Call me pedantic if you must but I object when people say they are going to celebrate ‘Labor Day’. Worse is that a gazillion people think they are celebrating the End of Summer, or pool parties or parades and marching bands. That, my fellow Americans, misses the entire point. On Labor Day we celebrate Labor, as in America’s workers. To put an even finer point on it, we take the day to honor our workers by celebrating them — something we’ve been doing since 1894.
Another point of argument that you often hear is “Wait a minute! Labor Day skews its celebratory recognitions more to the workers who do physical labor. What about Mental labor? Don’t those people get any credit?” Well, of course they do, especially since America’s economy is something like 70% supported by service industries rather than manufacturing, farming, logging and rail-splitting. But still, it seems quite fitting to have this national holiday put its focus on the more traditional and more physical side of the working world.
In an article written a few years back the historian Victor Davis Hanson, (doing the nonphysical work of writing) noted that:
“Physical work has an intrinsic satisfaction in that it is real, in the primordial sense that nonphysical work is not. The head of the Federal Reserve Board may be more important to our general welfare than the city road crew patching asphalt roads, but there remains something wondrous in transforming material conditions through the hands, an act that can be seen and felt rather than just spoken or written about. Changing the physical landscape, either by building or destroying something previously constructed or altering it, lends a sense of confidence that the human body can still manifest one’s ideas by concrete action.”
Isn’t that a fine bit of thinking? Hanson continued with this:
“Man fights nature and there arise clear, easily observable choices. Critical to this fight is the use of muscle. The abstract becomes flesh only through the right arm or left leg. Bolts are tightened, tree limbs sawed, concrete patched, all through the hands and back. Every idea is matched with the flesh. For the farm, then, there is no conception that is not realized in the physical world, no idea that is not carried to its ultimate and often tragic conclusion. Such an easily identifiable struggle! Such a wondrous thing, when you, alone, with your muscle and mind in tandem, with or without sufficient courage and endurance, can at least once still, just once yourself succeed or fail!”
Fortunately, the ability today of those doing physical work to earn an excellent living is very much the new normal. Your neighbor the pipefitter may not have a BA or BS degree but odds are his 1040 is healthier than your average neighbor with a four-year sheepskin. I mention this because it’s our business to see that everyone with earnings, or the potential to earn, strongly consider having an investment plan. Indeed, it may be even more important for a physical-labor worker to get some kind of investment strategy going even sooner. Physical work can bring about wear and tear on a body. It can also be dangerous. The number of working years may be reduced accordingly.
Well, there you are: Fully prepared to celebrate America’s workers. Just two more things: Remember, don’t wear white after Labor Day and don’t put ketchup on a Chicago Dog.
Ron’s Market Minute – How Many Stocks are Enough?
It is not uncommon that we have a client that asks something like ‘I like the company Tesla (for example), can we add it to our portfolio?’ So, while I personally like the company and the stock, a funny thing happens when we add certain stocks to a matched portfolio of equities, and that is…. The risk parameters change. This is particularly true when the individual stock might be one of the ‘high-flyers’.
Have a quick look at the following chart. It shows the trajectory of the S&P Index* in red, TSLA in green, and YETI in blue. Yeti is another one of those headline stocks that people ask about.
Chart courtesy of FastTrack
The time period is the spring of 2020, specifically Feb 1 through March 18. During this 6-week period when (as we all know) markets took a big step back, the Index dropped by 26%- and many of the more familiar stock names dropped a similar amount. Some of the high-flyers, however, were more volatile. They tend to go up more on up weeks and down more on down weeks.
In this case TSLA dropped by 53%, and YETI also dropped by 53%! Each stock fell twice as much as the index. There is a lot of discussion among advisors regarding how many individual stocks need to be added to a balanced portfolio to NOT upset the risk profile. I’ve seen numbers ranging from 3 to 25. In any case, there may be distortions of the risk profile when we add one (even one exceptional!) stock to a portfolio. There’s a fine balance between adding a ‘bit’ of risk, and adding a ‘lot’ of risk.
Enjoy your holiday weekend!
Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk
www.denkinvest.com
LFS-3745695-090221
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