Hi, I’m Dr. Chris Mullis with NorthStar Capital Advisors, and I’m here to help you launch 2022 with a great mindset.
In this video, I’m going to talk about three simple (but powerful) questions you can ask yourself to set the stage for an amazing year, even when so much around us is unpredictable and up in the air.
One question before we start: why set goals or intentions at all?
Sure, you could just show up and wing it, but if you’re watching this video, I bet you’re someone who wants more out of life.
And starting your year with a focus on where you want to go, is a great way to be more mindful of what you take on and how you spend your time.
What do you want more of this year?
Is it time? Travel? Experiences?
Commit them to paper.
How do you want to show up for your family, your friends, and your community?
Who is most important to you and how can you invest in those relationships?
What do you want to get better at this year? Personally? Professionally? Mentally? It’s all fair game.
As we close the door on 2021 and set the stage for 2022, there’s a lot that is beyond our control.
That’s why setting a direction is so critical: we can achieve incredible things by paying attention to what’s most important to us and intentionally focusing on improvement.
To throw a sports analogy at you: a player can’t control whether their team makes it to the championship, but they can improve their odds by perfecting a skill, improving their mental game, and supporting their teammates.
Thanks for watching. If you have a question about what I’ve discussed with you or you’d like to speak personally about what’s going on, please send me a message. I’ll respond personally.
Whatever 2022 holds, I hope it brings you joy, excitement, and prosperity.
Today marks a most significant anniversary in the economic and financial history of the United States, and I could not let it pass without comment. When properly appreciated, it can serve as an importantly teachable moment.
For it was a quarter century ago, on the night of Thursday, December 5, 1996, that the iconic Federal Reserve chairman Alan Greenspan, speaking at a dinner of the American Enterprise Institute in Washington, gave his instantly legendary “irrational exuberance” speech.
And this is what the oracle said. Or more accurately, this is what he asked:
“How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy?” [43:38 in the video above]
Mr. Greenspan asked these twin rhetorical questions essentially because he did not have conclusive answers. And if he didn’t, you knew no one else in the world did either. But coming from him, even this interrogative form of thinking out loud was a financial thunderbolt — a shot heard round the world.
He surely understood that, when he so much as broached the question, he had at least suggested an answer. And that answer was unmistakably: we’re either already there, or will be mighty soon, as this greatest of all bull markets morphs into mania.
I thought it might be instructive — as well as a certain amount of good fun — to cast an eye over the intervening quarter century. Let’s begin with a key item of baseline data that may and certainly should inform our inquiry.
Fact: The Standard & Poor’s 500 Stock Index had closed that Thursday afternoon, in blissful ignorance of what was coming later in the evening, at 744.38. And sure enough — just as the oracle had darkly suggested it must — the S&P 500 topped out…three years, three months and 19 days later, on March 24, 2000, at 1,527.50. You read that right: it more than doubled in the 40 months after Greenspan’s dire warning.
I suppose I could just stop here, invite you to draw the obvious inference from the above, and call it a day. Said inference is, of course: No one — no central banker, no economist, no market strategist, no hedge fund manager — no one can predict the market, much less tell you where to get out and/or back in. The economy cannot be consistently forecast, nor the market consistently timed. By anyone.
But before I let you go, I’d just like to throw out a very few other potentially relevant factoids.
Friday afternoon, December 3, the S&P 500 closed at 4,538.43, up more than six times since Greenspan spoke.
With dividends reinvested, and any taxes paid from some other source, $10,000 invested in the S&P 500 on 12/4/96 is getting pretty close to $100,000 along about now.
The earnings of the S&P 500 for the year 1996 were $40.63. With less than a month to go in the current year, the consensus forecast is around $200, up almost exactly five times.
The S&P 500’s cash dividend in 1996 was $14.90. Consensus forecast for this year is about $60, up almost exactly four times.
The Consumer Price Index was 158.6 in December 1996. It will most likely close out this year around 280, up a mere 1.8 times.
What, then, was the single best financial decision you could have made on Thursday night, December 5, 1996 — when the 11 o’clock news breathlessly reported Greenspan’s electrifying remarks? Right: turn off the TV and go to bed.
Just my opinion, of course, but the best move you can make this morning, 25 years on, regardless of the headlines? The same: turn off the TV, log out of your computer. Enjoy the rest of your day.
And let the compounding proceed, uninterrupted.
With every good wish,
Dr. Chris Mullis
Historical S&P 500 Index and dividends: “S&P 500 Earnings History, NYU Stern School”
Consensus 2021 earnings forecast: Yardeni Research
Consensus 2021 dividend forecast: Bloomberg
Consumer Price Index: Inflationdata.com
Current net profit margin of the S&P 500: FactSet
Let’s face it. Buying meaningful gifts for our family and friends is really, really hard.
If you want to give something that has a larger impact long after the holiday season has passed, why not give the gift of financial knowledge and wisdom for living a fulfilled life?
Given the academic background of our firm, we know the following is going to be a big shocker:We really love reading books and giving books as gifts!
Below you’ll find our 2021 Guide to Gifts That Pay Off.
It’s full of our 23 favorite money-related and living-big gift recommendations for those ages 4 to 94!
Let us highlight a couple of our new recommendations this year:
The Total Money Makeover (Dave Ramsey) A proven plan for financial fitness
We love giving this book out to our clients for their adult children. And we like to give these out as graduation and wedding gifts with a $100 bill tucked inside. About 80% of this book is really good, but we (and history) may not agree with perhaps the other 20% (e.g., unrealistic investment return assumptions; over-reliance on growth investments; unsustainably high withdrawal rates in retirement). Nonetheless, Mr. Ramsey does a great job of teaching the basics of money.
The Price You Pay for College (Ron Lieber) An entirely new road map for the biggest financial decision your family will ever make
One of our savvy clients in Washington, D.C. brought this 2021 book to our attention and it’s excellent! This book discusses why college costs so much, digs into the allure of elite schools, uncovers hacks that may not really be hacks, and talks about how to plan and pay for college.
Knocking on Heaven’s Door (Katy Butler) The path to a better way of death
While it can be very difficult, having tough conversations about end-of-life care well in advance can help our dying loved ones cope later on. We have the ability to cultivate a “good death.” Give this book to your parents if they are still living and discuss it with them. And depending on your age, give it to your spouse and discuss it with them.
Retirement Heaven or Hell (Michael Drak et al.) 9 principles for designing your ideal post-career lifestyle
Don’t be fooled, the transition to retirement is a very difficult transition for many. To retire well you need enough purpose to wake up in the morning and enough money to sleep at night. Taking the time to read this book, reflect, explore, and be intentional will mean the difference between ending up in “retirement heaven” and “retirement hell.”
So what is the ultimate gift of 2021?
Life-changing wisdom about managing your money and living your best life that you can give to those that you truly care about!