Letters category: Letters

Normandy.  D-Day.  Operation Overlord.  The events of June 6, 1944 are known by many names, and have been commemorated in countless books, dramas, and documentaries.  You’ve seen the pictures of GIs wading through rough, freezing water onto a murderous, mine-strewn beach.  You’ve heard the stories of those who braved smoke and shell to scale the cliffs beyond.  But most of the stories we hear were told by the survivors – the lucky ones who made it to the top and saw France on the other side.

What about the others?

As you know, Memorial Day is just around the corner.  It’s a day for remembering those who didn’t make it.  The ones who gave their lives so that others might live.  And since this Memorial Day coincides with the 75^th anniversary of Normandy, I think it’s an especially good opportunity to remember the men who couldn’t tell their stories afterwards.

Men like the soldiers of Able Company.

The First Wave

Picture it: Roughly two-hundred soldiers packed like sardines in tiny boats that sway with the choppy sea.  This is Company A – “Able Company” – of the 116^th Infantry Regiment.  Most are in their early twenties and barely into manhood, yet men they are.  Long before they land, they are already fighting fear and the worst seasickness any of them has ever known.  If they lift their heads above the sides, they can see the imposing cliffs of Normandy in the distance – and the 200-yard beach they’ll have to cross just to get there.  A beach that offers no shelter or protection.

But when the order comes – “This is it men, you’ve got a one-way ticket and this is the end of the line,” – they shoulder their packs and lift their weapons, ready to do their duty.¹

Until everything starts going wrong.

First, water begins spilling over the sides of the boats, and many are swamped completely.  Those that stay afloat do so only because the men of Able Company use their helmets to bail the water out.  Other boats, hit by German artillery, catch fire and sink.  The noise is deafening.

Then, at 6:36 A.M, the boat ramps are lowered, and it’s time.²

One by one, the men jump into the frigid ocean.  They are not yet on the beach at all, but on a sandbar that stretches up to 100 yards out.  To even get to the beach, they’ll have to wade through water that often comes up to their necks.  Many soldiers, weighed down by heavy jackets, packs, and equipment, start to sink.  Those who can’t shed the weight, drown.  Those who can come up gasping for air – only to be greeted by a hail of bullets.

From the cliffs, German machine guns pepper the ocean, decimating Able Company before they even reach the shore.  But still they advance.  One pair of boots makes it to dry land.  Then a second, and a third.  They are the first wave, and they know what’s expected of them.  What’s required.  Despite fire and water, despite mine and mortar, they are the first liberators to step onto the shore.

The first free men to set foot on the beaches of France.

But in the meantime, they have more work to do.  Medics do what they can for the wounded, pulling anyone who might still be alive from the ocean.  Minutes pass.  No one from Able Company has yet fired a shot, and almost every officer – the men who give commands, who know the plans and have studied the maps – is dead.  The others, leaderless and bloodied, continue anyway.  It’s no glorious charge, but a desperate crawl.   Liberating France inch by inch, foot by foot.

Thirty minutes later, over half the Company is dead.  Most of the survivors are wounded and exhausted.  But still they continue.  Those who fall lift their heads to shout encouragement one final time.  For they are the first wave.  This is their job, their mission, their calling.  To pave the way for waves to come.

Finally, after an hour, the survivors make it across the sand to the bottom of the cliff.  A few join a nearby group of Army Rangers and scale to the top.  The others remain behind, holding the beach.  Most will remain forever.

Behind them comes the second wave.

Seventy-Five Years Later

It may seem like Able Company’s sacrifice was futile.  But I don’t think so.  Every yard they gained was a yard the next wave wouldn’t have to.  Every bullet they attracted was a bullet someone else was saved from.  Theirs was the smallest of footholds, yet it was enough – for the next wave, and the one after.  For what they did that morning led to everything that followed.  By the afternoon, the beach was theirs.  By evening, the cliffs were theirs.

And less than one year later, all of Europe was theirs.

History is often written down as the story of great leaders making grand speeches and grander plans.  But in truth, history is made up of moments.  Moments when normal men and women stared fear in the face and acted.  Moments when men and women offered service and sacrifice.  Moments that lasted the length of a heartbeat…and yet still affect our lives to this day.

This Memorial Day, I want to remember those men and women.  I want to remember the beaches of Normandy.  I want to remember the men of Able Company.  I hope you can take a moment to remember them, too.

Sincerely,

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

¹ “The suicide wave,” The Guardian, June 1, 2003.  https://www.theguardian.com/theobserver/2003/jun/01/features.magazine37

² “First Wave at Omaha Beach,” The Atlantic, November 1960.   https://www.theatlantic.com/magazine/archive/1960/11/first-wave-at-omaha-beach/303365/

The Origin of Mother’s Day

Did you know that there are more calls made on Mother’s Day than any other day of the year? It’s   true! Across the US, phone companies deal with the highest volume of calls on Mother’s Day.¹

As far as historians can tell, celebrating motherhood dates back to the Greeks and Romans. It is a tradition that has imbued our culture for millennia. And today the roots of this holiday intertwine with our own history.

The first record of Mother’s Day, as it is celebrated in the United States, dates back to an era just before the Civil War. Ann Reeves Jarvis began organizing Mothers’ Day Work Clubs to help young mothers care for their children. From child-rearing skills to hygiene to medications, these clubs provided all the basic essentials for new moms.

As rumblings of Civil War grew louder, the club’s purpose transitioned from supporting moms to maintaining friendship and unity at any cost. After all, many of the moms had sons on both sides of that war.

That bond saw them through the war. They nursed soldiers on both sides, offering their compassion, and ultimately saving the sons of countless mothers.

When the war finally ended, Ann re-christened the Work Clubs to “Mothers Friendship Day”, a celebration to heal the communities torn apart by this war.

When Ann passed in 1905, it was the second Sunday of May. Over the next several years, Ann’s daughter, Anna, worked to make that day in May one that all children would use to honor their mothers’ sacrifices. And in 1914, President Woodrow Wilson made it so.

Now, over a century later, we have perhaps forgotten the history of this day, but not its spirit.

So, in the spirit of friendship and compassion, I would like to wish you a wonderful Mother’s

Day from everyone here at Hudock Capital Group!

Sincerely,

Barbara B. Hudock, CIMA®, CPM®

Chief Executive Officer

Founding Partner
¹ “Mother’s Day 2019”, History.com, February 5, 2019.   https://www.history.com/topics/holidays/mothers-day

“We are now in a bear market – here’s what that means.”
– CNBC headline on December 24, 2018¹

“The stock market rally to start 2019 is one for the history books.”
– CNBC headline on February 22, 2019²

If you’re like most people, it’s probably not uncommon for you to plan your day or week based on the weather forecast. For example, you might check the forecast, see that it’s supposed to be sunny, and decide to go fishing on Saturday.

But when Saturday rolls around, it starts to rain.

The frustration you’d feel is very similar to how investors and analysts often feel about the markets. The forecast says one thing – and then the opposite happens.

For example, let’s go back to the end of 2018. For months, the markets had been hammered by volatility. The Nasdaq entered bear market territory. Many pundits predicted even more volatility after the new year.

But four months later, the markets are on the verge of record highs.

So, the question is: Why the change in direction? What’s behind this year’s market rally? And most importantly, what can we learn from it?

The volatility that dominated the end of 2018 was largely due to fears of an economic slowdown. The Federal Reserve raised interest rates, which can cool both inflation and economic growth. Trade tensions with China showed no signs of stopping. Corporate earnings slowed down, oil prices had dropped, and several other indicators had many analysts predicting a recession in 2020 or 2021.

Even after the turn of the year, there was some interesting data that, when compared with historical trends, suggested more storms on the horizon. For example, you may have seen the term “inverted yield curve” bandied about in the media for a time. We’re venturing into “financial nerd” territory here, but this is when the yield on short-term Treasury bonds rises higher than the yield on long-term bonds. It doesn’t happen often, and historically, it has sometimes been a sign of an impending recession.

The result of all these signals was a forecast that had many investors reaching for their umbrellas, convinced that gloomy weather was here to stay.

But instead, the markets enjoyed their strongest start to a year since 1998.³

In many ways, this rally has been driven by something very simple: Nothing really got worse. The Federal Reserve has stopped raising interest rates, saying that it won’t raise them again in 2019.⁴ The trade war with China seems to have hit a lull. And now, investors can point to a host of different historical trends that work in their favor. For example, some data suggests that when the stock market rises 13% or more “during the first three months of a calendar year,” it will gain even more before the end of the year.³

So, does that mean the good times are here to stay?

No.

Warren Buffett, the legendary investor, has a saying: “Be fearful when others are greedy and greedy when others are fearful.” While we shouldn’t take that maxim too literally, it does illustrate an important point. Time after time, conditions that cause fear can change in an instant, leaving the fearful behind. On the other hand, conditions that stoke greed can shift before you know it, giving the greedy a nasty shock.

On their website, CNN has something called the Fear & Greed Index.⁵ Using seven different indicators, they can calculate which emotion is driving the markets most at any given time. As of this writing, that emotion is greed. A few months ago, it was fear. As we’ve just seen, the scale can swing from end to another very quickly.

When you look more closely at the data, there are still reasons to think a recession is possible in the next year or two. (A contracting labor market, problems in Europe, stocks being valued too highly, to name just a few.) Other data suggests that the stock market’s current highs are overblown.⁶ But does this mean it’s time to run and hide? Nope! While data is very good at telling us what was and what is, it’s still unreliable at telling us what will be – at least as far as the markets are concerned. In fact, for as much grief as we give meteorologists for getting a forecast wrong, they do a much better job predicting the weather than experts do the markets!

Here’s what we can learn from all this

As your wealth partner, the reason I’m sending you this letter is because there are a few things I think we need to keep in mind as 2019 rolls on.

First, we need to remember to guard against recency bias. Recency bias is when people make the mistake of thinking what happened recently is what happens usually. It’s why investors tend to panic during market volatility or take on unnecessary risk during a market rally.

Second, remember that emotion is a good servant, but a bad master. Emotion helps us interact with other people. It makes experiences more memorable and life more colorful. But it can be come harmful if it drives our decisions. We should always strive to keep our own personal Fear & Greed Index from swinging too sharply one way or the other.

Finally, whether the markets go up, down, or sideways, you’ll probably hear about many different statistics, indicators, and historical trends that predict this, that, or the other thing. When you do, remember that correlation is not causation.

Correlation, as you probably know, is the measurement of how closely related two things are. In finance, we often find that many things tend to change in sync with one another. Asset classes, market sectors, you name it. It’s why we spend so much time looking at things like inverted yield curves – because they are often correlated with the health of the markets or economy.

But just because two things are correlated does not mean that one causes the other. (It’s why an inverted yield curve doesn’t always mean a recession is nigh.) All the indicators and historical trends you hear about in the news are important, and worth studying – but again, they only tell us what was or what is. Not what will be.

So, to sum up:

• -Just as we didn’t give in to fear when the markets were down, so too will we not give in to greed while the markets are up.
• -We will remember that sun today doesn’t protect against rain tomorrow, or vice versa.

Instead, we’ll make decisions as we’ve always done: by keeping your long-term goals foremost in our minds. In other words, we’re not working to help you go fishing just this weekend.

We’re working to help you go fishing any weekend you want. It’s why we work so hard to tailor an investment portfolio and strategy to fit your unique needs. As you know, we start with your life and plan your money around it. With our commitment to what gives you purpose, our focus on long-term results and our strategies to minimize volatility, Hudock Capital Group is here to help you live the life you’ve imagined.

As always, if you have any questions or concerns about the markets, please don’t hesitate to contact me. In the meantime, have a wonderful Spring!

Sincerely,

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

1. 1. “We are now in a bear market – here’s what that means,” CNBC, December 24, 2018. https://www.cnbc.com/2018/12/24/whats-a-bear-market-and-how-long-do-they-usually-last-.html
2. 2. “The stock market rally is one for the history books,” CNBC, February 22, 2019. https://www.cnbc.com/2019/02/22/the-stock-market-rally-to-start-2019-is-one-for-the-history-books.html
3. 3. “The Stock Market is Having Its Strongest Start in 21 Years,” Money, March 20, 2019. http://money.com/money/5639032/stock-market-strong-start/
4. 4. “Fed holds line on rates, says no more hikes ahead this year,” CNBC, March 20, 2019. https://www.cnbc.com/2019/03/20/fed-leaves-rates-unchanged.html
5. 5. “Fear and Greed Index,” CNN Money, accessed April 17, 2019. https://money.cnn.com/data/fear-and-greed/
6. 6. “Dow, S&P 500 and Nasdaq near records but stock-market volumes are the lowest in months,” MarketWatch, April 18, 2019. https://www.marketwatch.com/story/why-stock-market-volumes-are-the-lowest-in-months-as-the-dow-sp-500-and-nasdaq-test-records-2019-04-17

March 12 is “National Girl Scout Day”, recognizing the date on which the Girl Scouts was founded in 1912.  As a girl and young woman, I benefited from the many positive attributes of the Girl Scout program–making friendships, building confidence and learning life skills.

Among the many skills I learned were the beginnings of what would become a strong entrepreneurial spirit as I, like millions of others over the years, sold the iconic Girl Scout cookies.  Learning basic transaction skills, taking responsibility for making my customers happy and applying the proceeds from my efforts toward a good cause are things that have lived with me, forming the basis for a lifelong entrepreneurial drive and informing the business philosophy that I continue to practice today.  Thousands and thousands of girls are selling Girl Scout cookies this year, learning the same lessons I did—the only difference is that the cookies I sold cost only 23 cents per box!

As National Girl Scout Day is celebrated, I thought it would be appropriate to share with you a speech I gave in 2014 at a Gold Award Event.  The Gold Award is the highest award a Girl Scout can achieve.  I was honored to present these remarks at this event and continue to be inspired by the fine young women honored that day.  I hope you enjoy reading them.

Whether you were a Girl Scout or know a Girl Scout, please join me in wishing the Girl Scouts a very happy birthday.  And, if you have a chance, maybe buy a box of cookies or two.

Girl Scouts in the Heart of Pennsylvania

Gold Award Event

June 21, 2014

It is a delight for me to be here with you today. Having been blessed with the experience of being a Girl

Scout, I’m excited and honored to be part of this special Gold Award Event. I had no idea at the time how important the lessons I learned and the experiences I had as a Girl Scout were as a fantastic foundation and fertile ground for my later successes. You may very well have the same experience.

As I was preparing to be with you today, I wanted to say something that would make a difference in your life. I wanted to share ideas with you that you can take with you, that you’ll remember, that will come back to you and that will inspire you to continue to strive for excellence in your life – even when things don’t appear to be going your way.

I think that many of us “adults” and/or “parents” want so much to make it easier for you – but unfortunately, the only way you‐ or I ‐ grow, evolve, develop our own character is by making our own decisions and our own mistakes and that, my friends, is the nature of wisdom. Wisdom comes from learning from the mistakes you make. When I look back on the best lessons of my life, they usually involve situations that, at the time, seemed to be catastrophic challenges. One of the best things about

Girl Scouts is that it puts us in a position of having to make decisions, overcome challenges, experience failure AND success BEFORE going “out into the “real” world.” Knocking on doors, selling cookies and experiencing rejection prepared me well for the world of business.

John Luther Long said “Learn from the mistakes of others. You can never live long enough to make them all yourself.” Perhaps real wisdom is a blend of learning from your own mistakes AND the mistakes of others.

What did I learn from being a Girl Scout? What experiences did I have that formed such a great foundation for successes beyond my wildest dreams? It’s all right there in the Girl Scout Promise and in the Girl Scout Law:

Now, I know that you’ve said this thousands of times… but this time I want you to just listen to the words…

On my honor, I will try: to serve God and my country, to help people at all times, and to live by the Girl

Scout Law.

Which is:

I will do my best to be honest and fair, friendly and helpful, considerate and caring, courageous and strong, and responsible for what I say and do, and to respect myself and others, respect authority, use resources wisely, make the world a better place, and be a sister to every Girl Scout.

I want to share a personal story with you. When I graduated from college, I started as a secretary for

Merrill Lynch. I was shy and intimidated and so afraid that I was going to make a mistake or do something that would cause someone not to like me. I was SO intimidated that I actually dropped out of an assertiveness training class; I couldn’t even PRETEND to say no. After a few years at Merrill Lynch, one day, my manager called me into his office and closed the door. He said, “There’s someone who doesn’t like you.” I was mortified… my worst nightmare had come true. I said, oh my gosh, WHO??? He said, I don’t know, but someone doesn’t and you have to accept that. He said there are people who don’t like peaches even though they’re magnificent peaches. They may be banana lovers… so just be the best peach you can be and make sure you hang around peach lovers!!! That’s one of the most valuable lessons I’ve learned over the years… just be the best you can be at being you. When I started out as a Financial Advisor, it was largely a “man’s world.” There were very few women in the field. There are still very few women at the top of our field and I would encourage you to consider it. The world of financial planning and financial services is actually perfect for women… especially women who are willing to work hard and who want to make a tremendous difference in the lives of the people with whom they work ‐ clients as well as team members. My “secret mission” is that when clients and team members enter our doors, they are magically transported to a world that is kinder and gentler, warmer and friendlier, and where their dreams come true.

Remember that it is in serving others that we create joy and happiness for OURSELVES – and success comes as a byproduct. Focus on serving others and doing the best you can possibly do. You’ll be happier and you’ll be more successful. I want to offer you a challenge. I want you to pay close attention to the interactions you have in your life. When you shop somewhere, or when you go to an office, or call someone on the telephone, pay attention to HOW YOU FEEL when you leave. When you leave them, or hang up the phone, do you feel better? Do you feel worse? How do people feel after interacting with you? My son, and business partner, has a philosophy of life that he doesn’t want to come into contact with anyone that he doesn’t leave better than he found them. Think about that and the impact it has. Most of us, when we interact with someone, we’re thinking about what they can do for us and we’re wondering what they’re thinking of us. If, instead, we turn that around and think about how we can make them feel better and how we can improve their life, WHAT DO YOU THINK THE IMPACT WOULD BE FOR THEM AND FOR YOU? It doesn’t have to be elaborate, it can be a kind word, a smile – it can be a positive thought… just positively focus on the other person. Give Back. Get involved in your community and in your company. Participate. Create synergy and rapport. PAY IT FORWARD!!

And I guarantee you this. If you spend your life helping other people feel good about themselves and helping them get what they want, you’ll go further than you could ever imagine. And you’ll have more real friends than you could ever want. Right back to the Girl Scout law‐”to help people at all times.”

I can tell you that the successes I’ve had in my life have come directly from the same concepts that I’ve talked about and that are the core of the Girl Scout Promise and the Girl Scout Law.

Thank you very much. Congratulations on being awesome! I wish for each of you fabulous and infinite Success, Happiness, and Fulfillment.

Sincerely,

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

Three Named to Council of Trustees

There has been a lot of market volatility in recent months.

Precautions are useless after a crisis!

You’re probably wondering what we mean. It’s simple. When’s the worst time to buy a home-security system? After a break-in. When’s the worst time to check your tire pressure? After you’ve already had a blowout. When’s the worst time to put your seatbelt on?

You get the idea.

It’s a fundamental fact of life, and it extends to your finances, too. We can’t say for sure when the next bear market will come – and the recent volatility is not necessarily an indication that a bear is just around the corner. What we can say, however, is that a bear market is inevitable, because the markets take hits just like everything else.

Whether the next bear market comes this year or next or much later, there’s only one thing to do about it, and that’s to have a plan.

As your financial advisors, one of our most important responsibilities is to help you do now what people in the future will wish they had done earlier. That includes preparing for more market volatility. The actions that we put into place earlier this year were geared toward lowering volatility within your portfolio. In doing so, we retained certain investments that are set for generating returns over the long term. For these kinds of investments, the volatility over time is a benefit as it allows us to take advantage of opportunities as they present themselves. A well balanced portfolio can help to both reduce volatility and take advantage of the opportunities volatility at times presents. This can be challenging to remember in the midst of market turbulence, but history proves it to be true over and over again.

Without a doubt, the last few months have been turbulent. It’s a reminder that volatility is simply an unfortunate fact of life. And like a thunderstorm on a day you hoped would be sunny, or road construction when you’re most in a hurry, volatility never comes at a good time.

Make no mistake, volatility is frustrating – and even a bit scary. After all, when we talk about your investments, your portfolio, we’re not talking about some abstract concept. This is your money. Your retirement savings. Your hard-earned future.

A few things:

First, we need to remember that volatility is normal.  Knowing that it’s normal doesn’t make volatility fun.

But it should make volatility a little less scary.

The second thing to do is remember that we have a long-term plan in place – a plan in which volatility is already factored in. We’ve laid out a specific path to those goals – and the plan assumes there will be bumps, setbacks, and even a wrong turn or two along that path. It really is like driving a car, if you think about it. Smart drivers give themselves extra time to reach their destination, so when they hit the inevitable detour or traffic jam, it doesn’t ruin their journey.

That’s what we’ve tried to do with your finances. Volatility – even prolonged volatility – is a detour, not a derailment.

The third thing to remember is our team is constantly monitoring your portfolio. We’re not forecasters, trying to predict which way the markets will go next, because that’s a fool’s errand. Drivers who do that often end up going in circles. Instead, we watch your progress in real time, always asking if what’s happening now necessitates a course correction or not. Day-to-day swings in the markets rarely do, just like a pothole in the street doesn’t make you choose a different road. But should the road ever get too bumpy – bumpier than your portfolio can handle – we’re prepared to make changes and find a smoother route.

Which brings us to the final thing you should do: Enjoy your holidays! Spend time with family. Go caroling. Argue about where to place the holiday decorations this year. Do all the things you’d rather be doing this time of year. After all, it’s those things that really count.

There is no doubt, the markets are challenging right now. But here’s what we can say: Don’t stress about it.

That’s our job.

We will keep monitoring the markets – and your portfolio – every single day. If we need to make any changes, we will. In the meantime, you concentrate on what really matters. Family. Friends. Spreading Goodwill and Cheer. And remember that if you have any questions or concerns, at any time, that’s why we’re here – call us.

From all of us here at Hudock Capital Group, we wish you all the best for a wonderful holiday season!

Warmest Regards,

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

Michael J. Hudock, Jr., CPM®
Relationship Manager
President and Founding Partner

Thanksgiving has always been about being thankful for what we have.  Even before it was declared an official U.S. holiday, it was a centuries-old tradition to have a feast celebrating a good harvest, a victory in battle, or some other momentous occasion.

The custom of celebratory feasts is almost as old as civilization itself.  Yet the idea of “Thanksgiving” is still as important as ever.

Giving thanks for what we have – for whatever good fortune we’ve enjoyed this year – helps strengthen our resolve to deal with today’s challenges and confidently face tomorrow’s trials.  I think that’s why Thanksgiving has evolved from being a celebration of a good harvest into something much more important.

It’s a celebration of life.

As we celebrate life at Thanksgiving, we do so with a spirit of gratitude and compassion.  We do so by remembering those who may be less fortunate than us.  We may volunteer at food banks, make donations to charity, or call or visit those who may be lonely or in need of a kind word.  Regardless of the form of expression, we know that giving thanks means letting others know we care.

So, this Thanksgiving, please join with me in looking back on our good fortune and extending a helping hand to others.  Join me in a spirit of gratitude for all of our many blessings, including those yet to come.  Join me in giving thanks that we have each other to build a world that makes almost every year better than the one before.

On behalf of all of us here at Hudock Capital, we are thankful for you and your friendship and we wish you a very Happy Thanksgiving!

Sincerely,

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

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

You can’t be a successful investor by following the herd.

Warren Buffet said, “You pay a very high price for a cheery consensus. It won’t be the economy that will do in investors; it will be the investors themselves. Uncertainty is actually the friend of the buyer of long-term values.” Volatility is the price you pay for strong investment returns. As they say, no risk, no reward.

We know that many of you are not bothered by volatility, and that’s great. Market downturns are a good time to rebalance and add funds to your investments. Volatility is our friend… over the long term.

Historically, October is the most volatile month of the year. We know there will be markets like this, and we’ve prepared for them. It’s important that we always have funds available for you if you need to take distributions from your portfolio… this is something we generally talk with you about at each review meeting.

Much of the market panic the past weeks was caused by a quick spike in interest rates and comments the International Monetary Fund (IMF) made regarding the likelihood of lower global returns in the next few years. This is something we’ve been saying for quite a while, and it’s built into our model portfolios. During the year, we’ve positioned our short-term bonds and money market holdings to manage cash flow during unexpected volatility events just like this.

Is this the beginning of a bear market? We don’t have a crystal ball that tells us that. That’s why you have a well-diversified portfolio of stocks, bonds, alternatives, and money markets.

Interest rates are likely to continue moving higher. As you’re well aware, interest rates have been extremely low for many years, which is a good thing if you’re a borrower, but not if you’re an investor in bonds or CDs. As rates return to more normal levels, you’ll probably see volatility in your bond portfolio AND see your yields start to move up.

What will happen next week? We’re not sure, but we will be here for you. If you have questions or would like to discuss your portfolio or the markets in general, please feel free to call us. Also enclosed with this letter is our third quarter market commentary. This gives you a more long-term perspective.

Warmest Regards,

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

Michael J. Hudock, Jr., CPM®
Relationship Manager
President and Founding Partner

It’s easy to treat Labor Day as little more than the last summer holiday. As one more opportunity to visit the lake. As a day for barbecues or sipping lemonade on the hammock. After all, Labor Day lacks the historical traditions of Independence Day, the gravity of Memorial Day, or the religious significance of Christmas, Easter, or Chanukah. It’s just not quite as important. Right?

Wrong.

As you know, Labor Day is really a celebration of the Labor Movement. What you may not know is that one of Labor’s many accomplishments centers around the thing we hold most dear:

Our children.

These days, most kids in the United States spend their childhood going to school, romping on the playground, riding bikes, or any of a thousand other fun activities. The entire concept of growing up is based on learning, exploration, and recreation.

But it didn’t used to be that way.

In 1900, at least 18% of children worked as child laborers – and that figure is probably low.¹ In the 18th century, hundreds of thousands of children worked in mills and factories, mines and farms. They spent ten, twelve, fourteen hours every day in dangerous conditions for very little money. Many child laborers grew up with callused fingers, poor eyesight, and rotting lungs.
Most never received an education.

Here’s how one historian put it:

Although children had been servants and apprentices throughout most of human history, child labor reached new extremes during the Industrial Revolution. Children were useful as laborers because their size allowed them to move in small spaces in factories or mines where adults couldn’t fit, children were easier to manage and control and perhaps most importantly, children could be paid less than adults. Child laborers often worked to help support their families but were forced to forgo an education.¹

It’s largely thanks to the Labor Movement that child labor has become – for the most part – a thing of the past. Thanks to decades of lobbying and protesting, the Labor Union was able to prod the government into passing an ever-more stringent series of laws prohibiting child labor. For example:

In 1832, New England unions resolved that, “Children should not be allowed to labor in the factories from morning till night, without time for healthy recreation and mental culture,” for it “endangers their well-being and health.”²

In 1836, many trade unions started making formal proposals in favor of minimum age laws. Later that year, Massachusetts became the first state to require children under 15 to attend school at least 3 months every year. ²

In 1842, some states passed laws limiting children’s work days to 10 hours. ²

In the 1870s and 80s, as the Labor Union became a more unified force, many unions proposed banning child labor altogether.² When the American Federation of Labor was formed in 1881, its leader, Samuel Gompers, wrote: “What does labor want? We want more schoolhouses and less jails. More books and less arsenals. We aim to…take children from the factory and workshop and give them the opportunity of the school and the playground.”³

In 1904, the National Child Labor Committee began an aggressive campaign for more stringent laws against child labor. ²

I could go on, for pages and pages. Suffice it to say that in 1938, after a century of struggle, the Labor Movement helped ensure the passage of the Fair Labor Standards Act. This landmark legislation made it illegal for most industries to employ children under 14. It also imposed a host of other rules against employing older children in dangerous jobs or for long hours.

As you enjoy Labor Day, take a moment to watch your children and grandchildren frolic and play. Ask them about school starting. And reflect that these simple joys are largely due to the hard work of laborers.

This Labor Day, let’s all give thanks for one of the greatest blessings we enjoy: Childhood.

From all of us here at Hudock Capital Group, I wish you a safe and 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 Walter Trattner, “Crusade for the Children: A History of the National Child Labor Committee and Child Labor Reform in America,” Quadrangle Books, 1970.
² “A Time Line of Child Labor Reform,” Virginia Commonwealth University, https://socialwelfare.library.vcu.edu/programs/child-welfarechild-labor/child-labor-reform-and-the-labor-movement/
³ “Samuel Gompers,” wikiquote.org. http://en.wikiquote.org/wiki/Samuel_Gompers