Preamble to “On Tailwinds and Headwinds”

By: Larry Eppolito, MBA, CFP®

Now that the election is over, it’s time to write. As I’ve written many times, I recognize how sensitive people can be with regard to their political beliefs. While economics and finance are often politicized, I write in economic and financial terms – not political terms. Also, since everything is open to interpretation, please remember, my words mean exactly what I want them to mean, no more no less (Lewis Carroll). So, please feel free to call me for clarification.

This letter is a “preamble letter” to my next two letters, which I’ll send one at a time in a few days. I decided to use two letters to ensure my message was not lost.

In round terms, about half of all Americans are happy with the outcome of the election and about half are not. In my experience, each side believes the other side will harm the economy.

On Circular Arguments

Everyone has an opinion, but it’s essential to distinguish between facts and opinions. Facts are objective and verifiable, while opinions are influenced by individual beliefs, personal values, and preferences. When debating opinions, finding common ground can be difficult because there’s rarely a single "right" answer—each side may have some valid points, and there is usually at least an element of truth to both sides.

"Someone sits in the shade today because someone planted a tree 20 years ago." — Warren Buffett

Also, the media and politicians “evaluate” today’s economy and attribute today’s policies for the outcome, but the economy is affected by forces from years ago – sometimes many years ago.

The U.S. economy is essentially the sum of all companies selling goods and services. It is far larger than any one elected official. Economic growth or recession often happens regardless of who is in the Oval Office. Yet the media frequently credits or blames individual leaders, focusing on immediate outcomes because they are easier to measure. In reality, economic trends are often driven by forces set in motion years earlier, but these are harder to quantify and often overlooked. This leaves today’s economic outcomes open to debate. Often, these debates become circular arguments.

Please give my next letters a quick read. I’ve worked to keep them brief and believe many of you will benefit. I believe it offers a framework to help you interpret events in the years and decades ahead.

Have a great weekend!

Larry

Important disclosures

Securities offered through Raymond James Financial Services, Inc., member FINRA / SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Eppolito Financial Strategies is not a registered broker/dealer and is independent of Raymond James Financial Services.

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Any opinions are those of Larry Eppolito and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change. This information is not intended as a solicitation or recommendation of any kind. Investments mentioned may not be suitable for all investors. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Diversification and asset allocation do not ensure a profit or protect against a loss.

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Investing in fixed income securities (bonds) involves certain risks such as market risk, if sold prior to maturity, and credit risk, especially if investing in high yield bonds, which have lower ratings and are subject to greater volatility. All fixed income investments may be worth less than original cost upon redemption or maturity. Bond prices fluctuate inversely to changes in interest rates. In other words, if interest rates rise, after your purchase, you may receive less than your purchase price should you liquidate early. Bonds provide a fixed rate of return if held to maturity.

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