Interest rates are the price of money.”
With interest rates near zero percent, the central bank may now be deciding the economy is too weak to raise interest rates. Too weak? Not for those able to tap into low cost money. A look out of my window this morning evidences a building boom with four cranes erecting new buildings. Developers are vying for new hotels; all of which promise to leap to heights similar to the recent move in the biotech index. Booms are created when the price of money is artificially low.
It has been four years now since the Investment Forum where I proposed that the “main story” underpinning the stock market is the government printing press. The effect was demonstrated at the event by ripping a facsimile of our legal tender showing the debasing effect of government money printing.
Where it will end, nobody knows. We are focused on not paying too much for stocks, keeping your portfolios well diversified, and maintaining a cash reserve in most accounts. We do this without losing sight of the “main story.” We own stocks to keep up with the government printing press. In the hundred odd years since the creation of the Federal Reserve Bank, the most trusted currency in the world has lost 96% of its purchasing power.* Stocks are the alternative currency that has kept up.
When the politicians talk about the one percent, they mean you. Taxes have been going up. We have been managing your portfolios to keep realized gains and your corresponding tax bill to a minimum. Accounts have risen in this bull market which means larger required minimum distributions from retirement accounts. Dividends have also been rising which means more taxable income. The run up in the market means that changes to portfolios often result in realized gains; we are dedicated to low turnover and keeping your taxes and fees to a minimum.
We have created a client portal for you on our website. Your client portal is where you can view your account Quarterly Performance Report (now available), holdings, and allocation online. We emailed a link with a temporary password that will direct you to a login page. If you did not receive the email, please contact us. You may also access your portal through the “Clients Only” page on our website at www.rathbonewarwick.com. We look forward to your feedback on this new technology.
Next month, we will host our 2015 Investment Forum on Thursday, May 14, 11:30 am – 1:00 pm at the Stueckle Sky Center, Double R Ranch Club Room. This year we will hear from Apollo D. Lupescu, V.P., Dimensional Fund Advisors LP and L. Dwayne Barney, Ph.D., Professor Emeritus of Finance, Boise State University. It promises to be a lively discussion on the economy, money supply, and investments. Lunch will be served, and we will stand to publicly answer your difficult questions.
We like to call this a working lunch and we keep the topics at a high level to qualify for continuing education credit for our friends in the accounting and legal community. Please call us for reservations or go to our website to register online today.
Remember, do not lose sight of the “main story.”
Thank you for your business.
Robert W. Rathbone
*Source: US Dept. of Labor Bureau of Labor Statistics