*Excerpts from December 5, 2019 Quarterly Tea*

Rob: Good afternoon, everyone. Welcome. Our format for these discussions is generally pretty open. Let’s see what is on people’s mind to get a sense of where we should start.

Gary: I’m interested in the article in last Saturday’s Wall Street Journal about U.S. corporate debt being at record levels at $10 trillion. Does that mean corporate bonds are flooding the market?

Rob: Corporate debt, government debt and student debt have all skyrocketed. Interestingly enough, 30% of bonds worldwide that exist today pay negative interest rates. The lender traditionally pays the borrower so, if you’re a government issuing new bonds, you’re in hog heaven.

Teri: I’d like you to talk a little bit about the U.S. stock market and interest rates. I think that affects a lot of people in their decisions about how and where to retire.

Rob: Our stock market has done so much better than most other developed nations for so many years, and U.S. government debt is still considered to be the best in the world because it pays, compared to the European and Japanese markets, a relatively high rate of interest. If you’ve been invested in the stock market, you’ve been a beneficiary of the 10-year boom in asset values, which is a result of ultra-low interest rates. The stock market is up 26% this year and 50 of the 500 companies are up 75%! The rest of the large cap stocks are down, so it is a very narrow market. Investors earn very little in bonds or cash. Kyle, tell us why this is so.

Kyle: There are a variety of reasons. The most obvious reason stocks are up is that interest rates are very low. Low unemployment in the country is also a real positive for stocks, and we’ve seen expanding payrolls. It also appears that the people who are working are starting to earn higher hourly wages, though not a significant amount more. We also see that corporate earnings are good, out pacing expectations. Towards the end of last year, the stock market experienced a correction, which means it dropped by over 10 percent. At that time, analysts were forecasting earnings to drop by 4 ½ percent, but, in fact, they hardly went down at all. The market has been reacting positively to that factor. We are also seeing analysts speaking positively about the China trade negotiations and in some ways, the stock market is pricing in the hopes that these negotiations will work out in favor of U.S. companies.

Amy: What is going on between the U.S. and China?

Rob: Whatever trade deal might happen in the short term, there are many underlying reasons why the trade “war” between the U.S. and China will likely not get resolved. If you look at China’s economic statistics, they are reporting a shrinking economy for the first time in decades. Maintaining growth in manufacturing and the employment it engenders is critical to their overall political stability. The Chinese have no social safety net for people who don’t have jobs. Many traditional family structures have been broken apart by the massive migration from rural areas to their cities. Hundreds of millions of people are now separated from their families. If you go out into the countryside, in many places there are only old people and children. In the cities, there are huge concentrations of working age people, and, if these young people don’t have jobs, that could spell real trouble for the Chinese government and the ruling Communist Party.

Kyle: I think part of what props up China and the rest of the global stock markets is the huge amount of monetary stimulus by governments that pump more and more money into their economies. Japan just issued a big stimulus package with the hopes of increasing their domestic manufacturing activity, which in turn would spark more development and growth in the wider economy.

Rob: Even with this kind of stimulation, Japan has had a no growth economy since 1980. This does not mean that people are broke, but it’s very difficult for young Japanese people to find jobs. Both China and Japan’s manufacturing output are down, and industrial production is flat here in the U.S.

Jonathan: I’m curious when you speak about China, what are the larger implications of this for us and for the rest of the world?

Rob: One of the stated reasons for the “trade war,” for tariffs, is that China has been stealing Western technology. China has, for decades, ignored U.S. patent protections and this is one of the reasons China has been able to leapfrog ahead of other countries to advance technologically. Stealing other people’s intellectual property has allowed them to now have the capability to do their own research and development. Because they are such a focused economy where the military, government and industry are run by the same people, China is not distracted by internal disputes on politics or philosophy. Free of dissent, all their energy can go into directing their resources on research, free of ethical debate. For example, the Chinese have few ethical restrictions on genome research. They will probably be the first to clone human limbs as they are not distracted by moral dilemmas. If the Chinese can grow new arms and legs and eyes, they will! There are benefits to this approach and some dangers as well. I’m not a scientist but it seems to me that technology will advance in an uncontrolled way, so the outcome is unknown. The Chinese will use their considerable technical expertise to increase their influence over South Asian and African countries. It is the same story as throughout history. A contest of who controls resources. That is what world politics has always been about. Control.

Bert: Are the Chinese a threat to the U.S. economy?

Rob: Was the Soviet Union a threat to the U.S. during the Cold War? In some ways, they were. They had nuclear bombs pointed at the U.S. Were they a threat to our national sovereignty or territorial integrity or our economy? Probably not. The Chinese were for centuries an isolated country, but now they are not and can spread their wings. They feel their racial differences and cultural differences acutely and they have a desire to be recognized as great achievers. The Chinese want to project their power and expand their influence, but is that a threat to the United States? It doesn’t have to be seen that way. The repression of individual rights that is so much a part of their society is distasteful to us, but there’s nothing to say that we will not end up adopting some of their surveillance and control technologies here in our country.  I don’t see a direct political threat from China’s territorial advances, but there is certainly justification for the trade dispute that is going on. They need to be forced to “play fair.” China is our biggest trading partner. The growing affluence in China and the continued affluence here in the U.S. are related. That is why I don’t think there will be a “real” war between the two countries. There is certainly competition between us in many things, but that is not necessarily bad!

Kyle: I think there is a widespread feeling that China is a threat to our influence on the global stage. That is a part of what Trump is fighting against via tariffs, by saying “If you don’t start respecting our patents and intellectual property rights, then we are not going to trade with you on a level playing field.”

Rob: Take, for example, the area of cell phone technology. They’ve already begun rolling out 5G in China. The evolution of smart phone service in China illustrates how stealing U.S. technology has allowed the Chinese to bypass adding the necessary infrastructure to hard wire the country. The forced cooperation of “foreign partners” who, in exchange for the opportunity to gain a foothold in China, turn over their proprietary rights to technological knowledge to their Chinese counterparts, thereby saving the Chinese decades of research and billions of dollars in costs.

Gwen: Is the trade war a meaningful negative drag on our economy?

Rob: In some ways, it is. If you are a farmer, it’s been rough going.

Gwen: What about corruption? Isn’t China renowned for corruption?

Rob: There is a lot of corruption in China, but perhaps it’s just more overt there than it is everywhere else. President Xi has removed several people high up in the Communist party who were gaming the system of Party favors. Individual stealing for their own gain is a threat to the power of the Communist Party, which of course is not socialist but totalitarian. Totalitarian regimes are very effective at crushing opposition, making them more effective at rooting out non sanctioned corruption.

Karen: Is China overbuilt with too much construction?

Rob: It looks that way! I think there are several million apartments in China that sit vacant because the Communist Party values construction that creates jobs over fiscal responsibility. The people who control China could direct several million people to move to these empty cities, but they need to have jobs for these new residents or dissent would grow. Keeping employment levels up has become harder because the Chinese now must compete with other, lower wage cost nations. Chinese manufacturing activity has gone down since Trump started bellowing and slapping tariffs on Chinese goods. Both countries face basic structural challenges to their export-based businesses.

Charlie: I would like to ask about the term “easy money.” We are now, I guess, mostly done with “quantitative easing” where a huge slug of money was pushed into the world’s economy by central banks to avert a melt down and then a slowdown. Traditionalists say this is going to cause inflation. I see much of this money going to banks, who then turn around and hand it back to the government to collect interest, thus keeping the hamster wheel spinning inside the cage. Where has all this cash gone?

Rob: A lot of this government generated liquidity has gone into the stock and the real estate markets. Ultra-low interest rates have given the government the ability to have higher debt and lower interest rates at the same time. It makes no sense. If someone is a bad credit risk and their finances are getting worse, generally they have to pay an increasing rate of interest in order to keep borrowing. This is the opposite of what has happened over the last 10 years. Let’s look to Italy, which is in pretty bad financial condition. Yet, they pay almost no interest now when they borrow money. Three years ago, there was concern that the Italian government (or Spain or France) couldn’t afford to pay their debts. Then, almost overnight, those concerns abated. What’s happened? The answer is that people became complacent, as almost no one believes that governments can default on their debt. The public is now overly confident that the government will never default, and that companies that have driven the stock market sky high will keep making more and more money. What do you think, Kyle?

Kyle: I would say that the U.S. government will always be able to borrow money in the bond market, and that companies like Apple and Microsoft are still reasonably priced, unlike the nosebleed prices of Google and Amazon.

Rob: The great bulk of “easy money” given to individuals that was given to corporations and individuals has gone into investable assets. Some could say that we are living in an “asset bubble.” The last “bubble” occurred at the end of the 1990s when Intel, Qualcomm, Nokia, and others were selling at similar price-to-earnings multiples. Then came the sound of the high-tech bubble bursting. Is it different now? We are in the eleventh year of the second longest bull market in history. In 2019, there were two hundred and three days of new highs. A level of investor confidence only exceeded in the late 1990s before the tech crash. The question now is, how late in the game are we? Low interest rates and high stock prices are at risk if there is a loss of investor confidence. What might precipitate this? Political turmoil in the U.S.? It is unlikely. The presidential election in 2001 was decided by hanging chads and there was no impact to the market. In 2016, Trump, a political novice, won the electoral college, though not the popular vote, with no impact to the market. We have had Presidents and past Congresses that could only pass one piece of legislation every four years resulting in little to no progress on the political level. The markets are unfazed because they now influence politicians, rather than politicians enacting legislation that influences the markets.

Sarah: Coming back to quantitative easing and consumer confidence questions, what do you think about Bernie Sanders and the government debt?

Rob: Consumer confidence about debt is high because interest rates are low. Corporate taxes are low, so our national debt is high. I think Sanders would greatly expand the nation’s debt, but that’s the direction it’s going anyway.

Kyle: Corporate confidence is also high. Apple has billions of dollars in cash on hand, yet they are still borrowing billions of dollars, because money, like talk, is cheap. The government is paying 1.8% on 10-year bonds, which is ridiculous. A 10-year Apple bond price pays 1.4% so it’s considered more secure that the U.S. government!

Rob: Apple’s debt is probably a better, but maybe not a safer investment than U.S. government bonds. As a result of ultra-low interest rates, people are digging deep into junk territory for income. Junk bonds, those below investment grade, are paying 3%. The upshot is investors are no longer paid for the risk they take on when buying high-yield bonds.

Kyle: All that said, investors continue to buy bonds. The junk bond market was up 12% in 2019.

Rob: This means that the incredibly expanding stockpile of government debt has succeeded in calming investors. In this country, Europe and Japan, sovereign governments have, over the last 10 years, created enough money to keep confidence high. Let’s talk a little bit about the oil market because those carbon energy prices can be manipulated in a similar way as interest rates. The Saudis need to keep the price of oil above $84 a barrel and to get there, they try to reduce the supply by turning off their production. However, this strategy is not nearly as effective as before because the U.S. is now a net exporter of energy. In fact, we are the second largest oil producer in the world. Stocks and real estate are at all-time highs, so does it make sense to buy more? There are many facets to real estate in terms of supply and demand.

Larry: What stock market sectors do you think will do well in the coming months?

Gayle: Consumer spending has been very interesting this holiday season. It was the U.S.’s first ever trillion-dollar holiday spending season despite concerns about tariffs and negative interest rates. President Trump has proposed a $2.4 billion tax on French goods such as champagne, chocolates and perfumes. France’s response has been to add a 3% tax on all electronic vendors. This will hurt Amazon, Google, and Apple. Black Friday and Cyber Monday saw consumer spending increase 16% over last year. Who will be the season’s top winners? Target and Lululemon are hot stocks again. Some regional shopping malls are in trouble, so certain public real estate investment trusts are facing challenges.

Bob: If you can cast your vision on the next Presidential election, do you envision Trump being re-elected? And, given the fact that it will be a very polarized election, how does that potentially impact us financially, economically and socially?

Rob: I think the chances of Trump being re-elected are greater than 50 percent. Even though he is unpopular with a majority of Americans, the weakness of the Democratic field may enable him to continue on for another four years. It’s hard to believe that Joe Biden is the strongest Democratic candidate. He’s not much of a dynamo, and that is why Michael Bloomberg is now running. If the top two Democratic candidates, whoever they might be, would combine efforts they might win. It is important to keep in mind that, historically, the majority of voters have been moderate and centrist, and it is more likely that voters will gravitate to a moderate ticket. I believe that Trump would defeat the current slate of far-left leaning Democratic candidates that are leading in the polls.

Kyle: From what I have read, it is not necessarily a candidate issue but more to do with demographics and voter districting. As with the last election, it comes back to the electoral college. The Democrats need a highly mobilized population to be attracted to an extremely strong candidate to counter Trump’s base. The demographics and current districting do not favor Democrats in the upcoming election.

Bob: OK, let’s say Trump does win, the second part of my question stands: How does that impact us?

Rob: For those with financial assets, a second Trump term will most likely be favorable, certainly from a tax perspective! The wealth tax proposals floated by some of the Democratic candidates do have some merit, but I believe they would create some bizarre behavior. Taxing stock transactions would be helpful because computer traders dominate the market, and they can do so with impunity because their transaction costs are so low. Much like telemarketers, they can trade (or call) 100 times a day because the expense of each electronic transaction is immaterial. If there was a one cent tax on every phone call or trade, traders would stop dominating the price of stocks in the market, and one could answer the phone knowing a person and not a machine was calling.

Trump has ostensibly leveraged the country like he has leveraged his family’s real estate empire. He’s a marketer and a borrower. When you look at the one signature piece of legislation passed during his presidency, the Tax Cuts and Jobs Act of 2017, it has created havoc on the nation’s deficit. The Fed has cut interest rates several times over the past 3 years, but the President wants it cut even more. He supports negative interest rates, allowing the government to borrow for free. If interest rates remain negative for an extended period of time, economic conditions trend toward a centrally planned economy where the government, which can borrow and spend at will, can exert influence on the price of stocks and real estate, and greatly impact private sector activity.

Bob: What I should have asked is, does Trump pose an existential threat to the United States in regard to the financial, economic, and social impact on the country if he is elected for a second term?

Rob: I don’t think so. No matter who the President is, checks and balances remain, as does the separation of power. Given the size and diversity of our economy, I don’t see a threat from whomever sits in the Oval Office: Republican, Democrat or Independent.

Alan: Without being an alarmist, I think that you brought up a very good point. We as consumers want to live the good life, preserve the Constitution, and keep the country’s values from being hijacked by extreme groups. What can be done to look ahead in terms of values and ethics and civility and not just money?

Rob: The issue you raise about the Constitution is a good one. We began today with a discussion about the media and many people’s inability to discern what is real information and what is not. How can voters stay informed if they cannot rely on what they read, hear, or see? It is the Congress’ function to pass laws, and no significant legislation has passed in the last two years. Nor have laws previously passed to curtail overspending been enforced. The President has more room to exercise executive power when the Congress doesn’t exercise its legislative power. The U.S. national agenda is not complex. Americans believe in a social safety network, but do not believe in free health insurance or education. Most Americans believe in helping those in need but want to make those decisions individually and not at the cost of domestic prosperity.

Tony: Where does the U.S. stand in relationship with other developed countries in terms of levels of social safety nets and taxation?

Rob: France spends almost 60% of its tax revenue on social services: education, health care, public transportation. The U.S. spends around 40%, one-third less. In France, Germany or the U.K., payroll income taxes take up about 66% of earned income. In our country, the top payor level is around 50%. The U.S. is at a lower income taxation rate, and we, therefore, have less money to spend on social safety nets than the rest of the developed world. Low taxes and low social spending have been consistent themes for most U.S. presidents since Ronald Reagan. Lower tax rates are intended to create more overall wealth. The theory is that, these benefits for the wealthy will result in the reinvestment of that wealth into ventures that create opportunities for lower middle class and wage workers. However, people who cannot avoid payroll taxes, the middle class, do pay the bulk of taxes in every developed nation.

Frank: If that is the case, and if the trend is that the middle class is “disappearing,” we are then heading towards a system of two classes, the wealthy and the rest of the country, the 5% and 95%. Why then are we so intent on killing off the middle class?

Rob: I have seen recent studies that suggest something quite different. With low unemployment, the middle class isn’t dying. It’s just that families must now have two wage earners to make ends meet. Even then, most people can’t afford to save much for retirement or educate their children.

Dave: You’ve changed the definition of what “middle class” means. It used to mean that you work more than a certain amount, you can get ahead. Your future looks better than the past, and your kids can afford to attend college. Our middle class can no longer climb the economic ladder. Working people are struggling and their confidence that they can comfortably raise their families and educate them is diminishing. I hear what you are saying, but I don’t believe that is what is happening.

Rob: The cost of higher education, unless you attend a state school, which are more and more pressed for resources, is astronomical and student debt is skyrocketing. Those graduate students who do not have the financial support of their parents are overburdened and their career choices are negatively impacted.  Young people in their 20s and 30s with student debt don’t have enough money to make a down payment on a home, and the market for first time home buyers is impacted. The American dream since World War II has been that young people could go to school, get a job, save enough to buy a house, have children for whom they could provide a decent quality of life and then afford to retire in their 60s.  That dream has dissipated. This is one reason Democrats have proposed a wealth tax, which is an annual tax on the value of an individual’s assets rather than their income. It’s fascinating to watch and hard to fathom. Why does the working class react so poorly to this message? The middle class don’t seem to want to tax the rich because they still dream they might be rich someday, and, if that happens, they don’t want to be tapped out to pay for those who are less fortunate, work less, etc.

George: This brings up Ronald Reagan. There were seven candidates in the 1980 presidential election. The election was called at 5 p.m. in California, well before the polls closed. Raegan’s political machine swept the country with “free market” propaganda. Soon thereafter, the middle class started its downward trend. From 1945-1980, middle class wealth rose. However, from 1980 on, Raegan and most Republicans and some Democrats unleashed policies that favor big business and we have been riding a corporate sponsored gravy train ever since. The notion that the living standard of the middle class could steadily rise was dashed by the forces of deregulation, which benefit asset owners and not wage earners. It seems to me, we would be well advised to learn from the results of similar policies in Chile and Argentina in the 1970s.

Rob: Would you please summarize what happened in Chile and Argentina during that time?

George: Certainly. The separation of powers based on similar constitutional constructs that we have here in the United States were essentially eradicated. Even though they existed in paper form they did not in function.

Rob: What happened to the quality of life of their citizens during that time period?

George: The quality of life for working people initially increased dramatically, but then the upper class reacted by installing authoritarian centralized governments that crushed dissent and civil liberties.

Rob: There are many good things about our country. I think we’re strong enough to survive and thrive no matter who is elected. The challenges to our particular form of representative democracy and the values associated with it are independent of personalities so long as people read, discuss and engage with those who are different than themselves. Are people voting? I hope people are voting and participating in community activities, as that is what makes the country resilient.

Kathy: How about the real estate market? What’s going on there?

Rob: Demographics dictate the rise and fall of the real estate market. It is very difficult for people under 40, who are wage earners, to buy a home. There are not many single-family homes being built in the $200 – $300 thousand dollar range, which is what they can afford. Many homes in which the baby boomer generation live, are far too expensive for young people to buy or maintain. My advice to those in or approaching retirement who are thinking about selling their single-family residences is to sell sooner rather than later. The number of young people who can afford a $500,000 to $1,000,000 home is declining and will continue to decline, especially for large homes that are out in the country. Urban apartments are all the rage and fit the lifestyle of many millennials.

Eighty million homes in this country are going to pass hands over the next 15 years as baby boomers age. There are not going to be enough buyers for those houses, so it is going to be a buyer’s market for a long time.

Many young people don’t want to own a car or take on the responsibility for a house that requires work on the weekends or figuring out how to run or fix something like a lawnmower.

John: I would like to go back to Mr. Trump for a minute. We don’t have any leadership in the Senate or House. Everyone seems to be stalemated. What kind of safeguards can we put into place to protect our democracy?

Rob: I think that safeguards for our democracy already exist, though they may not be visible to the public. Career diplomats and the military have a duty to carry on in spite of political pressure. Consider the recent dismissal of a Navy Seal. The President gave an officer committed of military crimes his personal pardon, and career military staff said “This is crazy. This is bad for discipline. This is not how we do things.” Trump may be able to pardon anyone he chooses, but the military will figure out how to double its efforts to instill the moral code critical to the success of the armed services. America is very resilient.

Pam: If the markets have benefited by artificially inflated asset prices, does that mean the market will go down?

Rob: No one can predict when the stock market is going to go down or when real estate prices are going to take their next nosedive. A $1,000,000 house may only be worth $700,000 in a few years due to demographics, but people have endured far worse and survived. A sustained period of time when stocks have flat to negative returns is inevitable. We are used to being coddled. We want some guarantee that our assets are secure, that things are going to be okay, but that’s not reality. Our country will remain through the next down or “bear” market.

Charles: What is the outlook for the international stock markets versus the U.S.?

Rob: Well, from a cynical point of view, the international markets should do better in the next decade than the U.S. because they have lagged for so many years. Emerging nations should also do better. Their populations are growing, and they are experiencing greater per capita advances in education. There are value stock buying opportunities in the international markets. For example, there are large drug companies based in Switzerland that pay a dividend of almost 6%, twice that of U.S. companies. At the moment, money is still flowing to the U.S. markets, both stock and bond, for political reasons. We are still correctly perceived as a safe haven.

Sarah: What issues do you think are most important to Americans?

Rob: I think that, besides money, most Americans care about other people, the environment, the arts, our civil liberties and wasteful government spending. One of the reasons Trump has a good chance of being reelected is that people want a government that commands respect but doesn’t get too involved. Swing state voters care about jobs, about the cost of their health insurance, and whether or not the government is going to get involved in things that are not relevant to regular people’s concerns.

Blake: One thing that may be happening is our institutions may weaken. Take the judiciary. They get lifetime positions, but do they reflect the values of the people?

Rob: There’s a value that you may care about and there’s a value that someone else may care about. The people who work for the courts, judges, etc. are not unintelligent, uncaring people. They have to carry on the day to day business of administering the country. Trump’s additions to the courts are a swing back to more conservative positions but they are still fairly moderate.

The Markets – (Kyle Burns)

The final quarter of 2019 not only marked the end of the year but also marked the end of an almost decade-long bull market! At the end of 2018, the S&P 500 finished the year down over 6%, and many investors were ready to flee the markets to seek out more conservative investments. It seemed all but clear that the party was coming to an end and the bull market would be over. At regular intervals, pundits said that the market was due for a correction that would take the indexes into bear market territory. It was inevitable that the end of the rally was coming, if it was not already here. Even the Federal Reserve had similar concerns. They saw looming issues over trade wars, low productivity from the manufacturing segment and an inverted bond yield curve. These concerns led to three interest rate cuts, which acted as a ballast and reignited strong market performance in 2019.

As 2019 began, investors’ desires for safety had pushed the benchmark 10-year U.S. Treasury Bond yield up to 2.68%. Rate cuts from the Federal Reserve led to a steady decline in the 10-year Treasury over the first three quarters of 2019. By September 4, 2019, the yield reached a low of 1.46%, a decline of over 45%. As the yields on government and corporate bonds went down, investors fled back into the stock market, and, as corporations operated under easy money policies, they saw their bottom lines balloon. This environment led to a continuation of the bull market in stocks. In fact, 2019 was a year when stocks, bonds, real estate, gold and oil all did well, rebounding from the declines of late 2018.

The S&P 500 gained 31.5% in 2019 after a surge in the fourth quarter of over 13%. Each of the 11 sectors of the S&P 500 had positive returns in 2019. The worst performing sector, Energy, returned 8%, while the top performing sector, Technology, returned 48%. In 2018, only 2 of the 11 S&P 500 sectors had a positive return for the year. 2019 return highlights included Real Estate (up 25%), Financials (up 29%), and Communication Services (up 31%).

International markets also fared well in 2019, due to less rhetoric around trade wars, increased certainty over Brexit, and low interest rates promoted by the central banks. The major developed international markets returned 22%. Even the higher risk emerging market stocks managed to shake off political unrest in Hong Kong, drug wars in multiple Latin American countries, and Iranian backed attacks on Saudi Arabia’s oil infrastructure. While the events made for a choppy year in emerging markets, they still performed surprisingly well, returning 18.4% after a decline of 14.6% in 2018.

The U.S. bond markets returned 8.7% in 2019, the best performance of U.S. bonds since 2002 when investors fled the stock markets in search of safety after the crash of the tech bubble. Longer term bonds with maturities over twenty years did best in 2019, especially bonds that offered higher yields in comparison to the declining rates offered on new bonds.  We still believe that the stability and predictability of owning shorter-term bonds remain the best option for investment, and do not think that the benefit of owning longer term bonds is worth the tradeoff risk.

Staff Updates

Rob Rikoon: These past few months were taken up with our litter of ten, jet black, mixed retriever puppies. My daughter, Robyn, and I enjoy the mom, Beya, so much that we wanted to share her with others.  From the beginning of October until the end of December, it was pretty much bedlam in the back of the office. We kept one of the seven males and all the other nine happy campers have found loving homes.  There has been very little snow here in NM, thus far, so it has been hard to get in much cross-country skiing training. The lack of which means that, come late February when I head up to Northern Wisconsin for the International Birkiebeiner race, it may be a long (55-kilometer) event. This event attracts people from the upper Midwest and overseas. I may well be the only person from New Mexico to participate this year in the intimate crowd of 5,000 competitors.

Kyle Burns: In December, our family took a trip to California to celebrate James and Johnnie’s 10th birthday. We spent a day at Disneyland and then headed inland to Palm Desert to enjoy a few days of relaxation before the rush of the holidays. Although it was very busy, we enjoyed a wonderful holiday season at home, and it was great to see everyone from our extended families who came from out of town. Among the various gatherings we hosted while people were visiting, was a grand Christmas dinner for 30 in our home. It feels good to enter a New Year and I am looking forward to this winter’s ski season at Ski Santa Fe, hoping that I can accomplish some of the lofty goals that I set for myself each year.

Contessa Archuleta: My family and I shared a very busy and blessed holiday season with extended family and friends. This included a lot of decorating, eating and a trip on the Polar Express.   With the conclusion of the holiday season and the beginning of a New Year comes the opportunity to reflect upon successes and failures, both personally and professionally.  This reflection provided me with an opportunity to identify areas of needed improvements, assess priorities, and sets goals for the coming year.   While some goals are focused on health and others on family, I’m hopeful that the combination of these goals will fuel a successful year with our clients.  With that said, I can’t help but feel excited about the adventures that lie ahead in 2020!

Keren James: My son, Gryffen and I traveled to NY in early November to visit our cousins and my son’s Chosen Grandma. Gryffen got to see Hamilton on Broadway, and I was thrilled to attend my cousin’s reading of his new book, A Month in Siena. The holiday season was a quiet one, and I welcomed the opportunity to rest and recover for the coming year. My parents spent a week with us here for Thanksgiving, and it was a joy to gather at the table together to break bread and play games. My 85-year-old father shoveled snow, perhaps for the first time in his life, on Thanksgiving Day while Gryffen assisted and played alongside him. On his return home, my dad’s doctor told him that he wished all his patients in their 80s were healthy enough to shovel snow at high altitude. The New Year will bring snowboarding lessons for Gryffen as well as the most academically intensive period of his school year. I look forward to assisting clients with their tax preparation and hope to get in some cross-country skiing and perhaps snowshoeing in my free time.

Anthony Penner:  This past quarter was quite a whirlwind. In October, my wife and I visited Napa Valley for the first time with friends. We were there during their “Crush” season, which is when the grapes hit their peak of maturity and get picked off the vines. It was a great experience filled with amazing scenery, good company, and delicious food and wine. We returned and celebrated Halloween with our daughter, volunteering at her school for their annual “Trunk or Treat.” It was a fun event to be a part of as we watched our daughter run around with the new friends she has made this year in class. Next came Thanksgiving, where we celebrated at home with family and I successfully cooked my first turkey. Christmas and New Years were spent quietly at home, which we were thankful for after a hectic couple of months. Now we look ahead to all the great things 2020 will bring. Happy New Year everyone!

Elizabeth Hook: Let me start by saying a huge thank you to everyone for such a warm welcome during my first several months at the Rikoon Group. I have enjoyed meeting and working with everyone and look forward to all that 2020 has to bring. It has been a busy time in the Hook household. In addition to starting with the Rikoon Group, my husband and I have been working to slowly remodel our new home. We were excited to host my family from Georgia for two weeks over the holidays and share with them the magic of the season in Santa Fe. As we await our daughter taking her first steps, we are preparing for that and everything else 2020 has in store.

Jeff Sand: My wife and I completed the casita and garage construction projects at our property, and we are glad to have those done.  We can now park our cars in the garage for the winter and devote time to more enjoyable endeavors – like a new puppy! Rob’s dog, Beya, had 10 puppies on October 3. The mom is a black Labrador mix and the father is a golden retriever. All the puppies have black hair, just like their mom, so each was given a different colored ribbon in order to tell them apart. We got a female and she had the pink / rose colored ribbon and so her name became Rosita. She is 13 weeks old and now weighs 25 pounds. She is quickly on her way to weighing 50, 60, 70 or who know how many pounds! She is very calm and just about as sweet as she could possibly be. With my additional free time, I have signed up to start back playing pickleball on the weekends beginning in January.

Gayle Johnson:  Did you know that the S&P 500 has been positive during 19 of the last 23 presidential 4-year cycles?  FDR, George W., and Obama were the under performing years. Also, the average performance during the last 23 “presidential 4th-years” has been a gain of 9.9%. We are in for an interesting journey!

Regardless of market performance, one of the biggest risks to a portfolio is longevity risk, i.e. running out of money in our lifetime. No need to lose sleep. We are here for your planning needs.

On the personal side, I had an AMAZING trip in November to Denmark, Sweden, and Iceland. Such lovely people, gorgeous scenery, and tasty food. It was an experience I will always treasure (including the glacier cocktail, while standing on a glacier, with 800-year-old ice!). Then along came Christmas with my family, including my granddaughters. A 5-year-old and a 2-year-old sure help keep the magic alive.

I’m truly looking forward to helping our clients in 2020; the population of the U.S. will exceed 300 million this year, but to us, our clients are one in a million. A blessed New Year to you all!

Upcoming Teas

Please join us for our quarterly gathering at 2218 Old Arroyo Chamiso in Santa Fe to discuss economic and market related events on Wednesday, March 18th, from 2:30 p.m. to 4:00 p.m. (MT).