beloved Gamestop from what they viewed as evil hedge fund billionaires. Numbering over two million, this digitally connected army bought up millions of shares of GME, sending the price through the roof and the Hedge Fund managers into a panic.
 
Though the resulting battle made for good T.V., beating up a few hedge fund investors may not hurt many others. In fact, many investors began hoping the stocks they owned would be the next target. What’s more important for most investors is how this might change investing going forward. If you combine the socially responsible attitudes of many millennial investors, with the access to easy trading platforms and a connected army of like-minded people, we could be seeing a lot of more of this type of investing behavior.
 
I favor value-based investing. But value isn’t measured solely in monetary terms. Millennial investors place a high value on social issues. As their wealth increases, their ability to support the companies and causes they believe in will increase as well. Investors of the future may find good opportunities looking outside the traditional valuation models and consider those companies that this powerful younger generation will be looking to support.