Letters category: Letters

The bear is back.

On Monday, June 13, investors began the week by digesting a new spate of bad – albeit familiar – news: Inflation continues to surge.  In response, the markets sank swiftly and sharply, pushing the S&P 500 officially into bear market territory.¹  (A bear market, as you may remember, is a drop of 20% or more from a recent peak.  In this case, the “recent peak” was all the way back on January 3 of this year.)  The markets rallied somewhat on Wednesday, June 15, when the Fed announced a 0.75% interest rate increase, but the revival was short-lived.  Two of the three major indices – the S&P and the NASDAQ – are officially in bear markets, and a third, the Dow, is just a short slide away.

Having helped clients navigate – and even take advantage of – several bear markets in our careers, we’ve found that looking solely at that 20% number can paint a picture of pure chaos in the markets.  But not all bear markets are the same.  Some are long, some are short.  Some come with economic recessions and others don’t.  Some catch investors completely unawares, while others come on more gradually.  For this reason, it’s better to focus on the reasons behind the number rather than the number itself.  When we concentrate on the cause instead of just the effect, suddenly a bear market doesn’t seem so abstract or bewildering.

Breaking Down the Bear

This current bear market is not a surprise.  It’s the result of a slow, gradual market decline that’s been going on since the start of the year, all driven by one thing: Inflation.  In fact, the NASDAQ has actually been in a bear market since March, and the S&P 500 threatened to tip over last month before recovering somewhat after the Federal Reserve raised interest rates by a half-point.  The hope was that this step – the first of its kind since the year 2000 – would start slowing inflation’s rise.

Unfortunately, a half-point was not enough.  On Friday, June 10, a new Consumer Price Index report showed that inflation rose even higher in May, to the tune of 8.6%.²  That’s the biggest increase since 1981.  In essence, the Fed’s half-point rate hike was like sticking your finger in a leaky dam when the water is threatening to spill over the top anyway.

That means the Federal Reserve now had a choice: Raise interest rates more aggressively and risk triggering a recession or continue on the same measured path and risk worsening inflation.  (To clarify, this has been the Fed’s choice for months; it’s just that now, the pressure to get it right is even greater.)  Both approaches come with short-term pain for the markets, which is why Friday’s news was the tipping point for a bear market.

On Wednesday, the Fed announced their choice, raising the Federal Funds Rate – the interest rate that banks pay each other for overnight loans – by 0.75%.³  That may not sound like much, but it’s the biggest single rate hike since 1994, and it will lead to rising interest rates across the board.  (Mortgage rates have already risen to their highest level in over 13 years.⁴)

The reason the Fed did this is because higher interest rates are a proven tool for fighting inflation.  Since higher rates reward saving over spending, the demand for goods and services tends to go down, forcing companies to lower their prices if they’re to attract new business.  Lower prices, of course, means lower inflation.

The Fed’s move was expected, and many economists feel it’s warranted.  Why, then, have the markets continued to fall?  Because now the economy is on the clock for a possible recession.

You see, higher interest rates are a double-edged sword.  Higher rates mean higher borrowing costs and more expenses for both individuals and companies.  If rates rise too high, too fast, it could trigger nationwide layoffs, a plunge in housing prices, and more.  Given that the Fed hinted that another 0.75% hike was on the cards in July, such a scenario is not out of the question.³

When the Fed announced the rate hike on Wednesday, they also revealed something else: Their economic outlook for the rest of 2022.  The Fed’s hope is to achieve what’s called a “soft landing.”    This is where economic growth slows, but a full-blown recession is avoided.  There’s some justification for this hope.  After all, if you remove inflation from the equation, the economy is actually in pretty good shape.  The unemployment rate is at 3.6%, which is almost back to where we were in January 2020 before COVID hit.⁵  And consumer spending – the bedrock of our economy – remains strong.  It was to shore up the economy that the Fed dropped interest rates in the first place.  Now, the thinking goes, that mission is complete, which means it’s time for the Fed to pivot to the second prong of their “dual mandate”: stabilizing prices.  (The first prong is stable employment.)

Unfortunately, soft landings are historically difficult to achieve, and the most recent data suggests an economic slowdown may already be happening.  Consumer sentiment is dropping, retail sales numbers have dropped slightly over the last month, and while the economy continues to add jobs, it did so at a slower pace in May.³  Even the Fed admits that the unemployment rate will likely go up over the next few years.  (Moving from 3.6% to 4.1%, according to their projections.³)

Time will tell whether a new recession is on the horizon.  For now, though, fears of one have driven stocks into a bear market – and that is the real issue we need to concern ourselves with right now.  How we handle feelings like fear will play a big role in determining how well we navigate these turbulent times.

You see, news of a bear market is an unpleasant headline in a year that’s been full of them.  But in my experience, the real danger during market conditions like these is not the bear itself,

but the way people respond to it.  Because, when you think about it, headlines are written to seem big, grand, even epic.  They’re designed to get your attention.  What they are not designed to do is give advice specific to you.  So, let’s talk about what a bear market does and does not mean for your investments, your financial plan, and your financial goals.

What a Bear Market Means

Have you ever been driving on the road and hit every green light on the way to your destination?  It’s a great feeling, isn’t it?  Well, that’s sort of what a bull market is – and the road is the journey to your financial goals.

A bear market is the opposite.

During a bear market, the road to your financial goals, for the foreseeable future, is like getting caught at every red light in a major traffic jam.  We’re still progressing toward your goals, but we’re inching instead of cruising.  Sometimes, we may not move at all for a while.  Sometimes, it may be necessary to take a detour and backtrack.  It’s not fun, but it’s also not the end of the world.  Because here’s what a bear market doesn’t mean:

Have you ever been caught in rush hour traffic, and the lane you’re in won’t budge?  Meanwhile, the lane next to you seems to be moving fine.  So, as soon as you see an opening, you merge into that lane – only to immediately slam on your brakes.  Now the new lane is backed up!  So, you try again…until you find yourself in the very lane that’s closed off and causing a jam in the first place.

This is what emotional, undisciplined investors do during bear markets.  They start frantically trying to change lanes, get off the road, or even abandon the car altogether.  As a result, they burn fuel, waste time, and end up making the situation worse – because they aren’t where they need to be when the road gets cleared and the traffic speeds up again.

They aren’t there when the bear market inevitably ends, and a new bull is born.

You see, history doesn’t show us how long a bear market will last.  Until now, we’ve had three bear markets in the 21^st century.  The first, in the early 2000s, lasted 929 days.  The second, amidst the Great Recession, lasted 517.  But the third, back in early 2020, lasted only 33.⁶  What history does show us is that bear markets are always temporary.  The markets always recover – and the recovery can be a generational chance to get in the next bull market on the ground floor.

Warren Buffett once said, “The stock market is a device to transfer money from the impatient to the patient.”⁷    If we can remember this; if we can remember what a bear market means and does not mean, we can not only weather this volatility…but turn it to our advantage in the long run.  Because while a bear market may signal the end of a bull, it does not signal the end of our investment strategy.  Your financial plan.  Or your journey toward your financial goals.  Because, at the end of the day, we’re prepared for this.  Our car is tuned up, and there’s plenty of gas in the tank.

A bear market just means we might have to sit in traffic for a while.

We will keep a close eye on what the Fed does and how the markets respond to it.  Expect to hear more from us on this subject soon.  In the meantime, please let us know if you have any questions or concerns about the road ahead.

Sincerely,

Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

¹ “Dow tumbles 876 points and stocks enter bear market,” CNN Business, https://www.cnn.com/2022/06/13/investing/dow-stock-market-today/index.html

² “Inflation rose 8.6% in May, highest since 1981,” CNBC, https://www.cnbc.com/2022/06/10/consumer-price-index-may-2022.html

³ “Fed hikes its benchmark interest rate by 0.75 percentage point, the biggest increase since 1994,” CNBC, https://www.cnbc.com/2022/06/15/fed-hikes-its-benchmark-interest-rate-by-three-quarters-of-a-point-the-biggest-increase-since-1994.html

⁴ “Mortgage Rates Hit 5.78%, Highest Level Since 2008,” The Wall Street Journal, https://www.wsj.com/articles/mortgage-rates-hit-5-78-highest-level-since-2008-11655388013

⁵ “The Employment Situation – May 2022,” Bureau of Labor Statistics, https://www.bls.gov/news.release/pdf/empsit.pdf

⁶ “Stock Market Briefing: S&P 500 Bull & Bear Market Tables,” Yardeni Research, Inc. https://www.yardeni.com/pub/sp500corrbeartables.pdf

⁷ “Winning the Market with the Patience of the Wright Brothers and Warren Buffett,” Forbes. https://www.forbes.com/sites/investor/2018/01/30/winning-in-the-market-with-the-patience-of-the-wright-brothers-and-warren-buffett/

Happy Father’s Day!  As you know, Father’s Day is a chance to honor our fathers for their contributions to family and society.  That includes grandfathers, great grandfathers, and also men who serve in the role of fathers.  This is a chance to show how their hard work, sacrifice, and commitment have paid off.

Many words have been written about fathers.  Some of the greatest thinkers and writers have taken the time to pen their thoughts on fatherhood, most with much greater depth and skill than we have.  So, for this Father’s Day, we thought you’d enjoy reading some of the most famous quotes about fathers.  They’re some of our favorites, anyway.

Read them, and see if any of them describe how you view your father!

Here they are:

Ten Famous Quotes on Fathers

“When I was a boy of 14, my father was so ignorant I could hardly stand to have the old man around.  But when I got to be 21, I was astonished at how much the old man had learned in seven years.”

– Mark Twain

“Father! – To God himself we cannot give a holier name.”

– William Wordsworth

“It’s only when you grow up and step back from him—or leave him for your own home—that you can measure [your father’s] greatness
and fully appreciate it.”

– Margaret Truman

“One father is worth more than a hundred schoolmasters.”

– George Herbert

“My father gave me the greatest gift anyone could give another person …
he believed in me.”

 – Jim Valvano

“By the time a man realizes his father was right, he has a son who thinks he’s wrong.”

 – Charles Wordsworth

“I cannot think of any need in childhood as strong as the need for a father’s protection.”

 – Sigmund Freud

“A father carries pictures where his money used to be.”

– Anonymous

“The greatest mark of a father is how he treats his children
when no one is looking.”

 – Dan Pearce

“He was there when I didn’t understand, he was there when I was wrong, he was there when I cried, he was there when I lied.  For some reason, my dad was always there when I needed him the most.
His love was never ending.”

 – Michael Jordan

So, what would you say about your father if given the chance?  Perhaps this is the best thing about Father’s Day.  It’s not about buying a new tie or choosing a funny card.  Or at least, it’s not just about that.  It’s about the opportunity to reflect on what exactly our fathers mean to us.  A chance to ponder both who we are and what we want to be … and how our fathers impacted both.

On behalf of everyone here at Hudock Capital Group, we wish you and yours a happy Father’s Day!

Sincerely,

Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

When someone says the word “hero,” what do you think of?  Do you imagine some muscle-laden dragon-slayer with a magical sword?  Or perhaps a gun-toting, leather-wearing action star, complete with signature sunglasses?  These are what heroes tend to look like in the movies, after all.

In real life, heroes come in all shapes and sizes, from all walks of life.  Perhaps it’s a tall, gawky young man with enormous ears.  Or a balding, middle-aged man with two bum ankles.  Or an old man with glasses and a hearing aid, leaning wearily on a cane.

That’s exactly what one legendary group of heroes looked like.  We’re referring, of course, to the Doolittle Raiders.

***

The year was 1942.  With the United States still reeling from the attack on Pearl Harbor, a group of officers decided something had to be done.

“The Japanese people had been told they were invulnerable … [but] an attack on the Japanese homeland would cause confusion and sow doubt about the reliability of their leaders.” 

So said Lieutenant Colonel James “Jimmy” Doolittle, describing the impetus behind one of the most notable feats of bravery ever performed when eighty members of the United States Air Force launched a daring air raid on Tokyo despite the overwhelming odds against them.

The need to take the fight to Japan was undeniable.  But according to Doolittle, there was another, more important reason for the raid:

There was a second and equally important psychological reason for the attack.  Americans badly needed a morale boost. 

In February of that year, members of the United States 17^th Bomb Group were given the opportunity to volunteer for a secret mission.  They were not told what the mission was about or what its objective would be—only that it was both important and “extremely hazardous.”

Eighty men volunteered.  Eighty men raised their hands.  Despite the danger, despite not knowing what they were signing up for, eighty men said, “I’ll go.  Send me.”

In that moment, they became heroes.

Take a good look at them.  Some were young men barely out of their teens; others were decades older, with wives and children.  Some were tall and some were short.  They came from places like Fresno, California, and New Haven, Kentucky.  Each and every one a hero.

These were the Doolittle Raiders.

Fast forward to April 18, 1942.  The Raiders were still on their ships, almost 800 miles from Japan, when they were spotted by a Japanese boat.  The boat was quickly sunk, but not before it was able to radio a warning to the mainland.  The Raiders’ commander, Doolittle, was a 44-year old former air racer, who was already something of a legend in aeronautics for being the first pilot to ever take off, fly, and land using instruments alone (meaning he was essentially “flying blind”).  Now, he had to make a choice.  Continue as planned—or abort the mission?

Even though their secret was out, and even though they were 200 miles further out than they had planned, Doolittle decided to launch the attack.

Immediately, 16 planes took flight.  Each carried a pilot, co-pilot, navigator, bombardier, and a gunner.  Normally, such bombing raids had fighter escorts, but in this situation, the bombers were all alone.  They didn’t even have the kind of defenses most bombers normally had, because they had to remove as much weight from their planes as possible.  It was the only way they would make it all the way to Japan and back.

The Raiders reached Tokyo about six hours later.  Despite Tokyo’s defenses, not a single bomber was shot down.  They dropped their bombs and strafed their targets, giving Tokyo a taste of what Pearl Harbor had received.  More importantly, they had done what no one thought was possible: taken the war straight to the heart of Japan.

Then, things took a turn for the worse.

With night falling and the weather growing bleaker, the Raiders realized they did not have the fuel to reach their base in China.  Fifteen of the sixteen planes managed to reach the Chinese coast after 13 hours in the air.  Some of them crash-landed, others bailed out.  One plane was forced to fly all the way to the Soviet Union.  The crew was interned, and while they were treated well, it would be years before they made it home.

Many of the other Raiders were given help from the Chinese, but some weren’t so lucky.  Three airmen died while crash-landing.  Another eight were captured by the Japanese.  Three of these men were executed.  A fourth died in captivity.  They had given their lives so that their country would feel hope again.

The others were kept under confinement for four years, where they were starved, beaten, and sentenced to hard labor.  It wasn’t until 1945 that they were finally freed.

When Doolittle finally made it home, he expected to be court-martialed, as every single plane had been lost.  Instead, he returned to a hero’s welcome.  American morale had risen dramatically, just as Doolittle hoped it would.  Most of the surviving Raiders went on to serve in the rest of the war; some even served in Korea years later.

Ever since the war, the Doolittle Raiders held annual reunions.  Lt. Col. Richard E. Cole was the last of the Doolittle Raiders.  He passed away in 2019 at the age of 103.  When you look at their pictures, you no longer see the same youth and vitality they once had.  But what you do see is far more important.

You still see heroes.

Every Memorial Day, we pay tribute to the thousands of heroes who died serving our country.  Some of these heroes died before the invention of photography.  Many of them are lost to history, their names unknown, their deeds unrecorded.

But we still know what they look like.  In fact, we know what all heroes look like.

Just imagine someone, anyone, young or old, short or tall, man or woman, raising a hand and saying, “I’ll go.  Send me.”

That’s what a hero looks like.

On behalf of everyone here at Hudock Capital Group, we wish to say “Thank you” to our nation’s heroes.  Thank you for your service.  Thank you for your sacrifice.  Thank you for saying, “Send me.”

Thank you for being heroes.

Sincerely,

Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

Navigating Turbulent Times

Remember when you were learning to drive, how new and scary it could be?  The first time you merged onto the freeway.  The first time you switched lanes during heavy rush hour traffic.  The first time you parallel-parked on a busy street.  The first time you drove in heavy rain or in the snow.

Eventually, though, each of these actions became easier and less stressful…to the point they became second nature. After all, you’d seen it all before. You’d done it all before. No matter what bumps in the road you encountered, you always knew exactly what to do.

We were thinking about this while studying the markets recently. As you probably know, market volatility has been persistent since the middle of January. The S&P 500 has moved in and out of correction territory for the past two months and the NASDAQ is technically in a bear market. (Quick reminder: A “correction” is defined as a drop of 10% or more from a recent peak, while a “bear market” is a drop of 20% or more.)

As you can imagine, this sustained volatility has a lot of investors gripping tight on the wheel — metaphorically, at least. And make no mistake; it’s clear that we are living in turbulent times right now. Some analysts are warning of a potential bear market across the entire stock market; some economists, meanwhile, are even forecasting the possibility of a new recession.¹ (Though it’s worth noting this prediction does not seem to be the prevailing one among most economists.)

No one enjoys investing during times like these, just as no one, we imagine, enjoys driving a big rig in a snowstorm.  But as your financial advisors, we decided to write this letter to assure you that we have a major advantage; we are not rookie drivers. We are not practicing for our driver’s test. Our advantage is that we’ve seen this, lived through this, and even benefited from this all in the very recent past!

Let us explain what we mean by quickly recapping why the markets are so volatile. The various reasons are all interconnected, so we can untangle the knot of events fairly easily.

On Monday, April 25, health authorities in Beijing, China, rushed around the city to conduct as many Covid 19 tests as they possibly could. By the end of the day, they had tested almost 3.7 million people.² Their goal?  Identify and quarantine every infected person in the vicinity so that they could avoid the city-wide lockdown that nearby Shanghai has been dealing with for the past four weeks.

The reason this matter is because the world depends on China for a lot of things: foodstuffs, rare earth metals, computer chips, cars, steel, plastics, etc.  The worry is that if China goes on lockdown again, production on all these items will plummet.  That would throw a major wrench into global supply chains, which are still – still – struggling to recover from the pandemic.

This is something the world can ill-afford at the moment, especially given the ongoing war in Ukraine.  Much of the world depends on both of these countries for the goods they need.  Wheat and neon gas from Ukraine, for example.  Oil and natural gas from Russia.  Thanks to this conflict, and due to the sanctions imposed on Russia as a result of it, it’s now not only more expensive to buy certain items, it’s more expensive to ship them, too.

All these supply chain issues, of course, have contributed to the rampant inflation we’ve seen this year.  For example, take something as simple as chicken eggs.  Russia exports a huge percentage of the components that go into agricultural fertilizer.  When it becomes more expensive for farmers to buy fertilizer, the price of corn goes up.  When the price of corn goes up, the price of chicken feed goes up.  When the price of chicken feed goes up, the price of raising chickens goes up.  That leads to higher-priced eggs, which is further compounded by higher oil prices making it more expensive to ship those eggs to the market and…well, you get the point.

Understanding how the world’s issues, like COVID and war, contributes to supply chain problems makes it easier to see how they also contribute to inflation.  And what does inflation have to do with the stock market?  Simple, inflation doesn’t just affect consumers, it affects companies too.  During periods of high inflation, it becomes more and more costly for companies to produce the products they sell.  They can – and usually do – raise their own prices to compensate, but this can backfire if it leads consumers to go elsewhere.  Either way, the company’s profit margin suffers – which means they return less value to shareholders.  Shareholders, in response, then start selling their stock, driving the price down.  These are the reasons we’ve seen such sustained volatility in the markets – and why that volatility will likely continue for some time.

These are indeed turbulent times we live in.  But here’s the good news.  If you look closely, nothing we’ve just explained to you is new, is it?  We’ve been dealing with COVID since 2020; with inflation since 2021.  In the last two years, we’ve lived through both a bear market and a recession and come out on the other side.  We’ve been reading about supply chain issues for months; trade issues with China for years.  The sources of today’s volatility are largely the same as yesterday’s.

Much of the market volatility that we are experiencing is based on the uncertainty of “what comes next”?  Will the Federal Reserve hike rates forever?  Will inflation keep rising forever?  Will the Russia/Ukraine conflict last forever?  Will the shutdown in China last forever?   Although we can’t tell you when all of these concerns will end, we don’t believe they will last forever.  History tells us that some of the best investing opportunities come from periods just like this, but it’s not identified until we are in a position of hindsight.  When it feels like the bad news will never end and the market will never stop going down, it’s time to evaluate what we want to own for the recovery.  Our view is once all the bad news is priced in, the market will be in a better position to grow with some of these major concerns behind us.

We know that patience and planning will not only help us avoid making major mistakes, they’ll also help position us for when the markets eventually rebound.  We know that diversifying our holdings and sticking to our long-term strategy eliminates the need for relying on guesswork or shots in the dark.  We know that doing all these things together will not only help us get through today, it’ll help us seize tomorrow too.  That’s why, despite the headlines, despite the gloomy forecasts, we remain confident in our direction and excited about the future.  We’ve navigated volatility before, and we’ll do so again…all with a steady hand on the wheel.

As always, thank you for your continued trust in us and our team.  If you ever have any questions or concerns about the markets, don’t hesitate to let us know!

Sincerely,

Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

¹ “A major recession is coming, Deutsche Bank warns,” CNN Business, https://www.cnn.com/2022/04/26/economy/inflation-recession-economy-deutsche-bank/index.html

² “Beijing Orders Citywide Covid-19 Testing,” The Wall Street Journal, https://www.wsj.com/articles/beijing-braces-for-omicron-wave-with-hoarding-and-testing-11650866581

MARKET UPDATE:

Since our last market communique on the Ukraine war, cross-asset volatility has remained high as the war has proven more intense and geopolitically unpalatable.

A FURTHER ESCALATION

This has led to a ratcheting-up of economic sanctions on Russia that are rapidly crippling their economy.  While economic sanctions are common pressure points applied to wayward countries in times of war, the breadth and scale of sanctions implemented thus far by the US and her allies on Russia (including freezing Russian central bank assets, denying access to the global payments system called SWIFT, and now today boycotting Russian oil in the US) is without modern day precedent. One commentator has called this the economic equivalent of dropping a nuclear bomb on Russia—already incinerated nearly half the value of the Russian currency since hostilities began.

STAGFLATION?

From a market and economic perspective, the greatest risk remains the knock-on effects of rising commodity prices (especially oil & wheat) on global inflation.

The war has already induced a commodity supply shock, and it’s happening at a time when inflation was already running at 40-year highs.  The best corollary to the current situation is 1973, when geopolitical events in the Middle East led to an oil shock when inflation was similarly high.  Like the 1970s analogue, a serious risk today is that commodity prices move high enough to slow the economy while simultaneously keeping sustained upward pressure on inflation—resulting in stagflation (i.e. high inflation with weak growth).  In this situation the Fed would have to choose between the lesser of two evils:  1) fight inflation (by raising interest rates and tightening conditions that could slow growth still more) or 2) defend growth (by deferring rate hikes…but allowing inflation to run hot).  Historically, the Fed has favored defending growth.

During the 1970s, the Fed consistently lagged its policy response to inflation in an attempt to preserve growth—believing that the underlying pressures were only temporary given the geopolitical nature of the oil shock.  While they did raise interest rates, the hikes were ultimately too slow and modest to prevent inflation from being a problem for a decade (until the Volker rate hikes of the 80s).  The potential parallels to today’s Fed are obvious.

To be clear, the situation today in the US is better than it was in the 70s.  Today, the US is a major producer and net exporter of oil, which mitigates both supply and price risk to Americans.  Europe, by comparison, is not energy self-sufficient and is in a far more tenuous position (which is probably why they haven’t yet sanctioned Russian oil and gas).

We believe that over time, geopolitical tensions will be lessened and inflation pressures reduced, but right now we are keeping a sharp eye on these current global challenges and have opportunistic plans in place as the market volatility continues.

Q&A: How the Russian Invasion of Ukraine May Affect Investors

On Thursday, February 24, after months of tension and military buildup, Russia invaded Ukraine.  It’s the first major war between European nations in decades and brings significant humanitarian and economic ramifications for the entire world.

We want to assure you that our team has spent a lot of time analyzing the situation and how it might impact you.  We’ll go over some of the details in a moment, but the most important thing for you to know is that we are keeping a close eye on everything.  We remain confident in our investment strategy as well as the path to your financial goals.

Now, as you can imagine, the markets fell sharply when the world woke up to the news of invasion.  In this message, we’re going to explain what effect this war is likely to have on both the global economy and on the markets.  Because we’re financial advisors, not a geopolitical expert or military strategist, we’re going to refrain from commenting on why this war is happening, even though we have our own opinions, as we’re sure you do.  Before continuing, though, we do want to say that our hearts go out to the Ukrainian people.  While this message will focus on the financial and economic consequences of war, nothing compares to the human cost.  We earnestly hope that peace prevails as soon as possible.

Now, let’s do a Q&A about how this conflict will impact investors.  These are some of the most common questions we’ve heard from clients over the past few days.

Q: Why is this conflict impacting the markets? 

A: You’ve undoubtedly noticed in recent weeks how volatile the markets have been.  The ultimate reason, frankly, is quite simple.  War brings disruption.  To production, to trade, to everything.

That’s especially true with this conflict.  When it comes to the global economy, Russia and Ukraine are key players.  For example, both together comprise 29% of the world’s wheat.¹  Ukraine alone is one of the world’s top producers of corn, while Russia is Europe’s largest source of both oil and natural gas.  Both countries also play a major role in producing minerals and metals – think copper, nickel, platinum, etc.

These are not products the world can live without.  From the U.S. to China, from Germany to Ghana, we depend on these products to eat, communicate, get to work, grow crops, and even stay warm.  If you think of the global economy as a big spider web, touching a strand on one end causes the entire web to vibrate – sometimes violently.

Now, there are steps both Europe and the United States can take to mitigate these issues.  (More on that in a moment.)  But given that we are still recovering from supply disruptions caused by the pandemic, war is the last thing the world needs right now.

Another reason this conflict is impacting the markets is because of the shock it will have on the global financial system – in the form of economic sanctions the West has started levying on Russia.

Q: What are the U.S. and European Union doing about this?

A: Before we get into what the U.S. is doing, let’s quickly cover what the U.S. is not. 

This is not a war between the United States and Russia.  Currently, there are no plans to send U.S. troops into Ukraine.²  While American forces have reinforced several nearby countries like Poland and Romania, these are fellow NATO members.  Ukraine is not a member of NATO, which means NATO is not bound by the terms of its alliance to defend it from invasion.  Instead, the U.S. will support Ukraine by providing supplies, intelligence, and logistical assistance.

Because Russia’s actions are both a violation of international law and its own pledge to respect Ukraine’s borders³, the U.S. and many other western countries have announced a number of economic sanctions.⁴  Some of these sanctions include:

• Asset freezes and travel bans on dozens of influential Russian politicians and business leaders.
• Restricting Russia’s access to the European Union’s financial markets.
• Halting approval of the undersea Nord Stream 2 pipeline, which was set to deliver natural gas to Germany and be a major source of new business for Russia.
• Barring select Russian banks from raising money in the west or trading new debt in U.S. or European markets.

According to President Biden, these sanctions are just the first wave, with more soon to come.

Now, there’s no question that sanctions will have a major impact on Russia’s economy.  When Russia forcibly annexed Crimea in 2014, the U.S. also imposed sanctions on Russia that many experts believe have stalled Russia’s economic growth dramatically.  (Since 2014, Russia’s economy has grown by an average of 0.3% per year, compared to the global average of 2.3%.⁵)  These new sanctions are likely to be even greater, with an even greater effect.

But sanctions take time, and alone won’t stop Russian forces from penetrating Ukraine.  They can also be a double-edged sword.

Since World War II, Europe has become more economically intertwined to prevent another devastating conflict.  (This idea was the impetus behind the European Union.)  Since the end of the Cold War, Europe has also worked to make Russia a more integral economic partner.  The idea was that the more East and West relied on each other for trade, the less likely war would ever break out.

While this experiment has largely been successful, there’s a downside.  Trade in times of peace brings mutual gain – but nixing trade brings mutual pain.  Sanctions will undoubtedly punish Russian banks and companies that depend on foreign business.  But it can also hurt U.S. and European firms that rely on business with Russia.  This is another reason the war is roiling the stock market.

Q: Okay, so let’s focus on what’s happening here at home.  How long will market volatility last because of this? 

Obviously, that’s impossible to say.  Furthermore, trying to guess – and then making decisions based on a guess – is one of the worst things we as investors can do.  So, we’re not going to do it!

That said, there are some interesting things to note here.  First is that, historically, geopolitical crises often have a surprisingly short-lived effect on the markets.  For example, take the Cuban Missile Crisis.  The world has never been closer to nuclear war than during those nerve-wracking thirteen days in 1962, yet during that time, the Dow only fell 1.2%.  By the end of the year, the Dow was up 10%.⁶

Remember when Iraq invaded Kuwait back in 1990?  The Dow declined more than 18% in the immediate aftermath – only to recover completely a few months later, and indeed climb 38% over the next two years.⁷  Eleven years later, after the September 11 attacks, the Dow fell over 14%, but returned to normal a few months later. ⁷   More recently, look at Brexit.  When the UK voted to leave the European Union, it took most analysts by surprise, and many predicted it would lead to a major drop in the markets.  At first, it did.  The vote took place on a Thursday.  The next day, the Dow fell over 600 points, and then another 250 points the Monday after.⁸  But less than a month later, the Dow climbed to a new record high.

As you can see, while geopolitical events often seem scary to investors, their impact on the markets isn’t necessarily huge.  That’s because many things impact the markets.  Even something as big as war is only one ingredient in the dish.

On the other hand, financial experts like to say that “Past performance is no guarantee of future results.”  So, just because history has leaned one way doesn’t mean it can’t shift course in the future. This current crisis could have a sustained impact on the markets for all the reasons we’ve discussed.  There’s no way to know – meaning we need to be mentally and emotionally prepared for both possibilities. Our team is well prepared.

Another thing we need to prepare for is the possibility of higher prices here at home.

Q: So, how will this war affect our own economy? 

There’s no point beating around the bush: Consumer prices are already sky-high and are now likely to rise even higher.

Due to the pandemic, inflation has risen at a historic rate.  New sanctions and supply-chain issues will only compound the problem.  For that reason, it’s very possible we’ll see a jump in prices for the following goods and commodities:

• Gasoline. While oil prices and the price we pay at the pump aren’t the same, they are linked. On February 24 alone, oil prices rose above $100 per barrel.9
• Natural gas. As of this writing, prices are up 29% in Europe; we could see a similar rise.10
• Travel costs. Pricier oil means pricier jet fuel, which means higher airfares for travelers.
• Food. As we’ve already covered, Russia and Ukraine are hugely important to the world’s supply of wheat, corn, and other staples.
• Electronics. From your car to your cell phone, we rely on minerals and metals for our technology to function. Due to the pandemic, there was already a shortage of these supplies.

The U.S. can release oil reserves to combat rising fuel prices, and Europe can turn to other places for natural gas and wheat. (Including the United States.) But while these measures can help, they’ll take time – and can only blunt a rise in consumer prices, not stop it entirely.

Interest rates may also be affected. Most experts expected the Federal Reserve would soon announce significant rate hikes to combat inflation. In light of the invasion, interest rates will probably still go up, but might be less than previously thought. That’s good news for the stock market, at least in the short term, but it won’t help slow inflation as much.

Whew! We just threw a lot of information at you, didn’t we?  Well, take a breath, grab a sip of water, get up and stretch your legs – and then let’s cover the fifth and final question.

Q: Given everything that’s going on, what should we be doing about it? 

Prior to today, the idea of one European country invading another seemed almost unthinkable.  It was something for the history books, not the front page.  But that’s the world we woke up to today.  A different world than the one we went to sleep to yesterday.

But here’s the thing to remember.  The world is always changing – and we’ve always done a great job of adapting!

Massive change often triggers massive uncertainty.  Massive uncertainty often triggers massive overreaction.  That’s why so many investors tend to lose money during times of volatility, because they make long-term decisions based on short-term emotions under a fog of uncertainty.  By acting without overreacting, you are literally doing the single best thing you can to stay on track to your financial goals.

The situation in Ukraine will likely change every day, hour, and even minute.  Headlines you read in the morning might be obsolete by afternoon.  That’s why it makes no sense when investors panic, sell, or “cash out” just because of uncertainty.  By the time they do, the situation they’re reacting to may have already passed!  So, my advice, «Salutation»?  Over the coming weeks, let’s keep doing what we always do.  Let’s keep our heads and hold to our long-term strategy.  After all, we already know that it works!

We hope you found this message to be informative.  Of course, please let us know if you have any questions or concerns about your portfolio.  Our team is here for you.  We’ll keep monitoring the situation, and if anything changes, we’ll let you know immediately.

Sincerely yours,

Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

Sources

¹ “How a Russian invasion of Ukraine could hit supply chains,” CNBC, February 23, 2022.  https://www.cnbc.com/2022/02/23/impact-of-russia-ukraine-on-supply-chains-food-metals-commodities.html

² “Here’s what Biden has said about sending US troops to Ukraine,” CNN, February 24, 2022.  https://www.cnn.com/2022/02/24/politics/us-troops-ukraine-russia-nato/index.html

³ “Letter from the Permanent Representatives of the Russian Federation…to the United Nations,” General Assembly Security Council, December 19, 1994.  http://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/s_1994_1399.pdf

⁴ “U.S. imposes sanctions on Russian banks, sovereign debt and elites after Ukraine invasion,” Politico, February 22, 2024.  https://www.politico.com/news/2022/02/22/u-s-sanctions-russia-ukraine-invasion-00010733

⁵ “The impact of Western sanctions on Russia,” The Atlantic Council, May 3, 2021.  https://www.atlanticcouncil.org/in-depth-research-reports/report/the-impact-of-western-sanctions-on-russia/

⁶ “How markets reacted to geopolitical crises,” The Economic Times, April 13, 2017.  http://economictimes.indiatimes.com/markets/stocks/news/how-markets-reacted-to-geopolitical-crises/articleshow/58158842.cms

⁷ “Stock Market History: More Ups Than Downs,” Forbes, September 27, 2017.  https://www.forbes.com/sites/johndobosz/2017/09/20/stock-market-history-more-ups-than-downs/?sh=71324c093951

⁸ “Dow plunges over 600 points as U.K. ‘earthquake’ crushes global markets,” CNN Money, June 24, 2016.  http://money.cnn.com/2016/06/23/investing/eu-referendum-markets/index.html?iid=EL

⁹ “Global oil prices soar above $100 and could go much higher,” CNN Business, February 24, 2022.  https://edition.cnn.com/2022/02/23/business/brent-oil-ukraine-russia/index.html

¹⁰ “Russia’s attack on Ukraine means these prices are going even higher,” CNN Business, February 24, 2022.  https://www.cnn.com/2022/02/24/business/inflation-russia-ukraine-explainer/index.html

At Hudock Capital, there is nothing more important to us than YOU.  We are grateful for the opportunity to help you live the life you’ve imagined and we take great pleasure in celebrating your successes.  When our clients succeed, we succeed.

It’s my pleasure today to share with you one of our own team member’s successes.  We just learned that Forbes released its America’s Top Women Wealth Advisors Best-In-State List for 2022 and named Barbara Hudock as one of the top ten Women Wealth Advisors in Pennsylvania!  This is the fourth year that Barbara has been included in this list and it places Barbara among the highest ranked women wealth advisors in the nation.

As we congratulate Barbara on this achievement, all of us at Hudock Capital know that we cannot do what we do without our clients or each other.  In that sense, Barbara shares her recognition with each member of the Hudock Capital family, including you.

Celebrating our collective success with you, we are reminded how fortunate we are.  We are humbled by this recognition; we are grateful for your trust and friendship; and, we appreciate your business.  Thank you for being a part of our family and for making this achievement possible.

Sincerely yours,

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

A Short Guide to Dealing with Market Corrections

If you’ve been paying attention to the news, you know the markets have endured a topsy-turvy month of January. As a result, the S&P 500 and Dow Jones are both on the verge of what analysts call a market correction.¹ (Something the NASDAQ already entered last week.¹)  Should this volatility continue, you’re likely to see that term a lot in the days ahead.

Headlines proclaiming a market correction can often look very scary. That’s a problem because fear is every investor’s worst enemy.  It’s what drives investors to make irrational and shortsighted decisions instead of sticking to their long-term strategy. So, in this letter we’re going to give you a few simple steps for dealing with the market correction that will never go out of date.

Step 1: Know What a Correction Is

Quick refresher in case you’ve forgotten or are unfamiliar with the term: A market correction is defined as a decline of 10% or more from the most recent peak.

It’s important to know this so you understand why corrections are not the end of the world. For example, it’s hypothetically possible for a stock to drop 10% and still be higher than it was a week ago. And while corrections can sometimes worsen into bear markets — defined as a drop of 20% or more — they usually don’t. In fact, on average, corrections last only around three to four months.²

Step 2: Remember That Corrections Are Common

Unlike bear markets, market corrections are also surprisingly common.  Prior to this month, we’ve had ten since the turn of the century alone…of which three turned into bear markets.³ You see, “a drop from a recent peak” doesn’t mean the sky is falling. It simply means that, for whatever reason, investors are feeling pessimistic and have decided it’s time to sell. Invest for long enough and you’ll live through dozens of corrections in your lifetime.  They’re like getting a stomach bug: Unpleasant and unavoidable, but usually short-lived.

Step 3: Understand Why This Correction Is Happening

So why are investors retreating? Well, there are two main drivers of the current correction. The first is an old story, one we’ve been dealing with for over a year now. The second is newer, at least to those of us living on this side of the Atlantic.

We’re referring, of course, to inflation and Ukraine.

Let’s start with inflation. As you know, the ongoing pandemic has wreaked havoc on global supply chains.  This has caused prices to rise on everything from cars to food to toiletries.  At the same time, the economy has expanded, partially due to the Fed keeping interest rates at historic lows. The result? Skyrocketing inflation.

Early in the recovery, the Fed hoped that inflation would be transitory, meaning temporary and short-lived. But inflation has proven stubbornly persistent.  After all, COVID-19 has not gone away, choosing to spit out new variants instead.

For months, investors have been expecting the Fed to raise interest rates to combat inflation. (Higher interest rates slows the economy by encouraging consumers and businesses to save rather than borrow or spend. This, in turn, leads producers to lower prices to attract new business.) Now, in 2022, many analysts anticipate the Fed will raise interest rates several times this year. Although the “growing pains” of removing emergency measures from the economy can create high levels of volatility, the reality of this decision is positive.  It means the Federal Reserve sees enough economic strength that its time to take off the “training wheels.”  Historically, the market anticipation of the change in policy is where most of the volatility lives.  Once the change in policy is official (A.K.A, the Fed pivot), the market is in a better position to adjust to the actual data over anticipation and expectations.  During the January 26^th press conference, the Federal Reserve Chairman Jay Powell confirmed the strength of the economy and inflation pressures will likely lead to interest rate increases for 2022.  “This is going to be a year in which we move steadily away from the very highly accommodative monetary policy that we put in place to deal with the economic effects of the pandemic,” Powell declared. “I would say that the committee is of a mind to raise the federal funds rate at the March meeting, assuming conditions are appropriate for doing so. I don’t think it’s possible to say exactly how this is going to go, and we’re going to need to be, as I’ve mentioned, nimble about this so that we can respond to the full range of plausible outcomes.”

Why do stock investors fear the prospect of higher interest rates?  Well, low interest rates mean that many securities, like bonds, simply don’t provide the same return on investment as they would in a high-interest-rate environment.  That drives more into the stock market to get the returns they need.  Higher interest rates could potentially reverse this trend, leading to money flowing out of the stock market and into other areas.  When that happens, stock prices typically fall before they are in a position to recover.

For these reasons, the interest rate/inflation story is unlikely to go away anytime soon. But now, the markets have a new question mark to deal with: The prospect of Russia invading Ukraine.

Now, this is hardly the place to dive into the long and controversial history of the Russian-Ukrainian relations. So, let’s just cover the basics. In recent weeks, Russia has moved over 100,000 troops near the Ukrainian border.⁴ This has NATO — of which the US is a leading member — understandably concerned. (Remember, Russia forcibly annexed Crimea from Ukraine back in 2014.) All the major nations in the region are currently engaged in diplomatic talks, but the situation is growing so serious that the U.S. has ordered all family members of embassy personnel in Kiev to leave Ukraine.

Compared to inflation, it may be hard to see why this story has any effect on the markets at all. The reason can be boiled down to a single word: uncertainty. Will Russia really invade Ukraine? No one’s certain. What would happen if Russia did?  No one’s certain.  What will the US and other Western countries do about it? No one’s certain. If, theoretically, the US were to levy sanctions against Russia, or prevent Russian banks from doing business with the US financial system, what would that do to global trade? No one’s certain.

The markets hate uncertainty.  When investors encounter it, they tend to draw the curtains, head for the hills, and circle the wagons.  So, when you see a broad selloff after news like this, keep in mind that it’s not because investors know what will happen.  It’s because they don’t.

The good news is that geopolitical events tend to have a very short-lived effect on the markets.  That’s because, as the situation clarifies and uncertainty is replaced by understanding, the markets will settle down and go back to focusing on more domestic concerns.  However, our team will keep a close eye on this.  If the Russia-Ukraine crisis continues to impact the markets over the coming weeks, we will cover the subject in greater depth in a future message.

Step 4: Determine Whether a Correction Is Likely to Affect Any Short-Term Needs

Now that you know what a correction is and why this one is happening, the next step is to determine whether we need to do anything about it. For most long-term investors, the answer is usually no. However, if you have a major life event coming up, or feel you may need access to your money in the coming weeks, it’s possible your answer will be different. Should this be the case, please reach out to us as soon as possible so we can plan accordingly.

If that’s not the case, then proceed to…

Step 5: Keep the Long View

You knew this was coming, didn’t you?  But this fifth and final step always bears repeating, because it’s so important.

Think back on everything we just covered: Corrections are common.  Historically, corrections are short-lived.  Most investors will experience many corrections in their lifetime.  Corrections occur because investors want to sell stocks, often because of fear, not strategy.  Investors do this not because they know what the future holds, but because they don’t.

Put it all together, and it becomes clear: Corrections really aren’t worth overreacting to, are they?

That’s why keeping the long view is so crucial.  Generally speaking, it’s not the markets that determine whether we reach our financial goals or not.  It’s our own decisions.  Which, in some respects, can be a bit of a struggle, because it means we must stay disciplined all the time.  But it’s also an enormous comfort, because it means the power to control our financial future is always in our hands.

So, there you have it!  Your guide to dealing with market corrections.  Simple, right?  Of course, simple doesn’t always mean easy.  So, if you have any questions or concerns that we didn’t address in this message, please feel free to contact us.  We’re always happy to speak with you!

In the meantime, always remember that we are here for you.  From inflation to Ukraine and everything in between, we’ll keep monitoring the situation, so you don’t have to…and inform you immediately if there’s ever anything else you need to know.

Have a great February!

Sincerely,

Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

¹ “Dow, S&P 500 and Nasdaq all in ‘correction’ territory as inflation and geopolitical tensions flare,” CBS News, January 24, 2022.  https://www.cbsnews.com/news/stocks-s-p-500-dow-nasdaq-correction-inflation-russia-ukraine-2022-01-24/

² “Correction,” Investopedia, updated January 24, 2022.  https://www.investopedia.com/terms/c/correction.asp

³ “What is a stock market correction?” The NY Times, January 24, 2022.  https://www.nytimes.com/article/stock-market-correction.html

⁴ “How Russia’s Military is Positioned to Threaten Ukraine,” The NY Times, January 7, 2022.  https://www.nytimes.com/interactive/2022/01/07/world/europe/ukraine-maps.html

“I may walk slowly, but I never walk backwards.” – Abraham Lincoln

Happy New Year!

Every January, our minds drift to Lincoln’s quote above.  That’s because this is the time when people set new goals for their lives.  I’m going to lose weight.  I’m going to quit smoking.  I’m going to learn the piano.  I’m going to retire.  I’m finally going to write that book.  

But we all know that, while goals are easy to set, they aren’t always easy to do.  Life is constantly throwing obstacles in our way.  Distractions and setbacks abound.  Sometimes the road to our goals curves unexpectedly.  Sometimes the climb gets too steep.  Sometimes we get stuck in the mud.

When this inevitably happens to us – or, we should add, when it happens to our clients – we always try to remember Lincoln’s words.  After all, there was a man who knew something about setbacks and obstacles.  When he was 23, he tried his hand at business by opening a general store.  It failed.  Next, he ran his first political campaign for the Illinois General Assembly.  He lost the election.  A decade later, he campaigned for a seat in Congress – but couldn’t even get nominated.  A decade after that, he ran for the Senate for the first time to no success.  Then, in 1858, he ran one of the most famous political campaigns in history – most notable for his seven debates against rival Stephen Douglas – but still lost.

Of course, you know what happened next.

You see, amid all those setbacks, Lincoln also scored numerous victories.  He eventually did get elected to the Illinois Assembly.  He opened a successful law practice.  He served one term in the House of Representatives.  Sometimes, those victories were temporary.  Sometimes, they were less grand than he hoped.  Sometimes, they were mere steppingstones to what he really wanted.

The older we get, the more we realize how similar the road to our goals is to Lincoln’s.  There are wrong turns and false starts.  Dead ends and cul-de-sacs.  Pitfalls and potholes.  Our progress may get interrupted or delayed.

But every time we take that next step –

Every time we measure progress not by time elapsed but by distance run –

We are doing what Lincoln did.  Walking slowly…but never walking backwards.

So, this year, as you pursue new goals and embark on new journeys, we encourage you to remember Lincoln’s words.  Whether your goals be physical or financial, vocational or spiritual, you will achieve them.  All you have to do is take the next step.

That way, when the next twelve months are up and people ask how your year was, you can answer with a single word.

“Lincolnesque.”

From everyone at Hudock Capital Group, we wish you a Happy New Year!  Make it the best it can possibly be!

Sincerely,

Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

P.S.  One more thing.  As you set new goals this year, never forget that our team is a resource that’s always at your disposal.  Whether you need financial advice or just someone to cheer you on from the sidelines, we are here to help.  Nothing gives us more joy than to see you succeed!

Every year, we sit down at our desks to write a few thoughts about Christmas to share with our clients.  We ask ourselves, “What can we say that will spread a little Christmas spirit in some small way?  How can we add a little more peace to the world, a little more hope, a little more goodwill?”

Most years, we think it’s easy for people to feel the Christmas spirit.  But some years, it’s more difficult.  Maybe the year was harder.  Maybe life is a little more uncertain.  Maybe hope has been shut out by hardship, and goodwill replaced with grudges.  Some years, maybe Christmas seems more like a burden than a holiday.  Like an obligation more than an opportunity for joy.

Whenever we feel that way, we take a few minutes to read an excerpt from the first Christmas story Charles Dickens ever wrote.  No, not A Christmas Carol – this story was written almost a decade earlier.

Dickens knew all about hardship.  After his father was sent to debtors’ prison, Dickens was forced to leave school to work in a dank, unsanitary shoe factory infested with vermin.  To earn more money, he pawned his most prized possession – his books.  He was only twelve years old.

Later in life, Dickens’ experiences drove him to push for social reforms.  They also filled him with a lifelong love for the spirit of Christmas.  The spirit of family and love, giving and goodwill.  To him, Christmastime was what the world should be like every day of the year.  It was more than just a day.  It was a feeling that everyone should strive to cultivate in their hearts.

This is what he wrote:

Christmas time! That man must be a misanthrope indeed, in whose breast something like a jovial feeling is not roused – in whose mind some pleasant associations are not awakened – by the recurrence of Christmas. There are people who will tell you that Christmas is not to them what it used to be.  That each succeeding Christmas has found some cherished hope or happy prospect of the year before dimmed or passed away.  That the present only serves to remind them of reduced circumstances and straitened incomes – of the feasts they once bestowed on hollow friends, and of the cold looks that meet them now, in adversity and misfortune.

Never heed such dismal reminisces.

There are few men who have lived long enough in the world who cannot call up such thoughts any day of the year.  Then do not select the merriest of the three hundred and sixty-five for your doleful recollections, but draw your chair nearer the blazing fire – fill the glass and send round the song – and if your room be smaller than it was a dozen years ago, or if your glass be filled with reeking punch instead of sparkling wine, put a good face on the matter, and empty it off-hand, and fill another, and troll off the old ditty you used to sing, and thank God it’s no worse.

Look on the merry faces of your children as they sit round the fire.  Reflect upon your present blessings – of which every man has many – not on your past misfortunes, of which all men have some.  Fill your glass again, with a merry face and contented heart.  Our life on it, but your Christmas shall be merry, and your new year a happy one!

Who can be insensible to the outpourings of good feeling which abound at this season of the year?  There seems a magic in the very name of Christmas.  Petty jealousies and discords are forgotten.  Social feelings are awakened, in bosoms to which they have long been strangers.  Kindly hearts that have yearned towards each other but have been withheld by false notions of pride and self-dignity, are again reunited, and all is kindness and benevolence.

Would that Christmas lasted the whole year (as it ought) and that the prejudices and passions which deform our better nature were never called into action among those to whom they should ever be strangers.¹

To us, this is what Christmas is really all about.  It’s more than a day.  It’s a feeling.  A feeling of giving and gratitude.  A feeling of home, hearth, and hope.  A feeling shared between family and friends.

That feeling is the Christmas spirit.

We want you to know that we feel it, and that it’s in part because of you and our relationship.  We count ourselves blessed to know you, and to work with you.  We hope you feel that spirit this holiday season, too.

So, on behalf of everyone at Hudock Capital Group…

MAY YOUR CHRISTMAS BE MERRY, AND YOUR NEW YEAR A HAPPY ONE!

Sincerely,

Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

¹ Charles Dickens, “A Christmas Dinner,” Bell’s Life in London, 1835.  https://www.charlesdickenspage.com/a-christmas-dinner.html