Carey Wealth Management

We hope you have a happy Thanksgiving!

We are very thankful for your health and happiness. We are also very grateful for our relationship. Our family of clients continue to grow and it has been a privilege to advise and guide through the ups and downs of everyone’s journey through life.

We have been with our clients through new jobs, new careers, retirements, weddings, divorces, major health issues, major health recoveries, deaths and births. We have advised and guided our clients through the great recession, the great pandemic and the great expansion.
We are looking forward to our journey together.

Overall, the markets are still having a good year even with the pressure of increasing inflation. The Federal Reserve started buying less bonds, however they are still pouring gasoline on the inflation fire.
When demand is higher than supply, prices go up. When demand stays the same and supply decreases, prices go up. We are currently experiencing both. When demand is lower and supply increases, we have a recession.

I still believe there are good prospects of working through most inflation however I am still very concerned about the excess risk taking.

Examples of excess risk taking can be found in the following:

1) Special Purpose Acquisition Company (S**C)
a. 5 years ago, these didn’t exist.
b. S**C’s allow companies to go public however the investors in the S**C do not know the financial details of the companies being invested in by the S**C.
2) Initial Public Offering (IPO)
a. Today’s IPO’s have investors lining up to buy a lot of grossly overvalued companies.
b. 5 years ago, a company issuing an IPO had better financials and the valuation the company receiving was much lower.
c. Example, Amazon’s IPO was in 1997, the market cap for Amazon right after the IPO was $438 million. If we inflate the market cap valuation to today’s dollars, Amazon’s market cap after IPO was $890 million. Compare that to IPO valuations today and it’s clear that there is major excess risk in most IPOs.
d. Today’s IPOs are coming to market extremely overvalued.
3) Cryptocurrency
a. They call it a currency but it’s not a currency.
b. They call it a coin but it’s not a coin.
c. Most of the value is supply/demand driven. Get more people to own it and you will see an increase in value.
d. Cryptocurrencies have two real benefits currently, which are lack of regulations and lack of taxation. Both of these will go away at some point.
e. People believe if everyone owns it, everyone will be wealthy.
4) Non-Fungible Token (NFT)
a. NFT’s are video clips, digital art, a virtual cat.
b. NFT’s value come from their uniqueness.
c. c. Below is an example of a NFT that is currently for sale. Some people have paid over $100,000 for these. Some people have paid over $100,000 for these.

5) Rare sneakers investments
a. You can invest, buy shares and sell shares in rare sneakers.
b. This is not a joke, just another example of too much money and too much speculation.

Throughout history, greed and fear are major factors in investing. Currently we are living in a greed only time.

There are some signs that valuations do matter. Over the past few months, we are starting to see some of the companies with excessive valuations starting to get adjusted back down.

The following examples are all good companies with desirable products and services. The only problem has been their valuation was too high.
A few examples:
1) Pelton
a. 52-week high stock price was $171.09
b. Current stock price as of 11/18/2021, $46.26
c. Stock is down 73% in the last 12 months.
2) Zillow
a. 52-week high stock price was $208.11
b. Current stock price as of 11/18/2021 $57.90
c. Stock is down 73% in the last 12 months.
3) Zoom
a. 52-week high stock price was $486.83
b. Current stock price as of 11/18/2021, $245.16
c. Stock is down 50% in the last 12 months
We need to see more price correction across most assets before we can say see we survived the great bubble.

There are two factors that are major positives once we get past the current bubble that will help our economy expand for years to come. One is factor is the labor market and technology. 20 years ago, companies throughout the world were moving manufacturing and capital into areas of low wage labor.

If a company was to going to make shoes, cars, computers, etc., they needed a lot of employees to assemble the things they were making. Now, due to technology, robots, automation, low wage labor is not important. The labor need has shifted from unskilled to skilled. Our economy is positioned for this shift. Also, companies now realize that shorter supply chains are a major competitive advantage. These factors will greatly benefit our country’s economy.

Remember, we plan, we manage, we care about your future®

PAYCHECK PROTECTION PROGRAM (PPP) is a new opportunity for small businesses, under 500 employees.

This program provides loans to support payroll and some other expenses for small business. This loan does not need to be repaid if certain provisions are met by the small business.

Below is information from the Small Business Administration. Businesses can start applying through their bank on Friday.

I wanted to share this with everyone because you might have a family member or friend that works at small business and this might help them.

Stay safe and be strong,

Jamie

Small Business Administration We support America's small businesses. The SBA connects entrepreneurs with lenders and funding to help them plan, start and grow their business.

This information went out our clients at 11:00am today.

The Coronavirus continues to cause major disruptions in our daily lives and in our economy.

We have been working hard on getting real facts and making decisions based on the facts. We have received input from various sources including people that live in China and front-line doctors. All have different viewpoints and different information.

At this point, the information is still very confusing. There are still too many unknowns. One thing we do know is that many events have been cancelled and postponed. There will be a large financial impact and it could be less than 3 months or much longer.
We are still hoping that within a month or two this will end up being that largest head-fake in the last 100 years. However, the risk/reward on the short term has changed enough that we proactively analyzed all of our accounts and we have sold any of the equities that we feel will receive the largest negative impact from the fallout of this virus. Certain asset classes will be impacted more than others.

This strategy will allow us to have more cash available to take advantage of investment opportunities. This strategy will lessen the volatility you see in your investment account. Part of this strategy was to take advantage of some tax loss selling now for your taxable accounts.

One very important detail is all of our pre-retirees and retirees could receive their income for many years before we would need to sell any equities. This is the most important part of the long-term plan that you already have in place. However, since this is a health event with so much uncertainty and we know that so many individuals and businesses will be impacted by the cancellations and postponements, we feel this is the best move for you.

The action we took has nothing to do with the market sell off as of the time of writing this. A 20 percent or more correction is a normal part of investing. This action is due to the unknown health impact on individuals from the Coronavirus and the actions taken by individuals, cities and states to slow the spread of Coronavirus. We might see a race to close everything down and it might end up being a bad move, however the economic impact will be real for a period of time.

For any of our clients that have mortgage, depending on your current interest rate, you might be able to refinance your mortgage. We recommend starting to have those conversations with a bank or mortgage broker now. We are starting to see some outstanding opportunities in refinancing.

Please practice these safe health activities:
1) Wash your hands after touching anything outside of your home.
2) Do not travel on airplanes, cruise ships or mass transit.
3) Do not attend any events with more than 20 people. Just stay away until we get better facts.
Let other people prove this is nothing more than a cold or flu, and until more facts are available be safe.

Remember we plan, we manage, we care about your future.

Jamie

The markets and economy have been a wild ride for the past 12 months.
With all the negative talk about the trade war, recession and politics, the investments are producing a very strong year.

The facts are the job market is still one of the best in the last 50 years and most consumers are in a positive financial position. One thing that is very clear, you can’t worry about things that happen on the short term. Long term planning, long term strategies give the best results. We have some investments and strategies that we put in place approximately 10 years ago and those investments and strategies are paying off day. (Long term)
On the short term, we must always think about risk management. Short term, a million things can happen that cause short term pain. We are always preparing for the unexpected unknowns. Managing risks for unknowns is very complex.

Overall long-term planning and strategies with short term risk management puts our clients in the best possible position whatever happens next. Bring it on!

Remember, we plan, we manage, we care about your future®