Weekly Market Commentary

October 31, 2019


The Markets

At this time I’d like to share a couple of observations from the recent research conference. In a review of where money moved in the markets year to date several groups led the way. Defensive stocks with dividends, low volatility positions, high quality stocks and large company stocks were the dominant positions taken in the market.

When the economy was discussed the consensus was that rates would remain low and that a recession was not pending or imminent.

So far, 2019 has been volatile but successful year for U.S. stocks. The difficult part has been staying in during the big swings. All three indices finished last week in positive territory. Lawrence Strauss of Barron’s reported signs that global markets are stabilizing supported investors’ optimism. In addition, yields on 10-year U.S. Treasury notes increased, which suggested “investors are more optimistic about growth and overall economic prospects.”

How much is too much? In 1986, Fortune magazine asked Warren Buffett his thoughts on inheritance. He responded children should receive, “…enough money so that they would feel they could do anything, but not so much that they could do nothing.”

It’s an important question, even though relatively few Americans may need to grapple with it. According to the Federal Reserve:

  • 55 percent of inheritances are less than $50,000
  • 85 percent of inheritances are less than $250,000
  • 93 percent of inheritances are less than $500,000
  • 98 percent of inheritances are less than $1 million
  • 2 percent of inheritances are more than $1 million

A 2015 survey conducted by Merrill Lynch’s Private Banking and Investment Group found, “a majority (91 percent) of people plan to leave the lion’s share of their wealth to family members, motivated by a desire to positively influence the lives of loved ones. Yet the results indicate that many see significant risk in passing on wealth without context, conversation, guidance, or accountability.”

So, how much is too much? Is there an amount of inheritance that will sap your children’s motivation and undermine their work ethic? The answer may depend on the source of the wealth, reported The Atlantic:

“Perspectives on what constitutes ‘too much’ seem to vary depending in part on whether parents inherited their wealth or earned the majority of it themselves. When significant wealth gets passed down through multiple generations, inheritors can get the sense that ‘they’re just the caretakers of it’, which means they might be more inclined to keep up the family tradition and will it to their own children…Self-made rich people can have a different relationship to their fortune, because they have firsthand knowledge of what was required to amass it. As such, they might be more interested in bequeathing not just money to their children, but a good work ethic as well.”

Focus On The positive

“We should not forget that it will be just as important to our descendants to be prosperous in their time as it is to us to be prosperous in our time.” –Theodore Roosevelt, 26th President of the United States