Hoy Grimm

Hoy Grimm

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Expect the Supreme Court to rule 9-0 on Trump vs. Biden

As of November 12th 2020, the United States Presidential Election remains undecided. Biden is claiming the mantle of President-Elect. Serious challenges to votes counted in swing states are underway that could produce a late change. Regardless of your partisan bias, election 2020 is in the courts. It is reasonable to expect these various challenges to work their way out of state courts and ultimately to the United States Supreme Court. This is where our country will face it's greatest challenge since Bush vs. Gore.

After Judge Barrett’s addition to the court in October, conservative leaning Justices hold the majority of seats. Liberal Justices are in the minority. This presents a problem to the court if/when Trump vs. Biden arrives on their docket. I am basing my hypothetical outcome on these assumptions:

  • All 9 Justices want to ensure the one person, one vote right of all US citizens regardless of party.
  • All 9 Judges are intelligent and fair enough to discern the improbable outcome of several state vote tallies.
  • All 9 Judges want the best outcome for Americans.
  • All 9 Judges want to preserve the integrity of our elections.
  • Al 9 Judges want to preserve the integrity of the SCOTUS.
  • The conservative jurists would prefer to avoid a 5-4 or 6-3 split ruling.
  • The liberal Judges know they are powerless to effect the final ruling.

With these assumptions in place, I’ll navigate through their potential decisions. A split ruling, with the newest Judge siding with the majority, would be viewed by nearly half the country as a partisan decision. It would undermine the SCOTUS going forward and embolden Democrats to increase the number of SCOTUS seats if they can. If I were one of the conservative Judges, I would do this if there were no other remedies available to me. If evidence is presented that the vote is tainted, I would have no choice but to reject tainted vote tallies. As previously mentioned, it would do harm to the court, but the election process is more important.

Liberal Justices are in a more simplistic position. As a minority bloc, they have little influence to wield other than aggressive questioning during oral arguments. They could offer a detailed dissent to a split ruling after-the-fact but that won’t change the outcome.

Like King Solomon, here is my wishful escape from a split court ruling: the conservative Justices extend an olive branch opportunity to the liberal Justices- We agree in a unanimous 9-0 to conduct a December re-vote in six states (MI, WI, PA, AZ, NV, GA). We stipulate that each state must follow bipartisan count/observation/canvass rules. We stipulate that the only votes to be counted later are military votes from overseas deployments (add in other obvious exemptions that I didn't think of). If we can't present a 9-0 ruling, we rule 5-4 or 6-3 (depending on Justice Roberts) to remedy the irregularities presented to the court.

The liberal minority would see the wisdom in this opportunity. It removes the election decision from the courts and returns it back to the voters. It allows the SCOTUS to model bi-partisan behavior when no one else seems capable of it. Maybe the rest of the country would rally around their actions?

This is an imperfect solution that would introduce delays and doesn’t guarantee that the rules would be followed any better the second time. It’s better than the alternatives that I’ve thought through though. 

What do you think? Remember, our nation is very divided. Justice is blind but it's not stupid. This is not a time for partisan disinformation. The title of this article is purposefully misleading. I don't think we should fully "expect" a 9-0 outcome. Call me skeptically hopeful.

The Short Path From Broken to Unbroken

“The Destiny of Man is to unite, not to divide. If you keep on dividing you end up as a collection of monkeys throwing nuts at each other out of separate trees.”

 - T.H. White, The Once and Future King


Did You Know?

Are you familiar with the Japanese art form, Kintsugi? Artists reassemble pieces of broken pottery by mixing a gold infused lacquer to bind it along the cracks. The resulting product is a reclaimed vessel that highlights the previously broken, unusable pieces in a beautiful manner.




Today

I hope the analogy to 2020 is obvious - America is sharply divided. Cracked by COVID, racial tension, economic hardship and political conflicts. We have plenty of reasons to be at each other’s throat.

Looking to a political leader to heal our divisions is hopeful but probably unfruitful. There are too many powerful constituents who benefit from disunity. We shouldn’t expect our existing societal/political structure to deliver a solution. Yet, somehow in a few weeks, our citizens will cast votes to elevate one candidate to the most important leadership position in the world. It won’t matter who wins, our divisions will linger past the election (and may even get worse).

America has been incredibly good to me personally, so I love this country. I am proud of our accomplishments and contributions to global society. America is no less perfect than any other country so I will acknowledge but never apologize for the few missteps we have taken along the way.

Tomorrow

The only way our country dwindles toward irrelevance is if we choose to cherish our divisions more than our future. Social media flame wars have no winners. None. The destination is always the same - more division, more hate, more envy. Who intentionally wants to further any of these emotions? It is time for citizens to sacrifice their ego for unity.

We can’t wait for a charismatic leader to arrive in Washington and sprinkle magic dust on our problems. We can’t wait for the media to morph into a rational voice that was absent for the last 4 years. We can’t hope for someone else to lead us someplace else.

We can instead, make a personal choice to be less cynical, less judgmental and less mean-spirited. We can do this right now. We don’t have to wait until someone in authority models it. We must have a personal vision of what we can do to mend the fractured pieces of our society. We must act to be the glittering agent of Kintsugi “reconciliation”. We must be willing to reassemble the broken, jagged “pottery pieces” of ideas and relationships one at a time. No excuses. We must risk the sharp edges of disunity and pursue unity. Our only other option is to press in to our pursuit of divisive insanity that surfaced in 2020.

Some will argue that this is a plan of surrender to evil. They believe in winnable wars too. Engaging in unwinnable arguments is evil. We can engage in civil discussion and even disagreement without spiraling into hate. I can do this and so can you. Who else matters? I’m not being preachy to others. These thoughts are a personal admonition that I am voicing publicly. I need to be mindful of this before I hit that “post” or “tweet” button and I’m willing to be accountable for my choices.

It’s time.

Who is with me?   

 


Postscript

Let love be genuine. Abhor what is evil; hold fast to what is good. Love one another with brotherly affection. Outdo one another in showing honor. Do not be slothful in zeal, be fervent in spirit, serve the Lord. Rejoice in hope, be patient in tribulation, be constant in prayer. Contribute to the needs of the saints and seek to show hospitality. Bless those who persecute you; bless and do not curse them.

Rejoice with those who rejoice, weep with those who weep. Live in harmony with one another. Do not be haughty, but associate with the lowly. Never be wise in your own sight. Repay no one evil for evil, but give thought to do what is honorable in the sight of all. If possible, so far as it depends on you, live peaceably with all.

Beloved, never avenge yourselves, but leave it to the wrath of God, for it is written, "Vengeance is mine, I will repay, says the Lord." To the contrary, "if your enemy is hungry, feed him; if he is thirsty, give him something to drink; for by so doing you will heap burning coals on his head." Do not be overcome by evil, but overcome evil with good.

Romans 12:9-21 ESV

We're Almost There



Jim Rohn the grandfather of all modern-day motivational speakers said, “We must all suffer from one of two pains: the pain of discipline or the pain of regret. The difference is discipline weighs ounces while regret weighs tons." 

Let's recap 2020 for a minute. From January to February we had a great start. The NASDAQ surged 11% in a month to a new all time high. Then the wierdness begins. Coronavirus arrives in the US and markets plunge in the fastest bear market drop in history. Washington counteracted the market velocity by passing a myriad of measures to minimize the economic pain. May hits and the south starts to reopen only to be met with racial unrest from the death of George Floyd in Minnesota. Black Lives Matter protests flourished in large metropolitan areas across the country. The contestants for the November Presidential elections enter the stage with starkly contrasting views of how to deal with the problems of 2020. Many kids are forced into a distance learning setting instead of in person education. Finally, as fall approaches in mid September, the west coast is is engulfed in wildfires and smoke while coastal gulf states are hunkering down to weather an active tidal storm season. 

There have been some bright points.

In many parts of suburban and flyover America homeowners are heading to the bank as a sea of stimulus-related financial liquidity and low interest rates turned up the heat on an already hot housing market. Amazon brings much of what we need to the front door and Door Dash will even deliver dinner hot and ready. 

I don't know if the good news in your household is enough to offset the bad news we are surrounded with. I recall a summer trip to New York City when my kids were young. We finished a visit at the Empire State Building on 33rd Street and started walking to F.A.O. Schwarz toy store. It was only a mile and a half but in the summer sun on the pavement in the Big Apple it felt like 5 miles. Half way to our destination my son chimed in, " How much longer do we have to go?" I replied, "We're almost there." 3 blocks later we repeated the same exchange. Another block, another complaint.



By the time we arrived, my navigational credibility was hanging on by a tenuous thread. The kids' joy upon entering the king of all toy stores overcame their tired feet. I was relieved that our persistence paid a worthwhile reward.    



With city leaders enforcing stringent lockdown orders, New York City in 2020 is a much different place. Some die-hard New Yorkers are throwing in the towel and putting the Big Apple in the rear view mirror. Along the way their kids may even start asking, "Are we there yet" even if their parents aren't really sure where "there" is going to be. 

Back to the small apple that we call home. 

At LeConte, we've remained focused on taking every opportunity presented to us and are making plans for the future. Kevin and I bought our office building a decade ago in a post-housing crisis bankruptcy sale. It has served us well as we built our business from less than $100 million in client assets to $190 million today. We've pursued other locations and real estate opportunities in the last 5 years. This spring we equipped our team with the technology to work from home during our brief shutdown period. When we reopened, we assessed how we can help our clients now and in the future. At the end of the day, we like our profit margins more than a trophy location so we're staying in our current location.

This summer we embarked on a renovation project to improve and modernize our offices. Along with the visual cosmetic improvements, we're bringing our facilities up to ADA compliant standards and improving the functionality of our workspace. We're developing a new website to communicate our problem solving solutions to the public and provide seamless financial access for current clients. It looks really nice and I cant wait to unveil it in the near future. Internally, our team worked through the summer to re-engineer our business processes to efficiently serve the needs of our growing client base. LeConte is 30% larger than we were 3 years ago but none of our team members are working 30 harder (or longer). 

The renovation project will likely take us into 2021 to reach completion. It's provided us with a mental break from the day-to-day headlines and put a bit of daylight between the messes of 2020 and the better times that lie ahead.

We decided to look to the future, take control of the things we have influence over and ignore things that we can't influence. In our mind it would have been wasteful to endure 2020 by moaning about what could have been. Instead we chose to set a course forward and adjust our sails when we need to.

Now if we can just get through the election. Hang on, just a little bit longer.

This Summer's Hot Trade

As July creeps to a close, the thermometers in our part of the country are pegged north of 90. It's hot. Too hot to think about kids going back to school or off to college. Too hot to think about COVID. 

On the investment side, let's add Gold to the hot list. The popular GLD exchange traded fund is up 26% this year and increased 10% in July alone.



In the aftermath of COVID-related economic closures interest rates have plunged to all time lows. Five year Treasury notes only pay .28% and ten year US Treasury notes yield less than .6% which has in turn, pushed mortgage rates to all-time lows. Outside the United States other countries are experiencing the realm of negative interest rates which are manufactured by Central Banks as they attempt to stimulate economic growth.

The global pandemic of low yields is pushing investors to consider their alternatives. Safety-first investors overseas are fleeing negative rates and flocking into gold to avoid losing money. In the US, few investors can stomach tying their funds up for 5 years at a measly 1/4% return. Stock market valuations are stretched as speculators pile into momentum stocks regardless of weak fundamentals. Only folks who can endure stomach churning volatility are chasing this game. 

Washington's response to the COVID shutdown was to offer massive stimulus payments to almost everyone in America. Concerned investors have done a quick mental calculation on the cost of all of this and now realize that our national debt is on the verge of reaching a tipping point. With somewhere between 3 and 6 TRILLION in new debt added to the books this year alone, debt payments run the real risk of engulfing our budget. Exploding debt poses a big risk to the US dollar's reign as the safe-haven/reserve currency for the world.

This debt spiral has been building for years and it is the main reason that we have long advocated a position in precious metals. We view it as a reasonable insurance policy against the dollar declining in value. Gold prices have responded the confluence of economic events this year with a rally to new all-time highs. The question I'm fielding from friends is "can/should I chase it higher?"


Precious metals are becoming the hot trade and will attract the fast money crowd that likes to chase momentum plays. This will increase volatility (and therefore risk). When this ends, I don't know. We're enjoying the ride for now and using the big moves to sell gains down to our pre-determined exposure levels. This frees up cash to re-deploy into other asset classes that are still out of favor. This discipline is the essence of buy low, sell high. It keeps us from getting cooked in the hot trade and smart investors always have a plan to get out of the heat.

A Well Earned Holiday

If I took a quick poll, I bet most folks would label Memorial Day as the official start of Summer. People who have family members who died in combat have a different perspective because of their personal loss. It's hard to recapture the honorable origins of Memorial Day from it's historical roots. Maybe this year we will reflect on the voluntary loss of freedom in the wake of the COVID "pandemic." The toilet paper shortages are disappearing and the beaches are opening up, but before we get back to our normal "busyness", maybe we can dedicate a few minutes of our families' time to discuss freedom and what it costs. 



How were you impacted but the economic shutdown? What part did fear play in your mind and decisions? What was the financial cost to your family? Did the government help you (stimulus, small business loans, unemployment assistance)? Did the government hurt you (extended closures, bad decisions)?

What could you have done differently to be better prepared to navigate through COVID craziness? 

The Trial of Socrates offers interesting parallels to the current debate over the limits of our government in the face of a public health scare. The philosopher was associated with the Thirty Tyrants who were overthrown. Socrates was perceived to prefer Technocracy instead of majority rule. He espoused that political decisions should be made based on facts and data that only learned and capable leaders possessed. Only these leaders on Socrates view would be competent to make the best decisions for Athens citizens. Do the names Trump, Cuomo, Fauci and Brix come to mind? 

At the end of the trial, Socrates was faced with the option to flee Athens in exile or accept his death sentence. At 70 years old, he chose the latter and downed a glass of Hydroxychloroquine. Not really it was actually poison hemlock.

Socrates was credited with the phrase "The unexamined life is not worth living" in the writings of one of his young disciples named Plato. This is the takeaway for us today. We've all faced an exile of sorts in the mandated quarantine rules. What did we learn from it? Have you discovered an appreciation for something after it was taken away during quarantine? What are you thankful for? What is important to you?  

Before summer gets started and you bring the seersucker out of storage, take some time to ask yourself some questions. Discuss with your spouse and kids what they could live without if the past few moths became a permanent way of life. What should you leave in quarantine even after they end? Use the Memorial Day break to give thanks for the men and women who paid the ultimate price so that we have the freedom to contemplate the luxury of modern American life.



America is still the best place on the planet.

Retiring Soon? - It's Time to Take Action

Your April investment statements were ugly, maybe even shocking. You know that you shouldn't react in irrational fear, but if your retirement is closing in, reality sinks in. You can't hop in a time machine and redo the past but what should you do after the damage is done?



 

Back to your investment statements; skip past the value section and look at the activity section of your investment statements. Did you or your advisor take any positive steps to adjust or re-balance your investments last month? With the size and speed of price declines, you had opportunities to proactively improve your portfolio. Both bond and stock market sectors diverged which created opportunities to position your investments for future growth. If the activity section of your statements doesn't reflect action to improve your portfolio then it may be time to re-examine your approach.


We combine a goals-based approach with a predictive risk assessment to build family investment portfolios designed to help you meet your unique goals. We add tax expertise (analysis, preparation and filing) for a complete 360 degree approach to your financial independence. We call this Purpose-Built Planning and we use it to advise more than 160 million dollars of client assets. It works. Call us to see what we would change in your investments right now to help your retirement arrive on time and intact.

History offers Hope - Can we make 2020 an analog of 1857

The comparisons are remarkable.

In the late 1850's America was undergoing a transportation boom lead by the railroad industry. What started out as local operators laying tracks developed into a national network of interconnected systems. Railroads took advantage of a now-forgotten telecommunication innovation, the telegraph system, to enhance their logistic accuracy. Wall Street financiers were eager to throw capital at the fast growing industry. Eventually all it took was a clever business plan to get funding. These businesses were eventually referred to as Paper Railroads since they owned no tracks or rail cars. 

Today electric cars are on the verge of taking over the combustion engine. New cars are packed with technology systems that minimizes stress and driver errors. Our cars are connected to real time data like never before. The first brand that comes to mind in the electric car business is Tesla. It is a business born from eager investors who showered cash into a company with no manufacturing expertise, that sold cars at a loss and occasionally scraped a profit out of the government subsidies paid to electric car manufacturers.

On the back of the railroad and telegraph business successes, the stock market of the 1850's were roaring like our markets were. Then things changed.

America was awash in wealth from the gold that flooded from the California Gold Rush into the economy. As gold mining activity declined in 1855, bankers started losing faith in paper currencies and began restricting lending activity. By the spring of 1857, the seeds of the Civil War were cultivated in the Dred Scott ruling. Later that summer high-profile bankruptcies of N. H. Wolfe, a huge grain producer, and Ohio Life Insurance & Trust, who owned a big mortgage finance business, fueled deeper concerns. Overseas, the Bank of England suspended the Bank Charter Act of 1944. The act created a formula to back their currencies with gold and silver. Suspending the act meant banks no longer needed gold in reserves. 

As communication and travel brought the world closer together it also meant that The Panic of 1857 was the first global financial crisis. It lasted into 1859 When President James Buchanan ordered state banks (well, technically, he "advised" them) to act like the Independent Treasury System a precursor to the Federal Reserve system created in 1913.

The 2020 health crisis is triggering a financial panic which will trigger economic problems. How will we escape this? Will government intervention save us? Will pharmacological advances deliver a cure? We certainly have to work on all of this. Let me offer one more anecdotal "cure" from our nations history.

Enter a missionary to Manhattan named Jeremy Lanphier. After distributing 20,000 flyers inviting New Yorkers to start praying for healing, Lanphier was joined on Fulton Street near the financial district by 6 people who represented 5 different faith denominations on September 23, 1857. God used this humble beginning in a remarkable way.

After 3 weeks the number grew to 40 faithful who urged that they meet daily. Turmoil in the financial markets married to societal and political and on October 10th the stock market got blasted. Within 6 months what began as a weekly prayer group of 6 mushroomed to 10,000 people meeting every day in New York City to pray. Soon the newspapers reported on the gathering and it spread across the country. Businesses would hang signs that said, “We will re-open at the close of the prayer meeting.” 
Jeremy Lanphier


The Panic of 1857 ushered in the Revival of 1857-1858 and it started with 6 people.

I awoke this morning at 6:30. Before getting ready to work from home (under our governor's orders), I turned on my phone to connect with others from my church. A small group of us gather each Wednesday and even now while the church building is unoccupied, we still gather electronically to pray and encourage one another before our day begins. Here's a short example from Mike Garner a local attorney here, "May our prayers for revival remind us to put feet to our prayers. Lord please use me to reach out in Christ."

Mike started this group months ago before the health crisis hit. He started it with a handful of men to pray for revival. Why? Historically these revivals come along about every 40-50 years. Each new generation provides an opportunity to seek a Spiritual awakening. "Lord, may the Pandemic of 2020 turn into the revival of 2020-2021, Amen".

COVID-19 Office and Meeting News

In order to protect the health and safety of our clients and our employees, LeConte Wealth Management will be fully operational, working in a remote capacity beginning on April 1, 2020. Our office will be open during normal business hours and we can be reached on our main office line at (865) 379-8200 as well as individual cell phone numbers and email addresses. For the next few weeks, we will be moving all in-person meetings to virtual meetings or conference calls. For our tax clients, we ask you to mail or email any pertinent tax documents that are needed, and we will be mailing all tax return documents that require signature to your address.

Our team will continue to provide the highest level of service and attention to our clients during this time, and please let us know how we can assist you if your needs change.

 

All the best,

Kevin, Hoy and Jon

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