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I don't know about you but I am tired of lousy news so today is a nice change so read on and enjoy!
This past week was the start of my twentieth year as a financial advisor. On March 1, 1990, I opened my office here in Indian Rock Center amidst a quiet time in America's economic history. The 1980's started to show signs of life and 1990 proved to be the beginning of America's love affair with the stock market.
Real estate was in shambles due to the Savings and Loan crisis that had wiped out an entire industry of banking and finance. With home values declining in many areas, investors turned to stocks once more. The previous two decades had not been very good stock market years. But now, technology was starting to take off and investment capital from around the world was starting to flow into the United States setting off the greatest bull market in our history.
Within a few months while still cutting my teeth, the stock market shuddered as the Gulf War started to erupt and oil prices rocketed upward. President Bush (the first George Bush) had his hands full dealing with Saddam Hussein who was trying to take over the Middle East. War broke out and the stock market after being down 20% in the summer took off in January 1991. And take off it did.
Such was the start of my career in finance and the timing could hardly have been better. Computer and high tech firms proliferated, 401(k) plans sprung up as companies terminated old retirement plans and everyone became a stock market guru. Investing was so easy! All you had to do was open a brokerage account or mutual fund account and buy something. Anything would do just so long as you invested somewhere and bought something. A hot tip from a brother-in-law was often a better pick than what a seasoned stock broker could offer. Investing mania broke out around the world and prosperity like we had never witnessed blessed America.
I was ready for the challenge in 1990. Even then I was a seasoned veteran in the stock market having bought my first stock in 1964. My father had landed a job with a struggling shoe findings (grommets, eyelets and snaps) company in Ft Worth after the war. During the next two decades Tandy Corporation became the leader in the craft business which exploded during the Vietnam War era. Things were so good that they were desperate for labor and hired me at the age of 14! For years before that I had worked for my dad on Saturdays. He would take me to breakfast every Saturday and then I would help out in the warehouse. Over the years he taught me about finance, stocks, running a business, and how to navigate the business world.
In the early 1960's the craft business led to the consumer electronics business. Tandy Corporation being truly visionary bought a bankrupt electronics chain in Boston for the paltry sum of $300,000. Within months they released an initial public offering and I was the youngest investor in the IPO of Radio Shack which is truly one of the greatest experiences any investor could ever hope for.
The first five years were grim. My investment lost a lot but my father continued to advise me to exercise patience and discipline. The gamble paid off, the company thrived and my stock became one of the top five stocks of the 1970's. From my original purchase price of 75 cents a share I watched it go to $100 and split, go back to a $100 and split and on and on. I was hooked!
I went to college to be a stockbroker (as we called financial advisors in those days) and when graduation came in 1973, there were no jobs to be had on Wall Street. The stock market was gripped in the worst panic since the depression. Brokers were being fired and the industry was in shambles. With no job prospects in sight, I turned back to Tandy Corporation once more and got a job in their department store chain and learned the book business.
Eventually I was promoted to other positions and was transferred to Denver and later to San Francisco. In the mid 1970's, as the old guard retired or died, my whole family left the company and I moved to a small town at the gateway of Yosemite National Park in Northern California. With the profits from my stock, I bought a bookstore in Sonora and settled in intending to set the book world on fire. But 1976 was not a good year to start a business in a small town and so for the next 14 years I learned even more patience and discipline! But at the same time, I gained more and more valuable experience. I can honestly say that much of it I would have preferred not to have learned!
When my kids asked me to sell the store (they were tired of not having mom and dad at home during the holidays) in 1989, it was not long before a major earthquake hit the San Francisco Bay Area and suddenly everyone wanted to move to a small town. Thankfully many of my clients today were book customers and followed me in my new career.
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Today as I evaluate the state of our economy I am concerned. I fear for my country. Warren Buffett just said that the world's economy has fallen off a cliff and only the most deceived and clueless of folks would disagree. But that brings me to the point of this message. I have tried to refrain from boring you with a bunch of dusty history but please allow me to continue.
The "Miracle on the Hudson" was truly an astonishing sight to behold. The world watched as a disastrous moment was avoided by a cool, calm and collected pilot named Captain Chesley (Sully) Sullenberger who guided his plane to safety. After the plane landed, Sully stuck around and made sure every passenger was accounted for and safe.
In interviews later he was asked if he ever though that he might not have been the right person for the job. He confessed that the thought never crossed his mind but that he truly was the most qualified pilot for the moment. Not only that, he said all of his life's experiences had led him to that point, gave him the skills he needed and prepared him for that one short, brief moment in time where everything came together at the most crucial moment.
For the past 45 years, I have been in training. Learning from the best minds in corporate America, studying with some of the most knowledgeable investors I know and experiencing struggling to survive as a retailer in a small town, I can honestly say I am ready for this day. And, I am ready for the future and eagerly look forward to the days to come.
Today, I am thankful for you. I am thankful that you have chosen to allow me and my firm the privilege, not to sell you financial products, but to be your captain. These are truly unprecedented times and times that most of us have never seen. The future today is cloudy and unknowable. Since we don't know the next piece of news, we can only press forward using all the skills and training we have accumulated over a lifetime of experience.
I want all of you to know that I am ready, prepared and even energized as we go forward. The past year has been intense but we have survived and so have you. For those who boldly chose to follow my advice and move into our new strategies, you have been well rewarded. Most accounts are either positive or at breakeven during the past seventeen months while the stock market has collapsed by over 55%. I am confident that we will continue in the future to dispense good advice, help you plan your future and invest your money with care. Today looks murky but the future of America is always bright. I thank each one of you and invite you to continue this journey until we can one day look back and say, "Whew, that was one bumpy landing but everyone is safe and sound!" Oh yeah, please stick around. I will be the last one off the plane.
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That's it for another edition of the Vance Advance. Have a great week!
Working for your wealth and peace of mind,
The Vance Capital Management Team |
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