Jason Howell, CFP®, CPWA®, CSRIC® (left); Doug Tees, MBA, CFP®, CAP®, CBDA (right)
Letter to Stakeholders, November 2024
Tuesday, November 12th, 5:45 pm EST. It was just after 9 am on election day when we heard the news: a member of our family of clients had just passed away. From our perspective, Jenny was a loving wife and mother. She was also unnecessarily gentle and kind with her financial advisors (me and Doug). My wife’s name is also Jennifer – though she never lets anyone call her “Jenny.” Well before the surprising results of the election last Tuesday night, a member of our client family had something (someone) else on their minds. Financial advisors don’t forget the clients who pass away. This year the presidential election was eerily close to the Dia De Los Muertos, a day of remembrance for those who have died. On Veteran’s Day my family re-watched the Disney/Pixar animated movie Coco. It was a reminder that we keep our loved ones alive just by remembering them and saying their names. On this 12th day of November, we remember the veterans who passed away and we at Jason Howell Company would also like to honor Jenny.
Policy vs. Markets
Last Friday I had the opportunity to field thoughts and questions about the election – as it relates to finance – from my students at George Mason University. As an example of the public divide on how strong the economy is or isn’t we had a discussion about the effect of federal policy (fiscal policy) on gas prices and inflation. The conclusion? Not much effect at all. In fact, gas prices are affected mostly by the cost of crude oil and market forces (supply and demand). Similarly, inflation is mostly a result of central banks (monetary policy) and “The Age of Easy Money” as highlighted by a PBS documentary when the Federal Reserve Bank held interest rates low for the better part of 15 years. But fiscal policy (government) and monetary policy (central banks), can only encourage/discourage supply and demand. The market, in the end, has the final say.
Fiscal Policy Proposals
Despite the record rise in markets over the past week, not everyone is celebrating. Notwithstanding any moral judgement of the upcoming administration, it isn’t as clear to policy analysts that the future administration’s proposed polices are a net positive for the economy. Extending 2017 tax cuts could cost the federal budget $5 trillion, proposed deportation could cost $88 billion annually and tariffs could cost Americans $78 billion annually. In an era of “united government,” can any of this be avoided?
Bond Vigilantes
“I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter,” Mr. Carville said. “But now I want to come back as the bond market. You can intimidate everybody.”
– James Carville, Political Strategist
What Carville is referring to is the reality of markets, in this case bond markets. Since our is a country in debt, as goes interest rates, so goes policy. As economist Ed Yardeni articulated in 1983, “If the fiscal monetary authorities won’t regulate the economy, the bond investor will.” Yardeni also coined the phrase Bond Vigilantes to describe the power of people or institutions who can actively trade bonds to impress upon on governments that their (fiscal) policies are wrong. As the “reflation” policies of tax cuts (fiscal policy) and interest rate cuts (monetary policy) are enacted, the bond market will have a say on whether it is working or it is not. Along with “bond vigilantes” are Fed Chair Jerome Powell who can and will provide some balance to administration policy.
Your Portfolio
Doug and I remain focused on what our investing philosophy says we should do, even in light of proposed policies. We maintain that time in the market is better for you than timing the market. We are sticking to each of your plans.
Stakeholder Spotlight
This month our stakeholder spotlight shines on Christine Simone, CEO & Founder of Caribou. Caribou specializes in “healthcare planning” and we have partnered Caribou to assist a handful of clients this year with selecting their Medicare enrollment options. Need help? Contact us. And you can watch our interview with Christine here.
Jason J. Howell, CFP®, CPWA®, CSRIC®
President
Jason Howell Company is a family wealth management firm that strengthens the finances of families making the transition from first generation success to family wealth. We envision a world where wealthy families give, grow and govern themselves in ways that enrich their local communities. We do this by reducing the fear, isolation and guilt associated with financial success.
Jason J. Howell, CFP®, CPWA®, CSRIC® and Douglas W. Tees, MBA, CFP® CAP®, CBDA have spent a lot of time in the Washington, DC area, and are aware that many people who are first generation wealth suffer from a kind of "financial imposter syndrome." Successful entrepreneurs and family businesses are always looking over their shoulder; government contractors worry about the next contract; former Capitol Hill staffers privately wonder if they should "feel bad" for the money they now make. Imposter syndrome is common among people who work for the many corporate headquarters based in this area as well. These feelings get in the way of properly managing family wealth. We empower them to get organized, build a team of advisors and make decisions.
Our typical "first generation wealth" families include dual income parents who work, save and have just the right amount of fun. For long-time, family owned businesses we focus on much family preservation as we do wealth preservation.
First generation wealth success stories and family business owners realize that they:
- Need to “do something” with the cash in their checking/savings
- Need to eventually diversify their portfolio away from the family business
- Need an investment strategy for “up” and “down” markets
- Need a plan to mitigate market, credit, inflation, and political risks
- Need to start tax planning instead of just tax paying
- Need to be sure they are choosing the right work benefits
- Need to reduce financial miscommunications between family members
- Need to separate business finances from personal finances
- Need to separate family wealth from individual wealth
- Need a plan to provide space for both family and individual philanthropy
- Need to plan for money while alive and for what happens after death
To learn more about our unique offering, contact us for a free initial strategy session: click here.