Loss

Webster’s Dictionary defines the word loss as: “the act or fact of being unable to keep or maintain something or someone”. I disagree with this definition as it is very accusatory to me as if it is always someone’s fault for a loss. Not all losses are someone’s fault. I am extremely sensitive to the word as Hurricane Ian took so much away from so many in our area of Southwest and Central Florida. It was no one’s fault for their “unable to keep or maintain something”. Yet, many in Florida and along the coast suffered great losses. Now is not the time for blame, but a time for rebuilding our spirits, our homes, and our lives. The stories we have heard from clients regarding catastrophic and life changing losses cut to our core. As human beings who care deeply, we hear the pain in peoples’ voices and have offered to help any way we can. After being closed for three days for being without power our office is now open, and we are back. We are ready to serve and available to answer all questions regarding access to capital as we rebuild what we have lost to the storm. Hurricane Ian took away our homes, most precious mementos, automobiles and feeling of invincibility: but we cannot let any natural disaster take away our desire to move forward. We will all press on. Together as one unit. One team rooting for each other to win! I firmly believe that you never bet against the will of the people in this great country, and I am not going to start now.

Where I agree with Webster’s description of the word loss is in the capital markets. For years and under multiple administrations our elected officials have believed that we can run a country on debt financing knowing that we can magically print more money to pay our bills. I believe there has been a “unable to maintain” sense of responsibility to spend what you have and not borrow against the future. States are required to balance their budgets, yet not our federal government. Politicians who promise spending they know we can’t pay for should be charged with a criminal act. If we as citizens don’t pay our bills, there are serious negative repercussions. Politicians only repercussion for spending taxpayer’s money they don’t have, is getting reelected. We are all now “paying the piper” when it comes to easy money and the politics of deficit spending. Economics 101 states that when you have more demand than supply, prices go higher (inflation). Right now, the country is experiencing excess demand due to easy money, governmental handouts (excess liquidity) and a slow down to the supply chain due to Covid related shutdowns. For years, this excess liquidity in the capital markets has driven great speculation in all risk assets. Stocks, bonds, real estate, crypto currencies, precious metals and anything with a greater return than the cost of capital. Now that the Federal Reserve is decreasing excess liquidity by raising rates and inflation is eating at our paychecks slowing down our spending, these speculative assets are taking notice. The cost of capital has increased substantially. The market sees this as an opportunity to reprice risk assets based on the economic slowdown and higher cost of capital. Demand for risk has decreased. Selling risk assets to wait it out is the mantra of the day. Losses suffered, yet no lessons learned.

My quarterly message ends on one of hope. Storms come and go. Bad markets come and go. Positive returns in the capital markets comes from longevity in those markets with the full understanding that not every year is a good one. History shows us if you never give up and never give in during and after difficult times, life soon returns to normal and we will all be the wiser because of it. I have lived through bad markets and bad storms. Wiser each time and ever more thankful for the people I have in my life, which includes all of you!

The High Net Worth Advisory Group LLC

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