Another Year Older


Lots of publications provide a “year in review” issue in December, so here are some reflections on issues that affect WWA and our clients.

I’d like to begin by returning to my youth in Indianapolis listening to radio station WIBC. Its broadcast day began with Harry Andrews’ farm report. Although I’m about to turn 70, I’m still not sure what barrows and gilts might be. Very much the opposite of today’s narrowcasting approach, the station seemed to have something for everyone, including musically. I remember listening to Sixteen Tons by Tennessee Ernie Ford with similar wonder: what was a company store anyway? The song told the story of the dead-end life of an Appalachian coal miner and reached the top of both Billboard’s country and pop charts in 1955.

Coal continues to provide jobs along with the largest percentage of our country’s electric power but natural gas is taking over, so perhaps the concept of a company town will finally become a thing of the past. In one of this year’s most interesting books, Hillbilly Elegy, author J. D. Vance talks about his own journey from a coal mining town through the Marines to a Yale education. Viewpoint Books has copies in stock if you haven’t read it yet.

Natural gas was once considered an annoying by-product of the process of drilling for oil. Now, its value in the production of electric power is well recognized and the US has an abundant supply. My expectation is that the trend of gas replacing coal in power generation will continue. However, it seems unlikely that coal’s difficult but generally unskilled jobs will be replaced with anything comparable in the more technically complex gas industry. A focus on job training in coal-mining regions to help replace the country’s retiring generation of electricians, plumbers and welders might make sense.

For the last ten years, WWA has offered each client a business card-sized CD containing that client’s will and other important “emergency” documents. That medium was state of the art at the time but the last laptop I bought didn’t even have a CD drive. Changing with the times, Jalene has begun offering our clients on-line storage in an encrypted vault which can be accessed at time of need from any internet-connected device. You’re still welcome to the CD if you’d like.

Newspapers are closing all across the country but The Republic continues to provide daily local news (and I continue to subscribe). It’s now part of AIM Media, a full service media company offering internet advertising strategies and a constantly updated website in addition to a daily paper. Clearly, the “internetifacation” of the county will continue.

A phenomenon of the past several years, the digitization (and sharing) of music has cut deeply into the incomes of many recording artists. That has forced more of them to spend time touring, providing the opportunity for fans like me to hear them live, some for the first time. I also notice that vinyl records are returning to specialty stores as a generation of digital natives comes to recognize the value of the analog listening experience.

Although the East and West coast-based media were stunned by Donald Trump’s victory, about half of the country got exactly what they expected. Generally, the stock market doesn’t care for surprises but the overnight sell-off which began around 2 AM on the morning after the election tapered off as the market’s opening got closer. The day actually ended on quite a positive note. The rally continues, apparently because people expect Trump’s presidency to be good for business. I’ve remarked before that presidential candidates tend to run on the economy, either taking credit for it or promising to fix it. In reality, the president is just one cog in a complex bureaucracy that manages the country but, for now, the new broom seems to have been well received. For what it’s worth, we are fully invested on behalf of our clients, although we have chosen positions which we believe will do reasonably well should a market correction rear its head.

Let me close with another investing topic. Many hedge funds have been in the news this past year as high fees and poor performance have led to investor redemptions and even to fund closings. I was very uncomfortable when small investors were allowed to buy into these funds, since they were initially conceived to provide counter-cyclicality to very large portfolios. The rush to provide access to this source of ‘easy money’ reminds me of similar demands by small investors to take part in the “dot com” stock market boom of the late 1990’s. Those who got burned in the correction of 2000 may want to remember the pain of those losses before joining the herd flocking to retail versions of hedge funds.

2016 has been an eventful year on a personal level as well as a national one. Jalene and her husband, Mike traveled to Rome where she and the St. Bartholomew’s choir had the privilege of singing at the Vatican. My wife Janet and I made the decision to “retire” from yard work and will be moving to a condo after the first of the year. My plans to slow down didn’t materialize this past year but I hope to begin working three days a week starting in January. It’s truly been our pleasure to be part of your lives this year and we look forward to our continuing relationship in 2017 and beyond.