Willingdon Wealth Management

Countless statistics show that the gap between the rich and poor has widened considerably and continues to widen. To an extreme, an economics professor at George Mason recently published a book in which he predicts the population will be divided into two groups: those who are good at working with intelligent machines, and those who can be replaced by them. This is obviously a scary outcome, but are we focusing on the wrong thing?

Scientific research and discovery has always been an important aspect of American life. This, in itself, should make us hopeful.

One of President Obamas most notable lines, "you didnt build that," sent chills up my spine when I first heard it. As an entrepreneurial-minded business owner, I found that statement shocking, to be honest. But maybe there is some truth to it...

One of the most challenging aspects of managing portfolios is to process the endless information flow and determine what impact it will have, if any, on the markets. Some information, while interesting to read about, has virtually no impact on the future direction of stock and bond prices. Other information may not have an immediate impact, but it may be impactful in the future. This, delayed-impact information encompasses the vast majority of information that surfaces on a daily basis.

Last week my beloved peach tree inexplicably toppled over, destroying what was certain to be a bountiful crop. It was a favorite hobby of mine, to spend hours pruning, thinning, fertilizing, and spraying the height-challenged tree in order to produce a couple bushels of scrumptious peaches in early July. Yet this year I goofed. My plan for growth was flawed in that I failed to diagnose an infestation of peach borer which was weakening the root system. Once the internal strength of the tree was compromised, the tree was doomed.

A relatively weak first quarter earnings season is winding down, while major stock market indices are reaching all-time highs. This doesnt quite add up, does it? Overall, corporate profits advanced at an anemic 2.5% in the first quarter, well below the long-term average of 7%. Worse over, revenues were actually flat in the first quarter, below expectations in most cases. On top of that, most companies that have reported earnings have also lowered estimates for the remainder of the year.

In the powerful opening scene to the movie, "Patton," the famous general stands before his troops and boldly states, "Americans love a winner, and will not tolerate a loser." Its hard not to stand a little straighter when you hear a line like that. We do like to think about ourselves as the greatest country in the world. Certainly in economic terms the United States has accomplished more than any other civilization known to man.

While wisdom and experience are certainly very important to long-term investment success, I do believe it is also necessary to begin each day with an open mind. Flushing the senses, so to speak, allows new information to be processed through an unbiased filter. In short, markets change, and investment thinking must be adaptable.

I've always been curious about how famous people would have done had they pursued completely different careers. Some of our former presidents make excellent examples. For instance, Abe Lincoln towered over his contemporaries. I wonder how he would have fared as a basketball player had the game existed during his life. Our heaviest president, William Howard Taft weighed well over 300 pounds. Had football risen to prominence a few decades earlier, could gridiron greatness have been part of his resume?

Congratulations to President Obama for his reelection victory. My republican friends, I suspect, are in shock this morning, and understandably depressed. Meanwhile, my friends from the other side must be elated because last night was their night. I congratulate all on their months of hard work campaigning. But today is a new day and it is a test for all of us to come together. So, whatever you were yesterday, today you are only one thing, an American. Can you imagine that for a moment?

I begin this edition of Willingdon Views with a tribute to a great American, Neil Armstrong, who passed away last month at the age of 82. The first man to walk on the moon was from Wapakoneta, a small town in west-central Ohio. Despite his fame and extraordinary accomplishments, Armstrong maintained his small-town values throughout his life. In a statement released shortly after his death his family referred to him as "a reluctant hero who always believed he was just doing his job." Makes one wonder what they'll say about us after we're gone...

A tenuous moment occurs in our household every time we get down to the last piece of dessert. My kids fight over it, and I'm right there with them. When I was a kid, my mom had the perfect solution to this age old dilemma. She would allow the first child to cut the dessert and the other to choose which half they wanted. The interconnectedness between the process and the final outcome ensured fairness. A truly cooperative attitude like this seems nowhere to be found in our world today.

The world is separating into two main groups those who have substantial and growing net worth, who have ready access to capital, and those who are drowning in an ever-expanding pool of debt, with few options to improve their situation. This phenomenon makes for some interesting comparisons and for countless prognostications about what the future might hold for all of us.

The world is separating into two main groups - those who have substantial and growing net worth, who have ready access to capital, and those who are drowning in an ever-expanding pool of debt, with few options to improve their situation. This phenomenon makes for some interesting comparisons and for countless prognostications about what the future might hold for all of us.

Can we find the right balance between government regulation and corporate entrepreneurship? History has shown that too much government intervention can strangle the creative energy of the private sector. Yet more recent history has shown that too little or perhaps ineffective regulation can have dire economic consequences as well. Is it possible to combine these opposing forces for our collective good, and for the collective good of the world? Sadly, in the midst of never-ending political rancour in this election year, it would appear to me that these forces are moving ever farther apart.

With the overall market up 12%, the best first quarter since 1998, it was, most definitely, one heck of a start. Before we get too carried away, here is a list of the reasons why the bears contend the end of the first quarter will prove to be the high point for stocks this year.

The well chronicled economic and market woes over the past decade, as well as the ever-polarizing political process, have largely shattered our faith in our ability to solve the challenges we face. It is not surprising that there are so many doomsday predictions being made following these difficult times. Nevertheless, it is still possible that we can rediscover our faith in order to tackle these challenges with confidence.