My Last Commentary To You All

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Well, folks, this is our final show, and I want to wrap up my long tenure by sharing some of the most important lessons I have learned over these many years.

First, however, I want to thank everyone currently involved in its production. First, there is Brian Zeikowitz, my engineer. Brian has been with me since 2008 and, poor guy, he’s been listening to every word of the show, every week, to make sure I sound much smarter than I am. As a matter of fact, when we were discussing the show’s end, he reminded me of a story I told which made an impression on him, and it’s one that I had totally forgotten. So I would like to share it with you.

Back in 1987, I had been a stockbroker for six years, working at Merrill Lynch at the time and was still struggling to get on my feet and build a clientele. Of course, you may remember that 1987 turned out to be a very challenging year because of the 25% market crash on October 22nd. This crash was totally unexpected and reminded everyone of the 1929 Stock Market Crash which ushered in the Great Depression. So everyone was scared and shaken. Unfortunately, I was a casualty of bad timing because on October 1st, I had closed on a new, bigger home and my costs had risen dramatically. That year and the few that followed created a tsunami of events for me, a combination of high expenses combined with lower income similar to what is going on with a lot of folks today due to the Covid-19 crisis.

In order to keep everything going, I used my credit cards and any other debt I could muster to stay afloat. And I was not alone. A lot of my fellow brokers in the business were in trouble too and some of them decided to file for bankruptcy the following year. I was tempted. It was easy to do, and I noticed that those who did were still able to get a loan to buy cars and other things and it didn’t seem like it had much in the way of serious consequences.

So, I thought hard about it and finally decided not to do it, though it would have relieved me of much pressure and anxiety. My reasons? First and foremost, I felt I owed this money and it should be paid back. Now I know it’s not possible for everyone to adopt this attitude, but I was still earning a living and slowly building a clientele, and I had hope that this difficult time would eventually improve. I hoped it wouldn’t turn out to be a race to the finish however, so it was pretty nerve-wracking.

Also, I didn’t really know what the true future effects of a bankruptcy would be. There’s a lot of unforeseen consequences that can happen when you make big decisions like that.

So, here’s my point to the story. Eight years later, in 1996, after being so unhappy with the sales culture of the brokerage business, I desperately want to change the way I did business.

Fortunately, an opportunity arose which allowed me to start my own fee-only financial planning and advisory business and create my own culture. However, there was one caveat and guess what that was? In order to head up a firm as an investment advisor, I would not have been allowed had I declared bankruptcy. Wow, I thought, I really missed that bullet!

All that followed, a business that I loved, my great clients, and this radio show, would not have happened had I taken the other course of action.

So, the bottom line is: You never know what the consequences would have been for me had I taken the easier way out.

Okay, before I get into today’s commentary, I want to thank a few people who have been a tremendous help to me. First, my producer, Erica Stimolo. We are a small operation here, and Erica is the chief cook and bottle washer, and I have relied on her common sense to help guide me week after week. Happily, Erica has accepted a new position with my former investment firm and all will be okay. My editor, Carol Malzone, who is also my partner in life, has transported our website and weekly update into the literary light. I’m proud to say we have been using the oxford comma for years now and that, in addition to that upgrade, she has caught every nuance and tone that would make any publisher proud.

And finally, I want to thank you all for your support, especially those who over the years have written me via the website and have become clients and friends. And I also want to mention the kind emails we have received over these past few weeks. Thanks to you all!

Now for my commentary:

As I thought about my final words, it occurred to me that the same themes have consistently reoccurred.

I am going to take them one by one because I think this is a list for getting it right. It’s a recipe for wealth creation and smart financial living. These are not magic bullets but taken together, they can help you achieve the kind of financial security we all seek.

1. First, know what you can control and what you can’t. It’s the old serenity prayer from AA: Grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.

So, what is it that we can control and what is it that we can’t?

You can’t control the stock market’ you can’t control interest rates and inflation; you can’t control your job security (to a degree) and especially unexpected events like virus pandemics.

You can control your emotions, how much you save, how much you spend, and your personal cost of living. You can also control the personal and financial decisions that you make.

So, concentrate on that. If you’re spending your days playing the random casino of the stock market, in the long run, you will lose valuable time and money.

2. When it comes to investing, you should have a knowledgeable partner with you at all times. If it’s a seasoned family member, fine. If you have no one, you should hire a fee-only advisor. I have seen so many do-it-yourselfers blow up again and again. People who think they can outsmart the market by following the “Buy, Buy, Buy” action and the “Sell, Sell, Sell” action of the market. Remember investing is simple but it’s not easy. If Warren Buffett can buy a great company like Heinz and also four major airlines and get snookered, what makes anyone think they can do better?

3. Also, find someone who will analyze your whole financial life, not just your investments. There are wonderful tools available today to help guide you. An advisor who is a master of these tools can be a tremendous help.

4. With regards to investments, once again, you can concentrate on expenses and taxes which are definitely under your control. You see, investing in the market indexes around the world will bring you the vast majority of your return over the years. You can increase that return by owning things that charge low fees and don’t spew out capital gains.

5. Advisors come in many varieties—insurance agents, transactional brokers, annuity salesmen, lawyers, trust officers, and investment advisors. There are good and bad people in all of these, but focusing on the compensation structure is one of the best ways to weed out conflicts of interest. Everyone works to earn a living, just make sure that their compensation aligns with your goals.

6. Expect difficult periods. Times when things don’t go your way. You may plan to retire on X date, but a pandemic accelerates it or messes everything up. Make sure you have your finances in order, so it doesn’t throw you for a loop. What do I mean? Keep your debt levels modest. Make sure you have an adequate emergency cash fund. Get insured, by this, I mean life insurance and health insurance. Make sure your long-term investments are low-cost and tax-efficient, as I mentioned before. Max out your 401k if you can. These are just some examples of having your house in order.

7. Stay invested. Don’t let current worry cause you to lose faith in a well-diversified mix of quality assets. If you have thousands of stocks contained in your funds—and if you checked, they are probably thousands of stocks—they are not going to zero, even though it can feel like it sometimes.

8. CD’s are not safe for your long-term savings. Don’t be fooled. You may feel safe right now, but you will find that you start to run out of money because they won’t keep up with inflation. I have seen this sorry scenario time and time again. After taxes and inflation, you will lose money.

9. The economy does not go to zero and your stocks won’t either if you’re diversified. Remember that your stocks will go up 20% in a given year, but if they do, remember that higher return is really the cushion for the inevitable bad times. The real rate of return is going to be quite a bit less than 20%.

Well, those are some ideas for keeping you on the right path in the years ahead. As I said, no magic bullets but some good common sense.

And as for me, I’ll concentrate on the words of the beloved Fred Rogers who said, “Often when you think you’re at the end of something, you’re really at the beginning of something else.” And I think that’s definitely going to be true for me.

And as George Bernard Shaw said, “You don’t stop laughing when you grow old, you grow old when you stop laughing.”

Once again, thanks for all the years, and best of luck to all of you—and God Speed.

Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. There are no investment strategies that guarantee a profit or protect against loss. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however, their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.