"The Good, The Bad, and The Ugly"

"The Good, The Bad, and The Ugly"

December 14, 2021

The Good, The Bad and The Ugly is a 1966 Italian epic spaghetti Western film directed by Sergio Leone and starring Clint Eastwood as "the Good".  It was a financial success, grossing over 25 million at the box office and is credited as being the film that catapulted Clint Eastwood into stardom.  Consequently it was one of my father's favorite movies and he was a huge Clint Eastwood fan.  I fondly remember watching with him "The Outlaw Josey Wales", "Dirty Harry" and "Pale Rider" to name just a few.  I lost Dad in November.  To pay tribute to him and the great memories I have, I felt it only appropriate to name the title of this Blog after one of his favorite movies as the title aptly captures an accurate description of current conditions both locally and economically.

The Good:

In late September, Ford Motor Company announced plans for Blue Oval City.  The environmentally friendly facility will produce electronic vehicles and batteries.  This project will bring over 6,000 jobs and 5.6 Billion in investment to northwest Tennessee.  It is estimated that an additional 30,000 jobs will be created to serve those 6,000.  While this is a huge economic shot to the arm, there will be challenges.  In a recent meeting hosted by The University of Tennessee at Martin's Weststar Leadership Organization, the term "growing pains" was mentioned repeatedly.  With that said, those surrounding communities that tackle the additional education, housing, infrastructure and child care will be the communities that benefit the most.  Regardless, this is a great and long over-due opportunity for Northwest Tennessee.  It is estimated that ground will break as early as spring of 2022.  To learn more about Blue Oval City, click HERE

Very recently, the Tennessee Department of Economic and Community Development announced Canadian Firm, Sinova Global will be opening a manufacturing facility in Tiptonville adjacent to the Port of Cate's Landing.  The project will create 140 new jobs and approximately 150 million in new investment.  Here is an excerpt from the press release: "Sinova Global owns a fully permitted quartz deposit in British Columbia that has more than 25 years of high purity quartz available. With multiple uses, the company’s quartz is an ideal material for manufacturing the elements that make up silicon anode batteries, solar panels and semiconductor components, once transformed into silicon metal. Sinova’s quartz is the foundation for the creation of silicon metal, which is an essential building block of the clean energy transformation."  This company is a great example of a potential provider to the new Ford facility and I expect to see only more of the same in the coming years. To read the full press release, click HERE

In short, congratulations to northwest Tennessee and thank you to all of the political and business leaders that made these projects happen.  Things are looking up in our corner of the state!

The Bad:

Last weekend, one of the worst storms on record hit our region.  Towns specifically hit in Tennessee include Newbern, Samburg, Kenton, Dresden, and Paris.  Yesterday, I visited a client of mine that lost everything.  I'll admit that standing in the aftermath was emotional.  The picture above is what is now left of her den.  Being in good spirits, she jokingly jabbed at the situation saying, "Well... now I have a sky light."  Miraculously, she, her two grandchildren, her son and daughter in law along with all of her pets were hunkered down in a small room.  The tornado literally lifted the roof above their heads and the fireplace crumbled around them.  My client was VERY fortunate.  However, many lost their lives, belongings and livelihoods.  Some did not have insurance.  I will say, this is a resilient part of the country.  People here are independent and take care of themselves.  However, we all need help from time to time.

There are several churches, civic clubs and 501-C3 charities that are doing great work.  Personally, I chose to donate to Reelfoot Rural Ministries led by my good friend Rev. Robert Craig.  If you find it in your heart, give what you can. If you need to discuss a more sophisticated giving plan such as gifting appreciated stocks, mutual funds, etc.., please contact my office to set an appointment.  Click HERE for a comprehensive article from the New York Times describing in detail the destruction.  To learn more about Reelfoot Rural Ministries, click HERE

The Ugly:

Since early November, the general market indices have been ugly.  That is to say, they are flat to down and the volatility has been extreme.  It has not been uncommon for the S&P 500 and NASDAQ to experience moves of 1% to 2% on a daily basis.  That is not normal.  There is always bad news for the market to react to but it seems that several headwinds are coming together.  A new COVID variant, record inflation, supply chain bottleneck, extreme market valuations, the potential for rising rates, an uncertain Federal Reserve and the potential for war in both Taiwan and Ukraine make investors nervous.

Here are a few things to keep in mind when markets turn volatile:

1. Revisit your asset allocation. We have had a great run in the equity markets.  When this happens, if you do not periodically rebalance, your allocation may become too heavily weighted in risk assets.  It makes sense to take a look at your allocation now and if need be, rebalance by selling risk assets and buying fixed income assets.

2. What's the worst case scenario?  There are programs available to "stress test" your current allocation and/or investments to show you what would have happened if you held the same assets in bad conditions such as 2000 - 2002 or 2008-2009.  Once you see the results, ask yourself, "could I accept those results?"  If the answer is no, you may want to reconsider your current plan.

3. What is your time horizon?  Do you have decades or days?  This matters and should dictate how and what you invest in.

4. Manage your expectations.  I tend to lower my expectations and prefer to be surprised with any upside rather than the opposite.  Markets do not go up forever and periodically turn negative. It is important to remember this.

If you would like to sit down to review your investments, time horizon, expectations and/or stress test, please call the office to set an appointment.

Now that we are winding down what has been an absolutely crazy year, we sincerely hope that you experience a healthy, wealthy and happy new year.  If Kim or I can help you in any way, please reach out.