Having referenced this many times, it never gets old to repeat the inimitable words of my favorite comic strip character, Calvin (of Bill Waterson’s Calvin & Hobbes fame) as he looked at fresh snowfall on a January 1st morning, “A new year…a fresh clean start”.
Happy New Year to you. Hopefully this note finds you well and rested from a great holiday season. Our hope and wishes for you is a year of good health, much happiness and prosperity as we move forward on our journeys to lives of fulfillment. We are optimistic that better days are ahead for all of us.
Schwab/TD Ameritrade/RFPS Updates
2023 will be a year of transition in a lot of areas. Change is good (or so we have been told).
The long-awaited merger between Charles Schwab and TD Ameritrade is becoming a reality. We have been informed that the conversion of all TD Ameritrade Institutional (TDAI) clients and accounts will occur over Labor Day weekend. All cost basis and transaction history should migrate to the Schwab platform.
For clients that access their TDAI accounts through the www.AdvisorClient.com website, you will receive information about establishing log-in details for the new Schwab Alliance client site (which is a vast improvement and has a mobile app). You will likely need to reestablish and/or confirm your log-in credentials – stay tuned for more information on that.
As previously mentioned, there should be no major disruptions for clients during the transition. We have been assured that all functionality to trade or do move money transactions will be available except for the weekend of the migration. We will certainly let you know as quickly as possible if anything is needed on your part, although we do not anticipate any issues (fingers crossed).
Our firm will be going through some transitions as well. John will be assuming the role of Chief Compliance Officer and Principal for the firm. In this role, he will be responsible for interacting with FINRA and the State of Florida Office of Financial Regulation on all matters relating to compliance matters.
Also, there is a good likelihood that by year end, we may need to change from being a State of Florida regulated Registered Investment Advisor to being regulated by the SEC due to growth in asset size. This will be an administrative change for us and has no bearing on our ability to service our clients in the best way possible.
Lastly, John will be managing more of the day-to-day servicing functions to you, our valued clients. To be clear, I have no plans to retire any time soon (retaining my role as “Chief Hand-holder”) and will still be meeting with you all as always. However, John has proven that he is incredibly well-suited to assume this responsibility with the passion and energy you deserve. Please do not hesitate to reach out directly to him for any of your questions, concerns or needs.
This will be a very interesting and exciting time for all of us.
We will likely take a deeper dive and retrospection on all that transpired in the past year in the markets at a later date. From the Russian invasion of Ukraine to Hurricane Ian; the Federal Reserve efforts at curbing higher inflation rates to ensuing market turbulence; we had a rocky ride this year.
Your homework is to research the meaning of “reversion to the mean”. Why do I mention that phrase? A standard disclaimer in the investment world is that past performance is no indication of future returns. Remember the “good old days” in the stock market when the S&P 500 Index was up 28.88% in 2019, 16.26% in 2020, and 26.89% in 2021? Well, that ride came to a screeching halt in 2022. Averages are what they are.
Let’s face it, the market was painful to investors last year. Despite the breathless reporting in the financial press, stock prices go up, and down, and up, and down more or less at random (in the short term) and consistently show incremental gains (in the longer term). Unfortunately, it’s hard to see that generally upward trend for all the short-term disturbances. Those pundits that kept calling for a “correction” got their wish.
The first iteration of writing this summary for you was rather snarky and a tongue-in-cheek play on the fear mongering that some media and the charlatans that peddle gloom in their newsletters espouse. But since my New Year’s Resolution is to channel more positivity, let’s not let the noise cloud our outlook and remain confident in the long-term.
Of course, the end of the world has been predicted more than a few times over the years, and their historical failure rate is running right at 100%. We may see a recession this year, we will certainly see more confusing fluctuations in share prices day in, day out, and the financial bloviators will continue to think that these entirely normal market fluctuations are ‘news.’ But if history is any indication, patience in the markets, and a strong stomach for bumps in the roller coaster, will be rewarded in the end.
When the markets decline as they did this past year, history tells us that they become a buying opportunity; in effect, they go on sale, and become more attractively priced than they were before the downturn. But there is no guarantee that stocks won't become even more attractively priced at some point in the coming year; we just don't know what to expect. What we do know is that in virtually every historical time period, stock prices have recovered, usually unexpectedly, and the biggest danger has always been to move to the sidelines at the wrong time and miss out on that next upsurge. If we hear any more than that about the future of the markets, we will do our best to let you know.
As always, thank you for the trust and confidence you place in us. It is something we never take for granted and sincerely appreciate. Please do not hesitate to reach out whenever you have questions, concerns or whenever we may be of service to you. Again, best wishes for a healthy, happy, and prosperous new year.
Joe Downs, CFP® & John Cunningham, CFP®