Over the past several weeks, we have written extensively on the topic of tax cuts, from Trump campaign promise through passage and implementation of the Tax Cuts and Jobs Act of 2017. As we stated recently, early results are in, the economy is booming, and more Americans are employed than at any time in our history. History tells us that tax cuts work every time they are tried.

According to the Administration, there is more help on the way. President Trump is proposing a follow-up tax cutting bill for 2018. With that refreshing attitude in mind, we have prepared a “wish list” for Round 2 of Trump-era tax cutting. (According to Grover Norquist of Americans for Tax Reform, the goal is for a subsequent tax cut in each year of the Trump Administration.) Here is how we think the Administration should approach cutting taxes in 2018:

  1. Corporate Tax Rate. Originally, the goal was a 15% tax rate for all businesses, regardless of size. This was dramatically lower than the 35% rate in effect during 2017. The actual reduction to 21% represents a victory for tax cutters, but 15% should remain the long-term goal. We will be more likely to receive another 1% cut in the 2018 update.
  2. Small Business Tax Rates. The 2017 Act nearly created a disparity in taxation that would have been burdensome for the smallest businesses, but an amendment prior to passage effectively equalized the rate for individual and small business. As large corporation rates continue to fall, small businesses must receive the same reductions.
  3. Individual Tax Rates. Most individuals received a rate cut and broader income brackets, resulting in average tax savings of $2,700 for American families. Higher income Americans were not treated to significant reductions, and as such would make a good target for further cuts. Releasing more capital from high earners stimulates investment in the American economy. Also, for all individuals, the rate cuts are due to expire in the year 2025, and must be made permanent.
  4. Itemized Deductions. The new, larger Standard Deduction eliminated the need to itemize for many Americans. The represents a good start, but there were some “holes” left in the allowable deductions list:
    1. Medical Deductions were phased out after two years, and we believe they should be restored and made permanent. In any year, this deduction affects very few people, but those affected are having a rough year, paying unusually large medical expenses. We could all help them a little.
    2. State and Local Tax (SALT) deductions were capped at $10,000 annually. This had a profound effect on taxpayers in high tax states. While those of us in Florida and Georgia were relatively unaffected, We are not without sympathy for the sudden shock to the budgets of people living and working in other geographic areas. Some phasing in of the reduction would be helpful to these taxpayers.
  5. Estate Tax (including Gift Tax and Generating-Skipping Transfer Tax) were vastly improved by a doubling of lifetime exemptions. We continue to believe, as always, that these taxes should be totally and permanently eliminated.

Momentum for cutting taxes is high right now, and Congress should jump on this opportunity. Passage of another round of cuts prior to the election would be a catalyst for election turnout on behalf of Americans who are enjoying new-found or improved prosperity.

Van Wie Financial is fee-only. For a reason.

Early in 2017, President Trump announced his intention to introduce a package of significant tax cuts for all Americans. Despite the naysayers in Washington, D.C., along with most of the media, he did exactly that. Further defying “business as usual,” he got the package through Congress in time for a January 1, 2018 implementation.

It is now July, and the Tax Cuts and Jobs Act of 2017 has been law for over a half year. What actually passed, who was affected, and what have been the effects of the changes? Today we review the early highlights.

  • Passage and Implementation. The Act was implemented at “Trump Speed,” and has reportedly affected 90% of Americans. New withholding tables took effect in February, so most people began receiving larger paychecks after the first few weeks of 2018. Results are in, and consumer spending is up nicely.
  • Corporate Tax Rate Cut.The 2017 statutory federal tax rate was 35%. Originally, Trump’s proposal was for a 15% Corporate tax rate, but the end result was 21%, nonetheless significant. Corporate earnings are now rising, and businesses are thriving. This can be seen in both the job market and the stock market.
  • Personal Tax Rate Cuts. The bottom individual tax rate was retained at 10%, and above the 10% bracket came three new brackets; 12%, 22% and 24%. No one has to pay above the old 25% rate until their taxable income rises above $315k (married filing jointly). Trump promised a middle class tax cut, and with these reduced rates, he delivered.
  • 25% Tax Rate for Pass-through Businesses. Trump’s original proposal was that all businesses, great and small, would pay at the same tax rate. Since the 25% rate for small businesses exceeded the 21% rate for large businesses, this was not happening, and needed to be corrected. Fortunately, small businesses were saved before the bell by Sen. Ron Johnson (R-WI), who is himself a small business person. He successfully incorporated a new tax deduction for small businesses filing as “pass-through” entities. This leveled the effective tax rates between large and small business.
  • One-time Overseas Profits Repatriation. All overseas profits from US-owned companies are eligible for repatriation (bringing the money back to the U.S.), to be taxed at a one-time lower rate. Companies repatriated over $300 Billion in the first quarter of 2018. I project the pace of repatriation to accelerate.

Overall, the Tax Cuts and Jobs Act of 2017 appears to be a success, as evidenced by the 4.1% estimate of 2nd Quarter GDP growth. In our consumer-driven economy, more people have begun working, and spending power is increasing. How much more cash are Americans receiving? The numbers are now in, showing that the average American couple is currently receiving a tax cut of $2,917 annually. Strangely, recent research shows that many Americans remain unaware of their current windfall.

Next week we will look at developing proposals to further reduce our tax burden with a 2018 Tax Cut bill. Maybe that will get the attention of those remaining “in the dark.”

Van Wie Financial is fee-only. For a reason.

Simply put, inflation is on the rise. What are savvy investors doing to keep up during a period such as this? There are viable assets which help position a portfolio to respond positively as inflation marches along.

Generally, many assets that respond well to inflation are in the asset class called commodities, or alternative investments. These include food, energy, metals, real estate, and the less volatile inflation-protected bonds (TIPS). I consider real estate a commodity, and especially so if you are looking for real estate other than a primary residence. There is also one more surprise asset class, which is addressed near the end of this Blog.

Inflation-friendly asset classes are very risky, meaning the market price can and will change quickly, sharply, and often unexpectedly. Interested investors should keep only a small percentage of their portfolios in alternative investments.

Commodities. Most people do not want to invest directly in commodities. After all, how many pork bellies can one family consume? How about a train car load of corn being dumped on your front lawn? Not practical. Most investors prefer options, index funds, or some other form of ownership for commodities. Our amazingly flexible markets make this easy for all of us. General commodities index shares can be purchased in any of several Exchange-Traded Funds, or ETFs.

Real Estate is an often-misunderstood investment. Excluding your primary residence, do you really want to own real estate? Personally, I would prefer to avoid being called the “L” word – Landlord. How, then, can we buy real estate, hold it, reap the benefits, and eventually sell it?

As an investor, I prefer Real Estate Investment Trusts, or REITs, for fractional ownership interests in properties other than my home. REITs come in several forms, but the main ones are Mortgage REITs, which own mortgages on properties, Equity REITs, which own the actual properties, and Hybrid REITs, which are chartered to own either or both. I prefer the Equity REITs, as they have the ability to realize property appreciation in a rising market, while paying investors nice dividends during the ownership period.

Precious Metals. One of the most popular (and, likely the riskiest) commodity investment choices is precious metals, which range from the most common gold and silver, to exotic metals such as platinum. Again, these can be purchased several ways, but I prefer the ETF form for its marketability. Staying with gold and silver, we are inundated with advertising touting the ownership of the physical metals. I have no problem with people who prefer the look, feel and safety of gold and silver coins and bars, but in an investment portfolio, I prefer Exchange-Traded Funds.

TIPs. For the less speculative investor, there is another inflation-loving asset we frequently use in our portfolios. The Treasury Inflation-Protected Bond, or TIP, is a non-equity holding that is not closely correlated with the stock market. There are several ETFs that hold these inflation-indexed bonds, and each has its own objective. Potential investors should read the Prospectuses before investing.

General Market. Finally, the stock market itself is capable of helping us deal with inflation. Over time, inflation tends to drive the market up, simply because sales and profits numbers get larger. Investors holding the market index shares will generally benefit over time. In order to realize total market gains, broad-based index shares, such as the Wilshire 5000 composite tracking ETF, best reflect overall market rises.

Finally, we are fortunate to have most of our private homes appreciate over time in normal conditions. Granted, if your timing on the purchase proves to be horrible (e.g., 2006), it may take a long time to recover, much less to show a gain. But that isn’t the end of your financial world. Generally, the roof over your head, which may not be considered an investment, will prove to be an intelligent and rewarding lifestyle choice.

Understanding inflation can help investors cope with their otherwise declining standard of living, as income growth usually falls short of actual price level increases. If you need help with inflation planning, use a qualified, fee-only CFPÒ or call the show. We can help direct you through the investment planning process.

Van Wie Financial is fee-only. For a reason.

Inflation is generally portrayed as the rate by which prices increase over time. The U.S. Government measures the level of prices over time using the Consumer Price Index, or CPI. While there are several versions of the CPI, the most common measurement reports prices for “all urban consumers.” For years I have examined the truth and fiction of reporting on the topic of inflation. For as many years, I have known that we are being lied to by our so-called “leaders,” who consistently understate price level increases.

We have all seen inflation in action. Perhaps the most obvious day-to-day evidence is found at the grocery store, where prices have been rising steeply for years. Not only that, containers are getting smaller, and many are not filled to the top. “Shrinkflation” is the new word for reduced quantities of cereal, coffee, and various other household staples on the shelves. On the topic of food, have you checked out restaurant prices lately?

Inflation doesn’t stop there. Pay your health insurance premiums; check the increases in your deductibles and out-of-pocket medical expenses. Pay your homeowner’s insurance premium; what was it two years ago? Fill up your gas tank and check the numbers. Buy dog food, pay tuition bills, go to a movie, pay your cable TV and Internet services; they have gone up, and many by a LOT! Wages and salaries have not kept pace. Social Security recipients have been denied any COLA increase three times since 2010, with only small increases in other years.

Simply put, inflation is on the rise. In order to understand why, we need to look at the real definition of inflation. Nobel Laureate economist Milton Friedman said it best: “[Inflation is] always and everywhere a monetary phenomenon.” By this definition, rising prices are a symptom of inflation, or a result of inflation, rather than the definition of inflation.

Placing more money in circulation without proportionate increases in GDP results in less actual value per dollar. That is the true definition of inflation. Government printing presses have been running overtime for years. That encompasses both the physical printing press, plus the more clandestine electronic-entry money creator called the Federal Reserve.

Why does the government obfuscate truth with statistics? Simple; there would be an accelerating budget deficit and national debt if they acknowledged the truth in the CPI. Federal salaries and benefits, Social Security, indexed pensions, labor contracts, you name it – all are indexed to the CPI for annual Cost-of-Living (COLA) raises.

Today, the government has actually done something about it. Unfortunately for those of us who are collecting Social Security benefits, they “fixed it” on our nickel. Ushered in with the Tax Cuts and Jobs Act of 2017 is a concept called the “Chained CPI.” This measurement, which is used to calculate the annual COLA, takes into account human behavior.

The “Chained CPI” is explained like this. If steak gets too expensive, consumers will switch to hamburger. So, the Labor Department admits that we are rational, responsible citizens, who balance our personal budgets. Too bad they force us to do so by reducing our standard of living. What’s next, hamburger gets so expensive that we switch to Helper?

Financial expert Ed Butowsky developed his own method of price change measurement. Dubbed the Chapwood Index, after his investment firm, this index measures prices of things we all buy, city by city, over time. Butowsky compares the same items over time, so all comparisons are valid and weighted consistently.

Jacksonville is one of 50 cities used to track the Chapwood Index. The results are startling, but easy to believe, as they mirror what we all see day-to-day.

For last year (2017), the Chapwood Index for Jacksonville increased 8.6%, and for 5 years it averaged 8.1% annually. That’s a far cry from the approximately 2% reported by the government.

By comparison, higher cost cities have increased even more. For example, San Francisco was up 12.8% last year, and New York City increased 11.2%. If you believe these numbers, as I do, you can probably imagine the damage that is being inflicted on Middle Class Americans, from rising prices and relatively stagnant wages. It is just plain wrong.

What does all this mean to today’s investors? I contend that the true rate of inflation is being masked, but I am not here to teach a class in economics. My interest lies in developing an investment strategy that reflects changing conditions around us, including inflation. What are the investment assets that respond positively to inflation? How should we purchase and hold those investments?

Understanding inflation can help investors cope with the declining standard of living experienced by far too many older Americans. If you need help with inflation planning, use a qualified fee-only CFP®. We can help direct you through the planning and investing process.

Van Wie Financial is fee-only. For a reason.

For years, politicians across the spectrum have touted “tax simplification” as one of their reform goals. Many have gone so far as to claim that most Americans should be able to file their annual tax returns “on a postcard.” For just as many years, I have laughed in their faces, but now they claim we will be able to do exactly that next year. I decided to grade myself on the various negative predictions I made about the possibility of a shortened Form 1040 resulting in tax simplification.

While nothing is finalized yet, a preliminary draft was released this past week, and today we are taking a look at the veracity of this “postcard tax form” concept. One of my first questions was, very simply, “People still file paper returns?” For years IRS has been encouraging Americans to file their annual obligations electronically, and most of us do exactly that. File size has become pretty much irrelevant. Complexity is what (still) matters.

For those taxpayers who still send paper returns to the IRS, my next question is simple; “Do you want to file your 1040 in an envelope, or would you rather let the world see your name, address, Social Security Number, and signature?” So, is a postcard placed in an envelope still a postcard?

What will filers of the new 2018 Form 1040 actually find? The 1040 itself, which is currently 2 pages long and single-sided, will next year be a 2-sided form, ½-page large. More than half of the current 78 line items on today’s 1040 are being cut for 2018. A good start, perhaps?

At this point, it may help to remember two changes from the Tax Cuts and Jobs Act of 2017. First, the new Standard Deduction is large enough that many people who were previously itemizing deductions will no longer do so. However, we also discovered that the 2017 changes actually increased complexity for taxpayers who are not able (for whatever reason) to use the new shorter Form 1040.

In Congressional zeal to make the new 1040 Form fit on a half-page, certain items were deleted from the form. These include a few so-called “above the line” deductions such as student loan interest and teaching supplies. What if you are able to claim any of these reductions to income? Not to worry, there are six additional accompanying worksheets, some or all of which you will also have to stuff into your envelope.

But wait – we’re not done yet. What about other forms of income besides wages, salaries & tips, Social Security benefits, interest, dividends, and retirement income? Never fear, there are supplementary forms and schedules for those, as well. The envelope is getting thicker.

What other items will require further forms to be filed? These include:

  • Business income
  • Capital Gains
  • Sub-S business income
  • Sole proprietorship income
  • Partnership income
  • Child care tax credits
  • Retirement savings tax credits
  • Retirement savings contributions

The new form is intended to replace the existing 1040, the 1040A, and the 1040EZ. That, in itself, does nothing to reduce complexity. Further, more taxpayers are expected to file paper returns for tax year 2018, delaying their refunds and increasing costs to the IRS (taxpayers).

What is the bottom line on my prognostications? First, I gave myself a B+ for calling the “postcard form” mostly smoke and mirrors. For taxpayers with uncomplicated financial situations, many will be able to use the new Form 1040 and claim the higher Standard Deduction. That, however, was brought to you by the Tax Cuts and Jobs Act, not through the form redesign. In short, I fail to see any benefit from the alleged “postcard-sized tax form.”

Come to think of it, I should change my grade to A-.

Van Wie Financial is fee-only. For a reason.

Twenty years ago, California became the first state to legalize medical marijuana. From that foothold, despite being illegal at a federal level, the marijuana industry is working to become part of mainstream America. Because of the potential profits involved, it won’t be long before the industry is a part of Wall Street, too. The industry got a major boost in 2012 when Colorado and Washington both legalized marijuana for recreational use. Many people anticipate the market to grow exponentially with the pending legalization in Canada and even across the United States.

Even with 29 states legalizing medical use and 9 states legalizing recreational use, there is still a cloud hanging over the industry. Current federal laws make marijuana a class I drug, which is the same class as heroin, LSD, and cocaine. The federal government could decide to crack down on marijuana at any time, over-riding the state laws. The tax law also potentially prevents expenses incurred while participating in illegal activity from being deducted on taxes. This means that legal marijuana companies may get taxed on their income rather than their profits, resulting in higher effective tax rates. All of these factors hinder companies from being publicly traded, causing them to be sold as Over-the-Counter stocks, or penny stocks.

Still, even with all these hurdles, the marijuana market keeps forcing its way into the spotlight. From the creation of an index to track the North American marijuana industry to the first marijuana ETF to be included on the NYSE this year, the marijuana market is letting everyone know it’s here to stay. You may wonder what the best way to invest in this growing market is, and that is a great question for your registered CFP®. We aren’t ready to dive into this fledgling industry just yet, but it is very much on our radar. Don’t forget to tune into the Van Wie Financial Hour every Saturday at 10am to hear about more about this and other potential growth areas of our economy.

Van Wie Financial is Fee-Only. For A Reason.

Recent market volatility has been blamed on worries about President Trump’s proposed trade and tariff policies. That does appear to be an unsettling factor, but should that be happening? Truth is one thing, but logic and reason don’t always comprise the whole and complete truth. In my opinion, the market is overlooking common sense realities.

The first reality is the economy in general, which by virtually all metrics is in a period of stellar performance. To paraphrase “noted economist” Al Gore in the 2000 election cycle, “Everything that should be up is up, and everything that should be down is down.” GDP is up, unemployment is down, corporate earnings are up, wages are up, taxes are down, optimism is high, and investment is strong. That is a formula for an excellent stock market.

Why is the tariff discussion overriding all the economic data? There are a couple reasons, including historical legacy. Tariffs have been found to be mostly ineffective, and even destructive, in past generations. One classic example is the Smoot-Hawley Tariff Act from the 1930’s. It was a general and comprehensive protectionist tariff on everything we imported, and the results quickly proved to be negative, so the Act was repealed.

Did the death of the broad tariff bill result in free trade? Not by a long shot! In the intervening years, dozens of trade acts have been passed, resulting in about 12,000 tariffs that we currently impose on imports. This means that Americans pay more for all these imported goods. Who reaps the rewards? The Federal Government, which collects the tariff revenue. Who loses? American consumers, who lose by having to pay these taxes in the form of higher prices.

Interested to know what imported goods are taxed by the US Government? Here are just a small handful: brooms, cotton shirt fabric, chocolate, milk and cream, sugar of all types, avocados, peanuts, tobacco, T-shirts, ice cream, hotel/restaurant/kitchenware items, beef, tomato sauces, etc.

Similarly, our exports are frequently taxed by the receiving countries, and largely the tariffs (taxes) are higher on our exports than those on similar imported goods entering our country. A classic example is the 275% tax levied on dairy products we send to Canada. This hurts our dairy farmers by making their products unaffordable to Canadians.

I will be the first to defend free trade advocates who have a problem with Trump’s policies and actions, insofar as they desire a system of truly free and fair trade. The only acceptable tariffs, with the exception of countries whose governments are subsidizing their industries, are no tariffs in either direction. That is not the situation we are in today.

We elected a President on his policy positions, not the least of which was to correct bad trade agreements. Why not give him a chance? In Trump’s own words, “What the hell do you have to lose?” The stock market is acting like a petulant child. Try to ignore it in favor of the economics. The art of this deal is in its infancy.

Van Wie Financial is fee-only. For a reason.

The year was 1974, the place was Racine, Wisconsin, and I remember like it happened yesterday. Having spent a couple years working in corporate America right after getting married, I was entering into the world of independent consulting. Self-employment. One could reasonably surmise that I was too inexperienced and naive to understand the potential pitfalls.

We were young, ambitious, and seeking an opportunity for a brighter future, which included having a family. Self-employment was risky compared to corporate life, but we were aggressive and confident, so we took the plunge.

Fortunately, Sarah was teaching in the public-school system, and was covered by a large group insurance policy. When child number one came along (you know him today as Adam), our medical expenses were largely covered. Then, Sarah and I made the “big decision” to raise our children at home, by and with their parents. No more school district health insurance coverage once employment stopped.

In 1976, everyone had health insurance, right? Not so much for the self-employed, it turned out. Bye-Bye, group insurance. That constituted both a problem and a learning opportunity. Certainly, it would be easy to join some small or medium size insurance-buying group, right?

No! Small group coverage was not available to someone who, like me, was a one-person business, so we became advocates for change in the insurance industry. Only after a long learning curve did we conclude that this was not an insurance industry problem, but rather a problem in the law. This situation was a catalyst for my lifelong study of personal financial planning. For decades we advocated for Congress to figure out how to allow individuals and small businesses to form groups for health insurance coverage. These groups should be able to be formed across state lines if necessary. Congress and several Presidents continually turned a deaf ear to the problem.

We both reached Medicare age prior to our dream coming true, but I am pleased to report that the Administration has at long last taken a giant step toward solving the problem. President Trump signed an Executive Order in October, 2017, and the Labor Department recently finalized sweeping reforms in the group insurance arena. Now, people who are self-employed, and people in very small businesses who have some common thread, are able to band together in groups to buy health insurance at group rates, and even across state lines.

“Association Health Plans,” or AHPs, are expected to improve insurance options for small businesses and individuals, creating buying power through pure group size. AHPs are expected to affect 4 million Americans, saving thousands of dollars each, while improving coverages.

The fundamentals of insurance include the basic premise of risk sharing. The fundamentals of capitalism include the basic premise that competition is good. Pooling risk among more and more people lessens overall cost by lessening individual risk. There truly is strength in numbers, and nowhere is that more accurate than in the world of insurance. Larger groups result in lower rates per group member. Similarly, more potential insurance carriers competing for the small business market lessens cost. How simple can it get?

Without complaining how long it took to get here, I am thrilled by the announcement, though it is too late for me to take advantage of the new rules. Most job creation in this country takes place in small business. Over the past several years, more businesses failed than were created. Resultant job losses served no one very well and added to the uninsured rolls. Expect that situation to improve.

On a final note, creation of AHPs is expected to further weaken ObamaCare. That is good news.

Van Wie Financial is fee-only. For a reason.

Estate Planning is a topic that frequently makes people fall asleep, so please curb the urge for a moment. First, let’s answer that question, “Do you need a Will?”

Yes.

There, all done, right?

Probably not, because the odds are not favorable for you having a Will at all, much less an up-to-date document. Here is the sad news; 6-in-10 Americans have neither a Will nor a Trust. It is not, however, only older people who die. It can happen to anyone, as you can easily read on the life expectancy tables produced by the life insurance industry. Why take the chance?

Young people have a tendency to avoid the issue, because they have no significant assets (in their own minds, that is). Listen up, young people. You go online to Social Media, do you not? Once you do, you now have a Digital Estate. What would you like done with it when you are gone?

Let’s start easy – “nobody has nothing,” which perhaps sounds like poor grammar, but it makes my point. You most likely have a Facebook page, and probably others to supplement that. Most of us have far more personal digital content “out there” than simply social media. How about passwords for items such as:

  • Bank accounts
  • Investment accounts
  • Credit cards
  • Medical records
  • Social Security
  • Personal emails
  • Business emails
  • Amazon Prime
  • Insurance records
  • Subscriptions

We simply take these items for granted, with easy access pretty much any time or place. So, what happens when we pass away? Our records still exist, which in its own right could be a problem. Does anyone really believe that an identity thief really cares about your continued ability to fog a mirror?

Further, how will our loved ones and/or heirs access these records? Do you want them deleted or preserved, or a combination? Recently, estate planners have addressed these situations, and we are seeing these clauses in new documents. If your Wills, Trusts, etc., are more than a couple years old, these items were most likely not addressed.

The discussion of death and dying is never pleasant, but as financial planners, we must, and do, deal with these topics with our clients. We all have to face our own mortality.

After all, your life’s work, financially speaking, is your estate. Take care of more than your money! Direct your digital asset disposition, your monetary asset distribution, your family relationships and responsibilities, and your identity, whether dead or alive. And here is one more sage piece of advice:

Listen to theVan Wie Financial Hour each and every Saturday on WBOB.

Van Wie Financial is fee-only. For a reason.

Lately I have been amusing myself by looking back into my radio show archives, with the intention to see how times have changed. Not knowing an answer prior to researching a question is mentally stimulating. This next paragraph was written (by me) nearly 2 years ago:

September 11, 2016, 6:30 A.M. It was 15 years ago the world as we knew it changed forever. At least I wish it were forever. I remember where I was, and if you are old enough to be listening to this show, I’ll pretty much guarantee that you do, too.

What did we learn from this, and what should we learn from the time since? Remembering that the Dow-Jones Industrial Average (DJIA) is currently above 25,000, let’s look back and see:

  • On 9/10/2001 the DJIA closed at 9,605
  • That was the last number recorded that week, as the market failed to open the next day, and for another week thereafter
  • When it did open, the DJIA fell to 8,920, for a drop of over 7%
  • On December 19, 2001, a mere 99 days later, the DJIA crossed the 10,000 mark, up about 12% from the Post-9/11 low mark
  • A year later, the DJIA was back down to approximately crisis level
  • For the next 4 years, the index was higher every 9/11 than the year before
  • Then came the 2007 financial crisis, and the DJIA dipped all the way down to the mid-6,000s
  • In March of 2009 the index started to recover
  • Now, we are up over 150% from there, despite the recent correction (remember, this was written in 2016)

That was less than 2 years ago, and look at the market now! The point I am trying to make is easy; stay in the market for the long haul, and you should be fine. However, following that advice is not necessarily as easy as giving that advice, though history shows this to be true. Reacting to short-term events has never been profitable in the long run. Based on history, our capitalistic system fosters a strong and growing economy.

Today, with the DJIA having crossed over the 25,000 mark once again, we are still below the market high of early 2018, but those highs seem to be once again in sight. Faring even better is the NASDAQ, which is currently reaching new highs. Yet, if you pay attention to the various news media, you might think that our country is in a world of hurt.

Back in 2009, I did a radio piece entitled, “Consider the Source.” Things you hear are sourced by people who have varied agendas. Some are pushing a political point of view, others are selling newsletters, and still others may be hawking annuities. These people often use Fear and Greed to drive short-term news cycles, but the markets are affected in the long-term by economics.

Getting a dose of unbiased news through our radio show each and every week can help stabilize the urges we sometimes get to react to fear and greed. Investing with consistency and rational observations of what is going on in the economy has always paid dividends. It was true then, and it remains true today.

Listen to the Van Wie Financial Hour every Saturday morning at 10 AM on WBOB in the Jacksonville market, or through your computer or mobile device on TuneIn Radio.

Van Wie Financial is fee-only. For a reason.