February Power Hour – State of the Union
Dream Story – Jim and Dori, Little Wolf Farm CBD
Dori has always had a passion for women in business and wanted to start a little business and when the opportunity came in the state of Wisconsin to have a pilot program growing CBD, she grabbed that opportunity and brought Jim along for the ride (and his experience). Jim spent about 20 years in the Farm Credit System doing finance and banking and then managed manufacturing plants around the country for a large agricultural cooperative. Jim retired from all of that in 2004 but is enjoying his retirement career with Dori.
They worked with farmers and plant specialists to grow their first crop, then worked with a chemist after harvest to formulate their own product. The Global farm in October of 2019 and it’s grown and prospered. We get great support from the local community, Mineral Point, Dodgeville, Darlington, and all the neighboring little towns. It’s primarily a retail store of CBD products pain creams, gummies, and tinctures along with chocolate shop ice cream and famous boba teas.
Dori has always had a real passion for trying to help people and try to offer natural products to assist with some pain relief, anxiety, and stress. This is not a cure for everything, but it certainly provides a lot of pain relief and comfort to many people.
Fixed Index Annuities (FIA) are used by many retirees because of their ability to protect against market losses. Returns in an FIA are based on an index, you receive up to a cap or percentage of the upside in exchange for 0% losses in a bad year.
Gold and Silver
State of the Union with our United Asset Management team
Last year was the worse year on record for 60/40 portfolios with extreme volatility in both stocks and bonds.
The easy explanation of why this happened is the Fed.
Rising interest rates at the pace they did caused sock valuations to drop and bonds to see a 15-year reset.
There are two main ways to achieve risk management – avoid major pitfalls and position into a strength.
In 2022 the 20yr treasury experience a 25% decline and some low-margin and growth stocks were down 60-80%.
As mentioned in last year’s State of the Market, we were already positioning into defensive stocks as they were the strength and had higher amounts in cash, hedges, inverse indexes, gold as well as stop losses in place inside portfolios.
The interest rate environment has also led to opportunities in the bond world. For example, some municipal bonds are paying tax-free yields of 4 to 6% plus they have an upside potential of 15 – 30% based on current pricing. We are taking advantage of those opportunities for our clients.
Bond funds however are limited on how they can participate in those opportunities based on what they can and can’t do as outlined in the prospectus and based upon the size of the fund. Many times there are not enough of these bonds for a large bond fund to be able to buy as their holdings are in the billions. A million-dollar block of bonds isn’t even something they can utilize no matter how great the opportunity, it is not even a drop in the bucket for them.
Tom Healy – Overall Economic Outlook
The Fed’s job is to slow the economy but not to the point of collapse.
We are seeing that manufacturing is weak, but service industries are strong.
Consumer confidence which lends more to job security is growing as is the consumer sediment which also factors into how people feel about their purchasing power.
A major concern and something to watch for is what happens with the debt ceiling. The last time we were at this point in 2011, the S&P saw a nice decline.
When interest rates are low, growth stocks sell for more, but lowing interest rates leads to a decrease in what growth stocks will sell for leading to a decline.
Due to this, value stocks outperformed growth stocks in 2022 as we predicted.
Our focus in 2022 was on the rising rates and the effects that would have on stock valuations.
Now, in 2023, the focus is on the lagging effects higher rates have on the economy as we monitor earnings closely.
Besides all the above-mentioned risk management tools, we will avoid areas of risk – cynical and small caps while positioning in the defensive-based sectors such as staples, healthcare, and utilities with companies that we screen for strong balance sheets and earnings. *
(* This is where holding individual securities vs mutual funds or ETFs is important. Those pooled funds are limited in what they can do as defined in the prospectus.)
No matter if the market is strong or weak, there are always risk management tools that can and are used to protect our clients.
Estate Planning Spotlight
- Having goals provides people with a sense of purpose and a positive, forward-looking perspective.
- If you do not set goals, it is axiomatic that you will not achieve them!
- Accomplishing a goal—or at least making significant progress—provides a sense of satisfaction.
- The initial motivation generally wanes over time, making failure likely.
- Not keeping them could lead to a feeling of failure or shame.
- They reflect dissatisfaction with oneself or one’s life circumstances.
- Choose a guardian. If you are a parent, create a plan to ensure that your children are cared for if you or the other legal parent are unable to care for them by naming a person you trust to be their guardian. Grandparents – talk to your children about this!
- Create medical and financial powers of attorney. If you are unable to communicate or make your own medical or financial decisions, your agent under a power of attorney can step in and make decisions on your behalf
- Have enough life insurance. If you pass away, will the proceeds of your current life insurance policy provide adequate funds for your loved ones? Have you talked to your kids about this?
- Establish a plan for your money and property. Have you decided whom you would like to inherit your money and property when you pass away? If you do not have a written estate plan, your money and property will go to individuals specified in your state’s statute instead of to the beneficiaries you choose.
We serve clients in Mineral Point WI, Dodgeville WI, Platteville WI, Lancaster WI, Fennimore WI, Boscobel WI, Richland Center WI, Muscoda WI, Spring Green WI, Mazomanie WI, Sauk City WI, Middleton WI, Madison WI, Fitchburg WI, Verona WI, Mount Horeb WI, Barneveld WI, New Glarus WI, Monroe WI, Belleville WI, Oregon WI, Stoughton WI, Darlington WI, Cuba City WI, Hazel Green WI, Belmont WI, Dubuque IA, Freeport IL
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