by Ron Bare
Perhaps the most common mistake made when making investment decisions is making ANY investment decision outside the context of a written financial plan based on your goals and values. That is why Bare Wealth Advisors does not create investment portfolios for our clients without a plan.
Without a plan we are left to the news headlines and predictions from all the market “experts” – most of which are fear driven. Fear is a good salesperson, and financial journalism is guilty of “selling” the headline that will generate the most clicks. We believe wealth is ultimately a resource entrusted to us to maximize the impact and calling God has given us. We should never succumb to fear headlines and financial journalism’s goal of making short term investment decisions based on what the market may do over the next few months.
As Ecclesiastes tells us, “nothing is new under the sun.” Over the past year we have seen the following: war, inflation, rising interest rates, recession fears, supply chain constraints, and most recently the failure of Silicon Vally Bank (a tech focused bank which had heavy losses the past year). All this on top of coming out of a closed economy due to the Covid 19 pandemic, can be exhausting and emotional – however, none of these are “new under the sun!” We live in an uncertain world and one benefit of a financial plan is to help you plan for what we call the “certainty of uncertainty”.
Our advice is and always will be the same – think long term, diversify, minimize debt, live generously, live within your means, and create a tailored financial plan based on the individual values, purpose, and goals your family has established. However, in the meantime let me share a few thoughts regarding our current economic state.
There has been much discussion recently regarding the cause of the inflation we have been experiencing. Basic economics tell us that when you create too much of something the value of that something is reduced. The total M2 (money supply – or simply just think money in all bank accounts) increased by 40% during a two-year window of the pandemic. (Over $6 Trillion!) For perspective, the normal increase in M2 is about 6% per year. It does not take a rocket scientist to figure out this may reduce the value of money (the definition of inflation). The good news (of course nobody is focusing on any good news) is that M2 has decreased over the past 12 months and many leading indicators are showing that inflation is subsiding. It will take some time, but inflation is heading in the right direction – lower!
Remember, even though some indicators show inflation is declining, it is always challenging to predict what will happen in the “short-term.” More importantly, short term is not where we or you should focus. We are long term planners focused on the impact your resources can help you make over the next 10, 20 or 30 years!
As I wrap up these thoughts, I would like to encourage us all to make sure we receive the proper “inputs.” Begin with the NEVER changing word of God (Bible), understand the principles of truth and ask for wisdom to apply them to your life. Then surround yourself with advisors that know and care about you, listen to you and share your values, and can help you discern how to apply wisdom to the vision and impact God is calling you and your family to make – in this short life we have been privileged to live. Thank you for allowing us at Bare Wealth Advisors to be one of your trusted advisors, we are honored!
The Equity (Stock) market by most gauges is now down well over 20% and has entered a bear market. We understand that times like this can be difficult as an investor, and we are here to help you make wise financial and investment decisions. Because we care about you and your financial plan, we want to provide you with some overall thoughts and perspectives on market volatility.
What is the cause of this bear market?
Inflation has surged, the federal reserve is raising interest rates (and reversing what is called QE or Quantitative Easing) and these actions are increasing the odds of a recession. Oil prices are at record highs (we all see this at the gas pump daily), and food prices are skyrocketing – not to mention the war in Ukraine. All these headlines and events may lead you to believe that “this time is different.”
Therein lies perhaps the most dangerous phrase of becoming a long-term successful investor. “This time is different.” If we believe this, then the next thought is, “I must pull my money out of the markets, or at least start preserving cash and stop investing my monthly amount into something that loses money each month.”
This time is NOT different. Recessions occur once every five years on average. While inflation is a problem right now, there have been times where it was much higher. Also, although the federal reserve is raising interest rates, they are still relatively low. Oil supply is still limited due to pandemic shutdowns (and other factors for another time) and demand has surged due to a full reopening of the economy. All of this will work its way out. In our opinion, more oil supply will come, demand will soften, inflation will cool, and the market will realize that the world is not ending. In time, this bear market will end.
This time is not different, if just FEELS different. It always does. In 2008 when banks were failing, housing was busting, and the market dropped over 50% (remember how that felt? I do!) – it certainly felt very different. However, those who stayed the course, added to their portfolios, and had faith in the future prevailed, and this time should be no different. During uncertain times it is good to reflect on time tested principles:
- Give more money away this year to a cause you care about (giving is a step of faith in a God who provides)
- Do not make financial decisions out of fear or worry.
- Think long term – we make better decisions when we think long term
- Add to your investment portfolio, assuming you have a few years until you need the money a drop in the market may be a good opportunity to invest with a long-term perspective.
- As we have talked about in the past, make decisions based on your holistic financial plan that is based on your goals, values, and timeframes – we are here to help review any of these details with you if that would be helpful.
Thank you for your continued partnership, and I wish to close with words from Paul in Philippians 4:6-7; “Do not be anxious about anything, but in every situation, by prayer and petition, with thanksgiving, present your requests to God. And the Peace of God, which transcends all understanding, will guard your heart and minds in Christ Jesus.”
by Ron Bare
With recent market volatility we know concerns can sometimes arise. We hope this video blog by Ron helps to alleviate any of your concerns and offers you peace of mind. As always, we are here should you like to speak directly with us. Please feel free to reach out to your advisor with any additional questions.
by Ron Bare
Like you, all of us at Bare Wealth Advisors are concerned about the recent world events, most significantly the Russian invasion into Ukraine. In the days ahead, please contact your team here at Bare Wealth Advisors if you have specific questions on how this affects your personal financial plan. In the meantime, I feel compelled to share some overall thoughts and words of encouragement.
- There will be plenty of blame to go around for this event in the days and months ahead – for now, I suggest praying for peace and protection for the nation of Ukraine.
- We are seeing extreme price movement in food and energy, which is likely to continue. Keep in mind, the US was energy independent within the last couple years. I believe our country has the capability to produce the energy we will need in the long-term. Since Ukraine is a large producer of wheat, we will continue to see increases in our food costs until this uncertainty is behind us.
- In my opinion, Russia desires control and money from both energy and agriculture (mostly energy) and that is what this war is about. In my opinion, Putin does not want to start World War 3.
- Financial Steps to take:
- Live within your means – spend less than you earn
- Give generously to those in need – here is a link to 20 organizations that are helping people in Ukraine: https://www.ncfgiving.com/stories/help-for-ukraine-10-charities-on-the-frontlines/
- Minimize debt
- Think long term – this too will pass. Continue to “work” the financial plan we have put in place. If you are adding to investment accounts, please continue to invest and possibly increase the amount of money you are investing. You are investing into some great companies that over the long term may reward you with good profits. If you have excess cash (margin) in your financial plan this may be a great time to consider buying some of these companies shares.
- Do not fear: Read Matthew 6: 19-34 (read verses 25-27 below)
- V25: That is why I tell you not to worry about everyday life – whether you have enough food or drink, or enough clothes to wear. Isn’t your life more than food, and your body more than clothing? V26: Look at the birds. They don’t plant or harvest or store food in barns, for your heavenly father feeds them. And aren’t you far more valuable to him than they are? V27: Can all your worries add a single moment to your life?”
Thank you for trusting in our team. We are here to serve you and we would be happy to help bring clarity to any questions you have concerning your personal financial plan.
Ron Bare and the entire Bare Wealth Team
By Ryan Kurtz
It is January 26th, 2022, as I sit down to write my thoughts on the current state of the stock market. After 3 great years in the market (measured by the S&P 500 Index) in which a $100,000 investment would have grown to almost $180,000, the market is down 8.5% since January 1st. Does that mean the stock market is no longer a good place to invest? Let’s take a deeper look.
What creates volatility in the stock market?
The “market” is just an auction that happens every business day in which investors (owners) in companies buy and sell their ownership shares. If there are more buyers bidding, then there are sellers selling of a company, the shares go up in price. If there are more sellers than buyers, the share price goes down. There are many things that would make people want to buy or sell – a CEO retiring, a new product that investors think is a good idea, profits in a quarter are better than expected, and on and on.
Are we going to see a decline or drop in the market? The answer is yes. When, and how much, I have no idea (and no one else does either, it is just speculation.) Just because the market drops does not mean it is a bad place to invest. It is the nature of this type of investment that is priced by a daily auction. No one knows the future and even when very intelligent people predict what “may” happen to the market, they are often wrong.
Is the stock market still a good place to invest? The answer is – it depends. It depends on what you plan to use the money you invest into the market for. It is typically a good place to invest for someone that has a long-term plan to own the investment. If you need the money you’re investing in 1 – 3 years, it may not be a good place to invest. For investors that have been able to hold investments in the stock market for 10 years or more they would have had an investment that would have provided a good average annual return during most decades. If you only would be able to hold the investment for a year or two, you would have had a 25% – 30% chance of losing money*.
So, what are our current thoughts on the Market?
- The market is a good place to invest for a long-term investor
- The market could be too much risk to take if you are a short-term investor
- Based on our experience and working with many families; the stock market is one of the 3 best investments one should own to create wealth. The other two are real estate and private business.
In closing, our encouragement to our clients is to keep a long-term focus regarding your investment portfolio and understand how these investments fit into your overall financial plan. If you have a good understanding of the investments purpose, timeframe, and needs for you and your family you are much more likely to be a successful long-term investor!
*American Funds, The ICA Guide 2021 edition: Class A shares; MFS Investment Management, Principles of Long Term Investing Resilience
by Ryan Kurtz
As many of you know, our theme at Bare Wealth Advisors for 2021 is “Impact.” Specifically, we are challenging our staff and clients to ask, “how can we use our resources and lives to have an impact on others?”
As I reflect on my life and career, a man comes to mind that was very influential in my own life as well as extremely influential in our industry. Even though he is no longer with us on earth, Larry Burkett epitomizes a life of impact.
Larry passed away when I was 25 years old, and I was never able to meet him. My remembrance of Larry Burkett was when I spent afternoons as a young boy feeding animals and milking cows in the barn on our family farm. Typical of many farmers, the radio was playing, and every midafternoon a show called “Money Matters” aired. It was a “call-in” type of show where people would ask Larry financial questions and he would answer them. I was always struck by the way Larry gave answers to callers with knowledge for each financial situation while simultaneously integrating Biblical wisdom with the answer. His words were full of love for each person regardless of the financial situation – even if the caller found themselves in very negative appearing circumstances. Years later, as I began my career in the financial field as an advisor, part of my desire to help others came from wanting to “be like Larry” – to give loving financial advice integrated with God’s Word.
In addition to the radio show, Larry published over 70 books in his lifetime, and sales of these books now exceed 11 million copies. As I prepare for meetings with clients, I still have many of his books in my office that I pull out from time to time to see what Larry said about a certain topic. It is interesting to me that when I look up the advice he gave in his writings there is almost always a Bible reference included.
Not only did Larry impact me personally (and many others) through his radio broadcasts and writings, Larry was also instrumental in starting or helping to start a number of wonderful Christian financial ministries. At Bare Wealth Advisors we still are closely connected to several of these ministries, and they continue to impact so much of what we do each day. Some of these organizations that we use and connect with regularly are Kingdom Advisors, National Christian Foundation, Crown Financial Ministries, and the Money Wise radio show.
As I reflect on the impact that Larry’s life had on me and many others, I ask myself, “on who am I having an impact?” “Am I having the same life changing impact on others as Larry’s life impacted mine?” I will always be forever grateful for Larry’s life and the way God used him to influence me in so many areas of my life.
by Ron Bare
It’s hard to believe we are nearing the end of August 2021. As you all are very aware, the past year and a half have presented never before seen challenges and uncertainty. We recognize that often fear and anxiety are the results of this uncertainty. We thought it would be appropriate as we head into the fall to share some important, time tested principles, as well as a few key thoughts on our economy.
- As always, we recommend the best course of action is to be long-term, goal-focused, planning-driven investors. We’ve found that the best course for us is to formulate a financial plan—and to build portfolios—based not on a view of the economy or the markets, but on our most important lifetime financial goals.
- We believe in following a plan with discipline — as opposed to reacting to current events. This offers us the best chance for long-term investment success. Simply stated: unless our goals change, we see little reason to alter our financial plan. And if our portfolio is well-suited to that plan, we don’t often make significant changes to that, either.
- We do not believe the economy can be consistently forecast, nor the markets consistently timed. We are therefore convinced that the most reliable way to capture the long-term return of equities is to ride out their frequent but ultimately temporary declines.
PERSPECTIVE OF CURRENT SITUATION
- The economy continues to struggle with supply chain imbalances, as well as with a historic mismatch between the number of job openings available and continued high (though rapidly declining) unemployment. Financial journalists continue to speculate on when these blockages will clear, but for long-term investors like us, the key is our belief that they will, in the fullness of time.
- There is also the issue of the Biden administration’s drastic tax proposals with respect to capital gains and estates. The best that can be said on this subject is that, as the first half of the year ended, the momentum behind these initiatives seemed to be declining. But the political climate remains as detrimental to capital (and capitalists) as it’s been in quite a while.
- Nonetheless, for investors like us, the most important economic report of this whole six-month period is the fact that household net worth in this country spiked 3.8% in the first quarter of 2021—to $136.9 trillion—propelled by broad gains in the equity market and in home prices. Even more important, perhaps, is the fact that the ratio of household debt to assets continued to fall, and is now back down to about where it was 50 years ago.
- The consumer powers this economy, and the consumer has rarely carried more manageable debt levels relative to disposable income—and has simply never been holding more cash—than he/she does today. In June, the National Retail Foundation raised its outlook yet again; it now expects retail sales to grow 10.5% to 13.5% (that is, $4.44 trillion to $4.56 trillion) year over year. As a result, the retail giant Target raised its dividend by a whopping 32%.
As always, if your situation has changed, or if you would like to speak to one of our advisors, please give us a call. We thank you for your continued trust and confidence in the team at Bare Wealth Advisors and we look forward to speaking with you soon!
by David Denlinger
It is no secret that this past year created a significant amount of uncertainty, fear, and confusion. In times like these, it is very easy to allow the stress and weariness to get the best of us. All the negative headlines and conflicting news sources seem to shake our judgement. Instead of letting fear control our thoughts and decisions, 2 Timothy 1:7 is a good reminder to stand firm, “For God gave us a spirit not of fear but of power and love and self-control.” From a financial standpoint, staying disciplined during uncomfortable times is difficult but crucial to short-term financial wellness and long-term financial success. Here are several guidelines to help keep your eyes on the goal:
Don’t focus on market swings. It is important to have a financial plan and to stick to it through market volatility. If there are changes to your financial situation, please let us know and we can review your accounts to see if we need to make changes, but it is important to not make decisions out of fear or emotion. Additionally, trying to time the market often involves a lot of disappointment and very few find success.
Invest prudently. The natural human tendency is to buy lots of stock when prices are rising and to stop buying altogether when prices are on the down swing. But some stock prices may provide a good value if the market drops, and you will be able to buy more for the same amount of money. When you are in the accumulation phase, the best way to invest is to setup a monthly investment. This removes the emotion from investing and is a proven long-term plan for successful investing.
Increase your savings. In times of stress, it is natural to buy something fun. But no matter how you feel, it is important to follow Biblical principles and spend less than you make. Focus on adding to your savings instead of making large unnecessary purchases due to the stress you may be feeling.
Give Generously. No matter what is happening around us, it is important to continue to give. There will always be people in need and as a nation we have been very blessed financially. Consider giving of your time, talent, or money to those around you. Furthermore, you can consider giving to local, national, and international organizations to increase the impact that you can have.
Hopefully, these guidelines are helpful as you face the challenges of today. The pandemic has touched each of our lives differently and as you continue to steward your finances, we at Bare Wealth Advisors encourage you to stay disciplined and in all things be grateful. Philippians 4:6-7 states, “Do not be anxious about anything, but in every situation, by prayer and petition, with thanksgiving, present your requests to God. And the peace of God, which transcends all understanding, will guard your hearts and your minds in Christ Jesus.”
by Curtis Burkholder
As we enter the fall season with changing leaves and weather, it is easy to feel the world around is changing as well. However, as the writer of Ecclesiastes wrote, “There is nothing new under the sun”. In light of all the changes, we can be paralyzed by feelings of fear as we consider the upcoming election, the nationwide racial unrest, and the ongoing Covid-19 concerns. It is important to maintain a long-term perspective and look at the facts to confront some of our emotions and the pictures we paint in our own mind. It is natural to want to react and wait to invest for a “better time” or when “things don’t seem as scary”. However, as we will look at below, the facts tell a different story.
In looking at historical market averages, the S&P 500 Index has averaged approximately 11% over the past 75 years. This is a time period that covers both Democratic and Republican administrations. If you fast forward 2 months from now, the election will be over. Some people will be happy, and others will be fearful based on the winning candidate. These emotions can lead us to make irrational investment decisions. We need to always remember that it is important to remain invested in the markets and not give in to fear.
A second fact to consider is that you don’t need to like who is President to do well in the market. According to Invesco, some of the best returns historically came when the presidential approval rating was between 36-50%. This occurs approximately 40% of the time. Take a moment to stop and reflect on this – the best returns in the stock market have come when half or more of the country has not approved of the sitting president.
A third fact to consider is that while we may feel this election is more divisive and contentious than in the past, we can look at our history as a nation and find another political disagreement that was more contentious. In 1804, the sitting Vice President of the United States, Aaron Burr, engaged the former US Treasury Secretary Alexander Hamilton in a duel. This duel led to the death of Hamilton. While there are strong opinions on either side of the political spectrum today, none of us expect to see the Vice President (from either party) engage in a duel! As a nation based on freedom, there will always be different opinions and perspectives. We cannot let the political tensions impact our investing decisions.
As always, if there are significant changes to your personal situation, please contact us so we can relook at your plan and adjust accordingly. We do not want to make emotional decisions in reaction to the news, markets, or presidential elections. However, we will make changes as your goals and life situations change.
In conclusion, as we consider where we are as a nation and look to the future, none of us knows what today or tomorrow holds. But we do know WHO holds our future – Jesus Christ. As we look at the past, we can gain helpful perspective. We don’t know who is going to be elected, what the market is going to do, or if there will be a spike in COVID 19 cases this fall. We can take courage and comfort in the words of Jesus from John 14:27 “I am leaving you with a gift—peace of mind and heart. And the peace I give is a gift the world cannot give. So don’t be troubled or afraid.” (NLT)
by Ron Bare
In February of this year, I spent a week in Florida with my family as well as with some of our team from the office. Visiting colleges with our daughter, going to Disney’s Animal Kingdom, enjoying the beach, and attending the annual “Kingdom Advisor Conference” all seem like a distant memory. It is hard to believe that this was only three months ago! While we had heard a few “rumblings” of a new virus during our travels, we saw no masks or any cause for concern, even when boarding our plane on February 23rd.
The equity markets at the time were reaching new highs. The US economy was very strong, with record low unemployment and solid GDP growth rates. Although some were saying markets were beginning to look overvalued, the bottom line was that companies were profitable and were predicting even greater profits throughout 2020.
Then Covid-19 arrived and with it, full-blown panic. The market dropped 34% in 33 days, a record decline. I discussed this in our video blog in late March (which you can find on our website.) Now, two months later, the dust has begun to settle and although the panic has subsided there is still uncertainty about where we go from here. The markets have since recovered much of their decline, however, a large amount of skepticism remains. With this in mind I thought it may be wise to pass on a few thoughts relating to investing success over time:
- When stock prices are going down, the enduring value of the underlying companies is going up. The lower prices go, the more value is to be had at those prices. You understand this in almost every other area of your economic life (we all love to purchase something on sale!) It is essential to apply this same principle to the stocks of American companies we invest in – or you may never become a successful investor.
- Staying fully invested during market declines is the only sure way to capture the entirety of the markets long term advance. It is not possible to consistently sell out of falling markets and buy back later at the “right” time. Most of the market driven news is geared toward market traders, NOT long-term goal and plan driven investors. To the latter, market fluctuations are just part of the process to be rewarded for the long term returns of some of the greatest companies of America and around the world.
- You should never try to make long-term investment strategies out of short to intermediate-term disruptions. We always advise to make investment decisions based on our values and financial plan, not short-term events or emotions. The past few months are a good example. Let’s assume you ignored the market downward collapse of 33 days in late February and March and woke up today, May 15th, and took a look at the markets. Yes, they are down 15-16% from earlier highs, but that is in the range of a typical market correction that happens about once every 12-18 months.
There is the ongoing chance that the markets will continue to drop back due to the uncertainty we still are facing with the Covid-19 virus and economic wake it will leave. If you adhere to the ideas presented above, then these fluctuations should not impact your long-term goal and plan driven investment strategy. Perhaps when we focus on the long term, we not only will make much better investment decisions in the short term, but we also will rest better as we wait for time to pass.