Letters category: Letters

Happy Presidents’ Day!

Once upon a time, the topic of “who sits in the White House” was not nearly so inflammatory as it is today.  Of course, people have always had different political opinions.  But in recent years, it seems like our differences have become far more of a talking point than the things we have in common.

Whether it’s our political beliefs, our skin colors, our ethnicities, our religions, our respective life experiences, or even which sports teams we root for, the things that make us different too often end up dividing us.  You only have to go online for a few minutes to see how much anger and derision exist in our country today – because we too often focus on our differences instead of what we have in common.

With Presidents’ Day coming up, we decided to take a trip into history to see how past presidents have addressed this.  That’s how we came across a speech by John F. Kennedy in 1963.  In his address, President Kennedy talked about the concept of world peace and what it would take to actually achieve it.  High on the list, he explained, was the idea that we should focus more on what unites us than on what divides us.

Here’s an excerpt of what he said.  To us, it’s one of the most important sentiments any president has ever expressed.

“Let us not be blind to our differences–but let us also direct attention to our common interests and to the means by which those differences can be resolved. And if we cannot end now our differences, at least we can help make the world safe for diversity. For, in the final analysis, our most basic common link is that we all inhabit this small planet. We all breathe the same air. We all cherish our children’s future. And we are all mortal.”¹

We don’t live in the Cold War, as he did, but we do live in an equally uncertain era.  An era in which even minor disputes can feel like unbridgeable divides.  But as President Kennedy went on to say, it’s our responsibility as American citizens to bridge those divides.  To heal those hurts.  To see the good in others and build off that.

“My fellow Americans, let us examine our attitude toward peace and freedom here at home.  The quality and spirit of our own society must justify and support our efforts abroad.  We must show it in the dedication of our own lives.  [For] wherever we are, we must all, in our daily lives, live up to the age-old faith that peace and freedom walk together.  In too many of our cities today, the peace is not secure because the freedom is incomplete.

It is the responsibility of the executive branch at all levels of government – local, State, and National – to provide and protect that freedom for all our citizens by all means within their authority. It is the responsibility of the legislative branch, wherever that authority is not adequate, to make it adequate. And it is the responsibility of all citizens in all sections of this country to respect the rights of all others and to respect the law of the land.” ¹

Kennedy was far from the only president to address this issue, of course.  Over twenty years later, President Ronald Reagan would say this, in a speech given on July 4, 1986:

“All through our history, our Presidents and leaders have spoken of national unity and warned us that the real obstacle to moving forward the boundaries of freedom, the only permanent danger to the hope that is America, comes from within.  It was their last gift to us, this lesson in brotherhood, in tolerance for each other, this insight into America’s strength as a nation.

“My fellow Americans, it falls to us to keep faith with them and all the great Americans of our past. Believe me, if there’s one impression I carry with me after the privilege of holding for five-and-a-half years the office held by Adams and Jefferson and Lincoln, it is this: that the things that unite us — America’s past of which we’re so proud, our hopes and aspirations for the future of the world and this much-loved country — these things far outweigh what little divides us. And so…we reaffirm that Jew and gentile, we are one nation under God; that black and white, we are one nation indivisible; that Republican and Democrat, we are all Americans. …With heart and hand, through whatever trial and travail, we pledge ourselves to each other and to the cause of human freedom, the cause that has given light to this land and hope to the world.”²

What if this Presidents’ Day, we all did our best to see each other the way Kennedy and Reagan urged us to?  To not be blind to our differences, but to put more stock in what we have in common.  To remember that we all must share this planet together.  That we all breathe and dream and love.  That we are all doing the best we can.  That we are all mortal.

What if we did it not just on Presidents’ Day, but every day?  What kind of nation would we live in then?  What kind of nation would we leave to our children?  It would be a better one, we suspect, than the one we live in now.  So, this Presidents’ Day, that’s just what we intend to do.  To remember the words of our former presidents…as well as the words from another famous speech:

“And so, my fellow Americans: ask not what your country can do for you.  Ask what you can do for your country.”

This is something we can do.

We wish you a happy Presidents’ Day!

Sincerely,

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

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

¹“Commencement Address at American University, Washington, D.C., June 10, 1963.  John F. Kennedy Presidential Library and Museum.  https://www.jfklibrary.org/archives/other-resources/john-f-kennedy-speeches/american-university-19630610

² “Address to the Nation on Independence Day,” July 4, 1986.  Ronald Reagan Presidential Library and Museum.  https://www.reaganlibrary.gov/archives/speech/address-nation-independence-day

2020: The Year in Review

Every January, it’s customary to look back at the year that was. What were the highlights? What were the lowlights? What events will we always remember? Most importantly, what did we learn?

Here’s the problem, though: How in the world do you recap a year like 2020? You could write a book about March alone. So, we thought for a long while about everything that happened last year and decided to focus on three important lessons that we as investors can learn from 2020.

The first lesson has to do with…

The Markets. When word began leaking out about a new viral epidemic in China, the markets didn’t really know how to react. Would this go away in a few weeks and be nothing more than a footnote in history? Or would it be like the SARS epidemic of 2002 – terrible, but largely restricted to China? Or would it progress into a full-blown pandemic?

Obviously, we know the answer now. But we didn’t back then.

There’s a well-known saying about collapses and crashes: They happen slowly, then all at once. That’s sort of what the markets experienced in those turbulent few months between January and April. There was some volatility near the end of January, but nothing major. Toward the end of February, as the virus began affecting global supply chains, the volatility got worse. But for all the bad days in the markets, there were plenty of good days, too.

Then came March.

As the virus spread to our shores, as the World Health Organization declared a pandemic, as local governments instituted lockdowns and other restrictions, investors realized several things:
• Lots of people were going to get sick, or even die.
• Many more would lose their jobs.
• The economy was going to fall into a recession.

With startling speed, what had been happening slowly suddenly seemed to happen all at once: The markets crashed. From February 19 to March 23, the S&P 500 fell almost 35%.¹ On more than one occasion, trading at the New York Stock Exchange was automatically halted because prices were plummeting so fast. For most investors, it was like nothing they’d ever experienced before. Understandably, fear was rampant.

But not, we’re grateful to say, at Hudock Capital Group.

When speaking on the phone with our clients, our team did our best to emphasize a very important point: While COVID-19 was new and scary, what the markets were doing was actually old and familiar. It’s a classic tale: Something unexpected happens, and the markets panic. We saw it in 2008, during the financial crisis. We saw it in 2001, after September 11. We saw it in 2000, after the dot-com bubble burst. The cause is always different, but the effect is always the same.

When 2020 began, no one could have predicted the pandemic, least of all us. But that something, sometime, would bring the markets down – that was inevitable. That’s why we had already factored that inevitability into our strategy and prepared for how to handle it.

Then, too, we knew that historically, epidemics tend to cause sharp downturns followed by equally sharp recoveries.² So, our message to clients was simple: All that market madness didn’t mean we should deviate from our existing strategy. Quite the contrary! It meant we should hew to it more closely than ever.

Well, you remember what happened next: The markets recovered, and quickly. Between March 23 and April 14, the S&P 500 rose 27%.1 Before much longer, the markets had regained almost everything they had lost. And while there were further spasms of volatility later in the year, by the end of 2020, the markets had risen to new highs.

That’s why Lesson #1 is simple:

1. No matter what the markets are doing, nothing should ever make us choose panic over our strategy.

To understand the second lesson, let’s first understand something about…

The Economy. As we moved into the summer, many clients asked me the same question: “The markets are up, but the economy is still very, very down. What gives? Should we get out of the markets again?”

It’s a terrific question. Here was our answer:

The markets and the economy are not the same thing. They’re related, but different — and they don’t always move in concert with each other. The economy moves based on activity, like production, consumption, and trade. The markets, on the other hand, move largely on anticipation. When investors expect something will happen, they make decisions based on that expectation. So, when the markets plummeted in February and March, it was based on the expectation that unemployment would rise, consumer spending would fall, and the economy would contract.

All those things happened. But here’s the thing: once they happened, they were already “priced in” to the markets. So, in April, May, and beyond, the markets were no longer reacting to the idea of a recession. We were already in a recession! Instead, they were reacting to what analysts anticipated would happen in the future: an economic recovery. Specifically, that government stimulus would help, more government stimulus would arrive, and the pandemic would end. Some of those things happened, and some didn’t, but as always, the markets moved ahead of the economy.

All most people saw, though, was a series of unrelentingly negative headlines. That’s why many investors ended up sitting on the sidelines as the markets rebounded. After all, no one buys sunscreen when it’s raining. Sadly, too many investors missed out, just as they often do whenever the news seems bleak. (And of course, the opposite is also true: Too many people rush to invest just because the news is good, even if what they’re buying doesn’t make sense.) The problem was repeated in the fall when too many investors made decisions because of who won the election, or who lost, even as the markets continued to climb.

You can probably guess Lesson #2:

2. The markets and the economy are not the same. That’s one reason we should never make investment decisions based on headlines!

Finally, let’s talk a little bit about the most important thing that happened in 2020. We’re referring, of course, to:

The Coronavirus.

The next few paragraphs are not coming from us, the financial advisor. They’re coming from us, as people.

There’s no getting around it, 2020 was a hard year. Everyone, we think, suffered in some way. Some people suffered because they lost their job, saw their pay reduced, or their hours cut back. Others suffered because they felt isolated, or lonely. And of course, so many people suffered due to the virus itself – either because they caught it, or because someone they loved did.

This pandemic has tried our souls in so many ways. And while we sincerely believe there is a light at the end of the tunnel, this year will come with its own challenges. But there’s a final lesson that
2020 taught us. A lesson that will get us through the months ahead.

3. There is nothing we can’t adapt to. There is nothing we can’t overcome. There is nothing we can’t do.

That’s what 2020 taught us: That we are stronger than we knew. The universe threw a pandemic, a market crash, a recession, and an election at us in 2020, and we got through it. Maybe the year left scars, but it also left us stronger. So whatever 2021 hurls our way, we can take it. Economic uncertainty? Seen it, dealt with it. Market volatility? Been there, done that. We’re not saying it will be easy. But doable? You bet.

As we progress further into the New Year, we hope you will remember these lessons. It may sound corny, but we earnestly hope you keep them in your heart. They will help you weather the trials to come. They will help you work toward your financial goals.

One more thing to remember: Our team will always be there for you. If you have questions, we want to answer them. If you have concerns, we want to address them. If you have dreams, we want to help you achieve them. We look forward to serving you this year, and for many years to come.

Happy New Year! Let’s make it a great one!

Sincerely,

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

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

¹ “S&P 500 Historical Prices,” The Wall Street Journal,  https://www.wsj.com/market-data/quotes/index/SPX/historical-prices

² “How the market has performed during past viral outbreaks ,” MarketWatch, https://www.marketwatch.com/story/heres-how-the-stock-market- has-performed-during-past-viral-outbreaks-as-chinas-coronavirus-spreads-2020-01-22

Santa exists.  We can prove it.

We know you probably stopped believing in Santa Claus a long time ago.  So did we.  And not just Santa, but Rudolph, the elves, the workshop, all of it.  We accepted the fact that it was only a story for young children.  In short, we grew up.

But we were wrong.

***

On a winter’s night in 1971, a man named Larry Stewart stopped at a diner in the town of Houston, Mississippi.¹  Out of a job and out of money, he hadn’t eaten in almost two days.  But he went into the diner anyway, ordering a meal before pretending to lose his wallet.

The owner of the diner came over and picked up a $20 bill off the floor.  “Son, you must have dropped this,” he said.  Thinking it was a miracle, Stewart took the money, paid his bill, and left.

Only afterwards did he realize the truth: the owner hadn’t picked up the money from the ground. He’d given it directly to Stewart, in a way that wouldn’t embarrass him.  From then on, Stewart vowed he would help others the way the owner had helped him … if only he got the chance.

Nine years later saw Stewart in the town of Independence, Missouri.  Once again out of a job (a company he’d started had recently gone under), he stopped at a drive-in to get some food.  Seeing that one of the carhops was cold, overworked, and probably underpaid, Stewart gave her a $20 bill.  “Keep the change,” he said.

“You’re kidding,” she replied in disbelief.

“No ma’am, Merry Christmas.”

“Sir,” she said, crying, “you have no idea what this means to me.”

But Stewart did.  He remembered his own gift nearly a decade earlier, and his promise.  He could have stopped there, but “paying it forward” felt so good that he kept doing it.  For over twenty years he gave money to the cold, the hungry, and the needy, especially around Christmas time.  While he didn’t have a beard, reindeer, or a sleigh, he would sometimes dress up in red.  In and around Kansas City he made his rounds, giving $20 here, $100 there, even $1,000 if someone really needed it.  Most of the money was given to people he met on the street, or in bus stations,

or at the Laundromat; anyone who looked in need.  Race made no difference, nor age, nor anything else.  For him, charity is for all who are suffering.

Eventually, word got around.  Santa Claus was in Kansas City.  A Secret Santa, but Santa nonetheless.  No one knew who he was, for he never told anyone his name.

After starting another, more successful business, Stewart began helping people in other places.  He went to New York after 9/11.  New Orleans after Katrina.  Washington, Chicago, California.  Remember, Santa can go everywhere.  Maybe he couldn’t travel the world in a single night … but wherever he was, there was always someone who needed him.

In 1999, Stewart tracked down the owner of the diner.  He gave him $10,000.

In 2006, Stewart finally revealed who he was. ² He passed away a year later, but his legacy continues through the work of other Secret Santas all over the world.³ So that got us thinking: How can we say Santa doesn’t exist?  Why does he only have to be a myth?  Is he not simply someone who gives gifts out of kindness?  Maybe the Santa we believed in as a kid isn’t real, but the truth is much better anyway: there is no one Santa, but a hundred Santas, or a thousand.  The number doesn’t have to end.  Anyone can be Santa.  Every time we help someone in need, we’re Santa.  Every time we make Christmas about giving more than getting, we’re Santa, too.

We think that’s the secret.  Maybe the original Santa, if there ever was one, got old and had to retire.  But his final gift was to ensure that someone, somewhere, would always be there to carry on his name, someone like Larry Stewart.

This Christmas, we hope we can all take a moment to spread joy to someone who really needs it.  Maybe it’s a neighbor, or a co-worker, or just someone we meet on the street.  But whoever it is, remember . . .

Santa exists.  And he could be you.

Sincerely,

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

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

P.S.  From all of us here at Hudock Capital Group, Merry Christmas!

¹ Nancy Hellmich, “Santa shares his secret,” USA Today, December 21, 2006.  http://usatoday30.usatoday.com/news/nation/2006-12-20-santa-secret_x.htm

² Associated Press, “Illness unmasks generous ‘Secret Santa.’” MSNBC, November 15, 2006.  http://www.msnbc.msn.com/id/15751409/

³ “Society of Secret Santas,” Secret Santa World, accessed November 28, 2012, http://secretsantaworld.net/

Every year, we expect certain things to happen around Thanksgiving.  We expect the leaves to change colors.  We expect to decorate our houses with pumpkins and cornucopias.  We expect football on television.  We expect to eat turkey and stuffing, potatoes and gravy.  We expect our family to gather from near and far.

But the coronavirus pandemic – and all of 2020, really – has turned our expectations upside down.  This year, many of us will not be able to see our parents, grandparents, or other relatives. Those who have lost their jobs may not have the means to enjoy the kind of feast we’re accustomed to.

Most of us have never experienced a Thanksgiving like this one before.  That’s because most of us have never experienced a year like this.

And yet, it’s precisely during a time like this that Thanksgiving becomes more important than ever.  Because, it’s when life takes certain things away that we realize what truly matters.  When we learn to live without certain comforts, we learn what we couldn’t live without.  We learn what we really have to be thankful for.

Let us tell you: There are so many things we are thankful for.

First and foremost, we’re thankful for our family.  Not being able to see certain loved ones as often makes us realize how much they mean to us.  This year, we have treasured every email and letter, Zoom® session and phone call, more than ever before.

Second, we’re thankful for the technology that enables us to connect with our families, even when we’re hundreds of miles apart, or simply separated due to social distancing.

Third, we’re thankful for our amazing team.  Their dedication, professionalism, and attitude inspires us every day.  When the markets were crashing, they were on the phones, working hard to reach every client we have.  When the lockdowns started, they worked from home without skipping a beat, working to take care of you even while they took care of their own families.  We do what we do because their hard work empowers us to.
Fourth, we’re thankful for life’s daily luxuries that we too often take for granted.  Can you imagine going through this pandemic the way people would have hundreds of years ago?

The pandemic has reminded us just how accustomed we are to always having food, always having water, always having power, always having shelter.  In the 21st century, we have books and games and movies to keep our minds occupied.  We have pets to keep us company.

Let’s face it, this pandemic has even reminded us how much we take toilet paper for granted. Toilet paper!

As difficult as it is to live with COVID-19, the modern world makes it easier than past generations could have imagined.  And we’re grateful for that.

Fifth, we’re thankful for the men and women striving to end this pandemic.  The doctors and nurses on the front lines, caring for the sick.  They are literally putting their lives on the line, working from sunup till sundown.  All to save lives and to reunite families.  And let’s not forget the scientists and researchers, racing against the clock to deliver the world a vaccine in record time.  We could never do what they do.  We’re so thankful they’re doing it.

Sixth, we’re thankful for the members of our community who keep our community functioning.  From teachers to police officers.  From grocery store baggers to truckers.  From utility technicians to sanitation workers.  Many are working double shifts.  Others have converted their offices into makeshift bedrooms.  Too often, their work goes unnoticed and unsung.  But they are considered essential workers for a reason – because none of us could live without them.

Finally, we’re thankful for you.  When the pandemic began, our team tried to reach as many clients as possible.  Not just to talk about your investments, but to talk about you. To see how you and your family were doing.  But very soon, we realized we didn’t have to call each of our clients.  That’s because most of our clients were calling us!  Not to ask about the markets.  Not to ask about their money.  But to ask about us.  To check in on us.  To express their appreciation for us.

There is never a day that goes by where we are not thankful for what we do – because of who we do it for.

This pandemic has changed so much.  How we live, how we celebrate.  But there are some things it hasn’t changed.  It hasn’t changed what we care about.  It hasn’t changed who we love.

It hasn’t changed how much we have to be thankful for.

On behalf of our entire team, we wish you and your family a safe and joyful holiday season.  Happy Thanksgiving!

Sincerely,

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

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

The Highest Honor

On Veteran’s Day we pay tribute to the men and women who have worn the uniform of the United States Armed Forces. We pay tribute to all levels of sacrifice—from the cook, to the soldier who gave up his/her life in defense of our freedoms. All are important to us.

As we think about the sacrifices of our armed forces we recollect the importance of the Medal of Honor and the symbolic tribute paid by the Tomb guards at the Tomb of the Unknown Soldier.

The highest military decoration awarded by the U.S. government is the Medal of Honor. It is awarded to members of the armed forces who illustrate, “conspicuous gallantry and intrepidity at the risk of his or her life above and beyond the call of duty while engaged in an action against an enemy of the United States.” ⁽¹⁾

One soldier who exhibited such courage was Audie Murphy who at the age of 17 enlisted in the United States Army because he wanted to make something of himself. On January 26th, 1945 the company Audie commanded came under attack by six tanks and various waves of infantry. 2nd Lt. Murphy ordered his men to withdraw to the woods, while he remained in a forward position to give fire directions to the artillery by phone.

After the enemy realized his position he climbed into a burning tank, at great peril to himself. He was exposed to gunfire from 3 sides, was alone, and in a burning tank that could blow up at any moment. He employed the .50 caliber machine gun causing the attack to waiver, and in turn pushed the enemy tanks back. The Germans continued to try for an hour to kill Audie.

During the fire fight, he received a leg wound and continued to fight until ammunition was exhausted. He then made his way back to his company, refused medical attention, and organized his company to counterattack the Germans who withdrew their forces.

His single act of courage saved his company from possible encirclement or destruction, and allowed the company to hold the woods, which was the German’s objective. ⁽²⁾

By the end of World War II, he was the most decorated U.S. soldier, having earned every medal his country could give, including the Medal of Honor. If the name Audie Murphy sounds familiar, it’s because after the war he also became a famous movie actor, author, and has his name on the Hollywood Walk of Fame.

Audie’s show of gallantry was not an isolated event. The U.S. has given over 3,460 Medal of Honor awards with 19 men receiving the award twice. Fourteen of these men received two separate medals for two separate actions; five received both the Navy and the Army Medals of Honor for the same action. Over 600 received the award posthumously. The most medals earned in a single war was during the Civil War with 1,522 awarded. ⁽³⁾ The Medal of Honor is properly described as having been “awarded”, “earned”, or “received”, not “given” or “won.” ⁽⁴⁾

Tomb of the Unknown Soldier

As a country, we go to great lengths to make sure that those who lived and served, and those who died while serving are remembered and honored. At the Tomb of the Unknown Soldier the Tomb Guard symbolically gives another one of the highest military honors, but to the “Unknown Soldiers.” During a Tomb Guard’s watch, the soldier marches 21 steps down the black mat, turns, faces east for 21 seconds, and turns, faces north for 21 seconds, then takes 21 steps down the mat and repeats the process. Twenty-one was chosen because it symbolizes the 21-gun salute. ⁽⁵⁾

During Hurricane Isabel in 2003, with winds that turned over vehicles, downed trees, and turned debris into projectiles the Regimental Commander of the U.S. infantry sent word to the nighttime Tomb Guards to secure post and seek shelter. They disobeyed the order. Their important watch continued as normal. Soaked to the skin, marching in the pelting rain, they said that guarding the Tomb was not just an assignment; it was the highest honor that can be afforded to a service person. The tomb has been patrolled continuously, 24/7, since 1930. ⁽⁶⁾

The Medal of Honor award winners, and the Tomb of the Unknown Soldier represent the deep gratitude our country feels about our military service members willing to give his/her life. But, even these significant acts of gallantry don’t dampen the gratitude we have for all our military personnel willing to serve their country. Happy Veteran’s Day!

Sincerely,

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

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

(1) http://en.wikipedia.org/wiki/Congressional_Medal_of_Honor

(2) http://www.cmohs.org/recipient-detail/2907/murphy-audie-l.php

(3) http://www.history.army.mil/html/moh/mohstats.html

(4) http://www.segtours.com/blog/archives/347

(5) http://www.arlingtoncemetery.mil/ceremonies/sentinelsotu.html

(6) http://www.freerepublic.com/focus/f-vetscor/1126293/posts

ELECTIONS & THE MARKETS

It’s that time again!  Every four years, Americans participate in an election to choose the next President of the United States.  Under normal circumstances, voting is a simple, uncomplicated act—but the months preceding it are anything but—and this year is no exception.  After all, before we vote, we first have to endure the dreaded “campaign season.”  From endless television commercials to the plethora of yard signs, “politics” seems to become the order of the day.

If you’re like us, you probably don’t enjoy all the campaigning.  But you also know how important the political process is.  Being an informed, engaged citizen is crucial to maintaining the stability of our Republic.  That means asking some pretty tough questions.  And, getting the answers can be both frustrating and time-consuming.

Fortunately, there’s one question you don’t have to ask.

“How will the election affect the markets?”

This is a question we get every four years.  And the answer is always the same:

Not much.

Since 1957, the S&P 500 has gained an average of roughly 9.8% every presidential election year.¹  Of course, there can be some massive exceptions.  For example, in 1928, the S&P rose over 37%.  In 2008, it fell over 38%.²

There is a danger, however, in using averages to try to predict what will happen.  Take the “Presidential Election Cycle Theory” for instance.  Once upon a time, many people believed that U.S. stock markets are always the weakest in the year following a presidential election.  This was the case for Franklin Roosevelt.  It also held true for Truman and Eisenhower.

But in George H.W. Bush’s first year, the S&P 500 rose 27%.  In Bill Clinton’s first year, it rose 7%.  Barack Obama’s first year saw a 23% rise.  Donald Trump’s first year was 19%.

It’s clear that the “Presidential Election Cycle Theory” just doesn’t hold water.  And that’s true for actual election years as well.  An average merely shows you what has happened, not what’s going to happen.  (Side note: this is why you often see the financial industry emphasize that “Past performance does not guarantee future results.”  Because it’s true.)

“But what if the Democrats/Republicans win?  Won’t that have an effect?”

That’s the next question we get every four years.  Our answer:

Not really.

Don’t believe us?  Let’s see what markets have done over the past 50 years.  Below are the last eight presidents of the United States, with their political party next to their name.  (We’re skipping Ford as he took office in the middle of Nixon’s second term.)  The third column shows how the S&P 500 performed.²  (You might want to cover the third column and try to guess the result—you may be surprised).

If a hypothetical investor had followed the “Presidential Election Cycle Theory”, he or she would have missed out on some of the biggest gains in market history.  The same is true if that hypothetical investor had made decisions based on politics.  For example, an investor that didn’t want to invest during a Democrat administration would have missed out on the market performance of Clinton’s second term.  Just as an investor that didn’t want to invest during a Republican administration would have missed out on the market performance during Reagan’s second term and the first Bush term.

As worked up as we often get about our political beliefs, neither party tends to have that much impact on the markets compared to the other.  Historically, the S&P 500 has gone up 10.8% under Democratic presidents, and 5.6% under Republican presidents.³  Either way, the markets go up over time.  That’s because the markets are driven by far more than just one person or event.

Obviously, it matters a great deal who our president is … but not when it comes to the markets.  And that’s a good thing!  Here’s why:

1.  The Founding Fathers created a system of government where no branch (executive, legislative, or judicial) was supposed to dominate the other. The fact that neither political party, nor election years in general, have that much influence on the markets shows that our system of checks and balances extends to investing, too.
2.  Again, the markets are driven by far more than just one person or event. They’re controlled by the ebb and tide of trade, by the law of supply and demand, by innovation and invention, by international conflict and consumer confidence. The markets are like life. The course our lives take isn’t determined by one gigantic decision, but by the millions of small decisions we make every day.

We don’t know about you, but we find that comforting.

So, what’s the takeaway from all this?  The takeaway is that when it comes to investing, we control our own destinies, not politicians.  The way to reaching your financial goals is by having a sound investment strategy, making informed decisions, and taking emotion out of it.  Not by worrying about the election.

Sure, campaign seasons can cause short-term market volatility and any pre- or post-election uncertainty can too.  Yet we know that making emotional decisions during periods of volatility can lead to bad results and that the best decision is often not to act in the face of market volatility.  Why? Because it is so unlikely that we can perfectly time the market.

We also know that campaign seasons involve a barrage of information with often conflicting or negative news stories.  When these stories are repeated over and over, they sometimes affect our ability to think independently, and may cause us to lose our focus on the long term.  As we stay informed, we should try to avoid overexposure to the media, particularly when a news cycle repeatedly focuses on the same negative events.  Everything in moderation, including the news.

So, yes watch the debates, chat amongst your friends, and decide who you want the next president to be.  Do so with the knowledge that whatever happens, the markets will go their own way … and so will you.  Regardless of the direction that you or this election takes, rest assured that your financial plan anticipates periods of volatility, that the disciplined investment strategies we have implemented together aim to achieve positive performance over time, and that history is on our side.

As your Wealth Partners with Purpose, we are always here for you.  Please contact us with your questions or concerns anytime.

On behalf of everyone here at Hudock Capital, we wish you a happy (and headache free) election!

Sincerely,

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

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

¹ “What could the S&P 500 tell us about Trump’s reelection?” Forbes, October 21, 2020.  https://www.forbes.com/sites/greatspeculations/2019/10/21/what-could-the-sp-500-tell-us-about-trumps-re-election/#3b5151ef4664

² “S&P 500 Historical Annual Returns,” Macrotrends, https://www.macrotrends.net/2526/sp-500-historical-annual-returns

³ “Democratic presidents are better for the stock market and economy than Republicans, one study shows,” Business Insider, August 24, 2020.  https://markets.businessinsider.com/news/stocks/stock-market-election-democratic-republican-presidents-better-performance-economy-gdp-2020-8-1029528932#

Labor Day is coming up! Normally, we’re used to celebrating it with parades, barbecues, and sometimes, fireworks. Unfortunately, for this Labor Day, we will have to go without the traditional celebrations. But we think we can speak for everyone when we say we deserve a holiday – even if we can’t observe it in the usual way. So, as we approach Labor Day, let us pause and reflect on the circumstances that make this year’s holiday unique.

As you know, this year has put our workforce to the test – the essential worker and the unemployed alike. Amid the COVID-19 crisis, we are recognizing more and more that labor is what holds our communities together. Billboards recognizing the workers who maintain our essential infrastructure are replacing advertisements. TV spots thanking the doctors, nurses, and other medical professionals working on the frontlines are replacing commercials. Parents taking on the extra labor of homeschooling their children feel more appreciation for teachers and school workers than ever. And many of those lucky enough to stay employed during this time are doing everything they can to help out those who aren’t. This has been a challenging time, but because we are all pulling through it together, we know there are better days ahead.

And we know that it’s our workers who will help us get there.

Of course, when and how we return to a normal, flourishing economy is uncertain. What is certain is that we will. We can be certain because our workforce is nothing if not resilient and eager to move forward.

We believe the pride and determination in our workforce is an inherently American trait. That’s how President Grover Cleveland saw it.  In his presidential nomination acceptance in 1884, he wrote these words:

“A true American sentiment  recognizes the dignity of labor and the fact that honor lies in honest toil.”¹

Ten years later, he made Labor Day a national holiday.

One-hundred and twenty-six years later, we honor laborers past and present. Every day we work to better ourselves, our community, and our nation, is a day to celebrate. That includes yourself, those you depend on, and those who depend on you.

So, even though we can’t celebrate Labor Day in the usual way this year, it’s still a day worth celebrating. Because it’s not just about the end of summer. It’s about ourselves and our community. It’s about recognizing everything we’ve gone through and everything we’ll do. It’s about recognizing that, no matter what happens, we’re in this together.

We think that’s worth celebrating. Don’t you?

So, however you celebrate, we wish you and yours a very happy Labor Day!

Sincerely,

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

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

¹ Grover Cleveland, “The Public Papers of Grover Cleveland: Twenty-second President of the United States”.

Happy Independence Day!  As we prepare to commemorate our beautiful nation, we’re conscious of the fact that this year’s holiday will probably be somewhat different than what we’re used to.  Fireworks and barbecues will be balanced with the need to “flatten the curve.”  Songs and celebrations will have to take place amid social distancing.  Indeed, our country is faced with challenges most of us have never experienced before.

But recently, we came across a quote that reminded us of something important: No matter how different this Independence Day may feel, the most important thing about our nation is still the same:

“I am an American, free born and free bred, where no one is my superior, except for their own worth, or my inferior, except for their own demerit.” – Theodore Roosevelt

Many things have changed since then, but his words still apply.  For that reason, there is nothing – not even a pandemic – that can dampen our love for our country.  And nothing can stop us from having a wonderful Independence Day.  A day spent giving thanks for this land we live in.  The home of the free and the brave.

From all of us at Hudock Capital Group, we wish you have a safe and wonderful Independence Day, too.

Sincerely,

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

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

Happy Father’s Day!

As you know, this special day isn’t just a chance to buy Dad some new cologne or a power drill.  It’s an opportunity to reflect on what fathers mean to us.  The things they’ve taught, the values they’ve instilled, the examples they’ve set.

It’s a chance to look in the mirror and ask ourselves just how we’re measuring up.

One of the greatest and most moving tributes we’ve ever read about fathers comes from none other than Teddy Roosevelt, Jr., the 26^th president of the United States.   Even today, the popular image of Roosevelt is that of a rough-riding boxer, a Bull Moose.  He was a man who, after being shot in the chest at a rally, decided to finish his speech anyway.

But as a boy, Roosevelt was “sickly and timid,” prone to asthma and bullying.

As Roosevelt would later describe it, the main reason for his transformation was his father, Theodore Sr.

My father, Theodore Roosevelt, was the best man I ever knew.  He combined strength and courage with gentleness, tenderness, and great unselfishness.  He would not tolerate in us children selfishness or cruelty, idleness, cowardice, or untruthfullness.  As we grew older, he made us understand that the same standard of clean living was demanded of the boys as well as the girls; that what was wrong in a woman could not be right in a man.  With great love and patience, and the most generous sympathy and consideration, he combined insistence on discipline.  I never knew anyone who got greater joy out of living than did my father, or anyone who more whole-heartedly performed every duty.¹ 

I was fortunate in having a father whom I have always been able to regard as the ideal man.  It sounds a little like can’t to say what I am going to say, but he did combine the strength and courage and will and energy of the strongest man with tenderness, cleanness, and purity.  I was a sickly and timid boy.  He not only took great and untiring care of me – some of my earliest remembrances are of nights when he would walk up and down with me for an hour at a time in his arms when I was a wretched mite suffering acutely with asthma – but he also most wisely refused to coddle me, and made me feel that I must force myself to hold my own with other boys and prepare to do the rough work of the world.  I would have hated and dreaded beyond measure to have him know that I had been guilty of a lie, or of cruelty, or of bullying, or of uncleanness or cowardice. 

Gradually, I grew up to have these feelings on my own account, not merely his.²

In some ways, we think that last line was the most profound of all.  You see, most children lucky enough to have a good father grow up idolizing their dad.  He’s a pillar of strength, a font of wisdom.  He’s a hero and a wizard, a teacher and a coach.  As we grow up, though, we start to see that nobody’s perfect, not even Dad – and it’s easy to focus more on avoiding his mistakes or perfecting his shortcomings than following his example.

But then, as we grow older still, we learn we’re not perfect, either.  We realize the only reason we avoided Dad’s mistakes was because he taught us how.  We realize that most of what we take pride in, most of what we value – it came from him.

That, to us, is what Father’s Day is all about.  It’s about more than gifts and cards.  It’s about more than simply saying “Thank you.”

It’s about saying, “I wouldn’t be who I am today without you.”

Whether out loud at a family gathering, or in the quiet of our own hearts, we hope all of us take the time to pay tribute to our dads this upcoming Father’s Day.  And from all of us here at Hudock Capital Group, we wish to say, “Thank you” to all fathers reading this.

We wouldn’t be who we are without you.

Sincerely,

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

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

¹ Theodore Roosevelt, Jr., “Theodore Roosevelt: An Autobiography,” 1913.  http://www.bartleby.com/55/1.html

² Joseph Bucklin Bishop, “Theodore Roosevelt and His Time Shown in His Own Letters – Book I,” http://bit.ly/2JgnSec

In honor of Memorial Day, we’d like to tell you a story about a man named Ben Salomon.

Ben Salomon was a dentist.  He went to school, got his degree, and started his own dental practice at the tender age of 23.  The most trying ordeal he was ever supposed to encounter was a mouth full of cavities or a particularly tricky root canal.  But when his country called, he answered – serving as the dental officer for the 105^th Infantry Regiment of the U.S. Army.

The year was 1942.

Ben Salomon was a dentist, but he still had to train like a regular infantryman.  He qualified as an expert with both rifle and pistol and was even declared the unit’s “best all-around soldier” by his commanding officer.  Soon, he was promoted to the rank of captain.  Two years later, he went into combat – specifically, to an island in the Pacific called Saipan.

Ben Salomon was a dentist.  But during combat, a toothache was the furthest thing from most men’s minds.  The Battle of Saipan was fierce, with the U.S. suffering over 13,000 casualties.  So, with little dental work to do, Salomon volunteered to go to the front lines, to replace one of the surgeons who had been wounded.

It was July 7, two days before the battle would end.  As the U.S. advanced across the island, the wounded began to pile up, and it wasn’t always possible to transport them back to the regiment’s main base.  So, Salomon set up a tent barely fifty yards from the frontlines to serve as an immediate aid station.  Just after dawn, approximately 4,000 Japanese soldiers launched one of the largest counterattacks of World War II.  Within minutes, Salomon’s tent filled up with wounded soldiers, many of whom had to be physically carried in.  Undaunted, Salomon got to work, trusting the line would hold and the enemy be repelled.

That was when he saw his first Japanese soldier.

Ben Salomon was a dentist.  But when he saw the foe attacking the wounded men lying outside his tent, he remembered his training.  He grabbed a gun, fired, and returned to his work.  But then, two more enemy soldiers entered the tent.  Salomon dealt with these, too – only for another four to emerge from beneath the tent walls.  Shouting for help, Salomon rushed them head on.  He defeated three on his own; one of his wounded comrades stopped the fourth.

But the front lines were punctured, and the bleeding couldn’t be stopped.  The enemy was overrunning the foxholes, and the aid station was doomed.  Realizing what was about to happen, Salomon ordered the wounded men to retreat, supporting and carrying each other as necessary.  In the meantime, Salomon said, he would hold the enemy off.

The wounded soldiers staggered out the rear of the tent.  Ben Salomon left by the front.

When they found his body two days later, Salomon was alone, clutching a machine gun.  The bodies of ninety-eight enemy soldiers were in front of him.  He had seventy-six bullet wounds and dozens of bayonet wounds, many of them suffered while he was still alive.  While he was still fighting.

Ben Salomon was a dentist.  He was also a warrior, a patriot, and a hero.

***

Fifty-nine years later, Ben Salomon was posthumously awarded the Medal of Honor.  This often happens with those who have died in battle.  Their names are preserved in records, but entire generations can pass before history gives them their due.

Despite receiving the Medal of Honor, and despite the incredible heroism he displayed, few people have heard of Ben Salomon before.  That’s not a surprise.  After all, over one million men and women have died serving our country.  They were all heroes, yet most can’t be found in history books, documentaries, or even Wikipedia articles.  In a sense, Ben Salomon is fortunate.  The Medal of Honor is given to those who have “distinguished themselves by acts of valor.”  But surely there are tens of thousands of people who never received such a medal even after their death – because their own acts of valor are lost to time.

We think this is one of the reasons we observe Memorial Day every year.  Whenever we visit a cemetery, whenever we flip through a photo album or scrap book, whenever we comb through the stories of our friends, family members, and ancestors who made the ultimate sacrifice, we commemorate the Ben Salomons of the world.  They weren’t superheroes like you see in movies, with magical powers or unworldly strength.  They were teachers and taxi drivers, farmers and factory workers, students and scientists.  They were dentists.  Every Memorial Day, we ensure their memories, their deeds, and their sacrifices are never forgotten, and thus never in vain.  We award them our own personal medals of honor – for deeds that mean so much to the world, and everything to us.

That’s why we observe Memorial Day.  To ensure that, while people die, valor lives on forever.

On behalf of everyone at Hudock Capital Group, we wish you a safe and peaceful Memorial Day.

Sincerely,

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

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

Sources

“In Recognition: Posthumous Medal of Honor Recipients,” Military.com, https://www.military.com/memorial-day/in-recognition-posthumous-medal-of-honor-recipients.html

“Salomon, Ben L.,” Congressional Medal of Honor Society, http://www.cmohs.org/recipient-detail/2981/salomon-ben-l.php

“Medal of Honor,” Wikipedia, https://en.wikipedia.org/wiki/Medal_of_Honor

“Ben L. Salomon,” Wikipedia, https://en.wikipedia.org/wiki/Ben_L._Salomon