Investment Newsletter for the End of April, 2020

The market for the month of April is up about 2,400 points. That gain is about 11%. It is the best one month gain for the market in many years. While the gain is very welcome due to its partial restoration of our account balances, it may appear to some people to not make sense considering the current economic times.

The topic of today’s newsletter will be the stock market. Why does it go up and down? Why did it go up when the economy is currently declining? In short, the reason is that the stock market is a prediction of the state of the economy in the future. The stock market price is not about the current economy. It is about expectations of the future economy. In a month/year/decade etc. what will the economy be like then? If people think the future will be bright, then they will buy more stock now (so they can profit from that future) and that buying will drive the price up. If people think the future will be dire, then people will sell more stock (to avoid being hurt by a market crash) and that selling will drive the price down. The people who bought stock in the last month believe that the pandemic will be over reasonably soon and when it does the economy will roar back. Those people think they would thus make a lot of money from buying at a bargain low price and selling in the future at a high price.

People’s memories tend to be very short. They place more mental weight on recent experiences than older experiences. Current bad news is more important than past good news and current good news is more important than past bad news. It is that overreaction to current news events that causes wild swings in market prices and provides some people the opportunity to profit if they have the ability to go against the crowd. Some of the biggest fortunes in history have been made by buying in times of crisis, when everyone is running screaming to the door. We have both made purchases during this crisis of stocks that we believe have been excessively beaten down by COVID 19 and will recover strongly when the economy does. We know that the stock market will recover, but it might recover sooner than the economy does.

If you have any questions for us, please call at any time. We sincerely hope you got value from this newsletter. We appreciate your business and trust.

Thank-You,

Daniel and Eli


As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

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Investment Newsletter for the End of March 2020

The market continued being sick with the coronavirus this month. The market continued its sharp downturn. Essentially, people are afraid that the economy will collapse. In some respects, stock prices are a forecast of what people believe the economy will look like.

Obviously, we are now entering a recession. Unemployment is incredibly high because of all the mandatory business closings. Daniel does accounting for several large restaurants, dentists, etc., all of whom have closed and laid off all their employees. As well as manufacturing businesses who laid off part of their workforce because of lack of business. That’s about 250 employees. The real question, however, is how long?

Over the last three days, Daniel has received over 20 phone calls and emails about the federal stimulus programs for businesses just signed last week. Every one of the closed businesses we just mentioned asked Daniel for advice. They ALL were planning on reopening as soon as they were allowed and wanted some federal assistance. All but one or two had strong qualifications and will probably be approved for the various SBA programs. We sent them to their bankers to complete the applications. Some of the money will be available in a few days, the big money in four to six weeks. The government will be loaning the money to cover payroll, rent, utilities, and some other things. The loan would then be forgiven if the money was used for those things.

So, is this stimulus going to juice the economy? Is it enough? There really is no way to know. But our feeling is yes, it is enough to fix the economy. It, of course, depends on how long the mandatory close orders last. Many of the mandatory closed industries have been hearing 30 days from their professional associations. In some parts of the country (such as Oregon), new cases are dropping. Other parts of the country are still out of control. The news is saying the peak will be in the next two weeks. After these businesses reopen, it will take time before everything is normal business amounts, maybe months. As people return to work, the fears of a collapsing future economy will recede.

We have been criticized in good times for our heavy bond allocation on portfolios, that we are too conservative. But, as you can see, risk is real and painful. Our portfolios did not lose as much as the market during the downturn.

The market will recover.

Thank-You,

Daniel and Eli


As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

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Investment Newsletter for the End of February 2020

February has not been a good month on the stock market. The Dow is down over 2800 points. The reason is fear regarding the Coronavirus. Therefore, the Coronavirus will be the topic of this newsletter. While we have already talked about this topic in a previous newsletter, we feel it is pertinent to discuss it further.

Due to the various quarantines, a lot of people are unable to go to work or go outside. Due to a general aura of fear, people are scared to go out and shop. All of these things are terrible for the word’s economy. However, it is temporary. Can you honestly tell us that you think this disease will be the end of the world? The world has dealt with massive disease outbreaks before. Coronavirus is a category of virus. The current Coronavirus that the world is facing is named COVID-19. The world has already dealt with another type of Coronavirus. In November 2002, the world faced a Coronavirus named SARS. By 2004, the problem had been dealt with and there were no more cases of SARS. The world did not end. Since the first SARS infection the DOW has nearly tripled. We don’t see any reason to believe that this Coronavirus outbreak will affect the world any differently than the last one did.

While it’s scary, it’s important to have the discipline to stay invested. Despite the volatility and the price drops, over the long run, the stock market is one of the most potent way to create personal wealth that exists. If you have the discipline to invest every month into the stock market (despite the volatility), then due to compound interest, when you retire you will likely have a sizable nest egg built up. Sure, there’s risk that the markets will be depressed when you need the money, but everything in life that’s rewarding entails risk. Obviously, you have to judge your needs and risk tolerance but we believe that is worth the risk. In our personal portfolios, we have invested more during these tumultuous times.

If you have any questions about your investments, please call at any time. We sincerely hope you got value from this newsletter. We appreciate your business and trust.

Dan and Eli


As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

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Investment Newsletter for the End of January 2020

January has been a very volatile month on the stock market. For this conversation, we are using the Dow as the market, as most of you do. In the end, the month is down only about 280 points, which is insignificant. However, from January 17 to January 31, the market has lost about 1100 points. That drop is due to the fear regarding the Coronavirus. That will be the topic of this newsletter.

A very big event happening in the world today is the Coronavirus outbreak in Wuhan China. The stock markets, due to fear about its effects on business and commerce, are very spooked. Businesses in China or businesses exposed to China are certainly feeling the stress. Travel industries would be an example. While we are not scientists that can comment on the virus itself, we know enough about financial/economic history to know that the effect on the stock markets will likely be temporary. The stock markets have survived a lot of bad things. They have survived wars, depressions, terrorist attacks, various diseases, etc. Historically, after every disaster, markets eventually recover. There is absolutely no reason to believe that this time is different, so that pattern will likely continue. Eventually, the marketplace will adapt. New companies will form, old companies will go out of business, and life will move on. And, the travel industry will recover also.

If you have been reading the newsletters for a while, you have probably seen us write about the importance of sticking to a plan. The markets are volatile, they always have and likely always will be. The future is unknowable. All you can do is have the discipline to adhere to the plan that you agreed to when you hired us. That plan is designed to achieve the objectives you want. If your risk tolerance or objectives change, then we can all collaborate on designing a new plan for you. However, fretting about the markets does nobody (especially you) any good.

If you have any questions about your plan, please call at any time. We sincerely hope you got value from this newsletter. We appreciate your business and trust.

Dan and Eli


As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

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Investment Newsletter for the End of December 2019

This newsletter is a very exciting one. It marks an end of month, end of year, and end of decade. The results of all 3 markers are overwhelmingly positive. The month is up 2.22%. The year is up 21.28%. The decade is up 283.48%. Those numbers are very nice. Despite the chaos in the world, if you had held on to an investment for the entire time, your patience would have been extremely lucrative.

The 1st topic of this newsletter will be the power of Compound Interest. If you were to deposit 100 dollars each month under your mattress, after 50 years, you would have $60,000. If you were to deposit that money each month into a bank, then assuming you earn 2% on your interest you would have $102,961.20 after 50 years. The Dow over the last 35 years has returned 9.3% per year. Assuming that level of growth continues, if you invest 100 dollars per month into the Dow, after 50 years you would have $1,312,604.89. The difference in wealth created due to a few percentage points is massive. Regardless of how much money you have now, proper and diligent investing can set you up for a very comfortable retirement.

The 2nd topic of this newsletter will be how to use the information we discussed above to give you a good retirement. The first thing that should be understood is that money that is not invested is not helping you build wealth. You may need it for liquidity reasons or peace of mind, but non invested funds will not bring you wealth. It does not have to be invested in stocks. You can invest in bonds, real estate, etc. The point is that in order to win the game, you need to play it. The second thing that must be understood is that a small amount of money can accumulate into a large fortune if given enough time. We want you to think very carefully about your monthly expenses. If you are able to trim your monthly expenses even by a little bit, that could be the difference between a financially secure and financially insecure retirement. We, of course, are not telling you to live a life of joyless austerity and frugality, but it is to your benefit to be careful with your funds and think twice before spending once.

If you have any questions about your investments, please call at any time. We sincerely hope you got value from this newsletter. We appreciate your business and trust.

Dan and Eli


As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

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Investment Newsletter for the End of November, 2019

The market this month is up about 1,000 points. Most of you made a lot of money this month. If you had sold out of your positions when the stock market had one of its many volatility swings due to various domestic and foreign news items, you would have missed out on that gain. In today’s newsletter, we are going to talk about discipline.

One thing that must be understood about the stock market is that in the long run, the vast majority of news items do not matter. The market swings back and forth with the news cycle, people’s fears and greed, and often just random noise. Unless it permanently affects a country’s economy or company’s profitability, the effect will eventually wash out. For example, when Brexit was announced, the stock market temporarily took a steep dive, but why? While Brexit would affect things in the short term, companies will adapt just fine in the long run. There are companies that survive in times of war. Human ingenuity is very resilient. A couple days after Brexit was announced, the market realized it had overreacted and the market surged back up.

If you had the discipline to hold on to your positions when things are bad, you would have profited. Discipline in the context of financial planning means you are able to stick to a plan. It might mean buying when the market is bad, which is very scary, but it is the ability to stick to what you had agreed to. Often the biggest enemy for an investor is themselves as their fear can overwhelm their better judgement. The market has many swings. However, in the long run it trends up. Our advice at Dollinger Management is to disregard the financial news when it comes to your portfolio. Create a plan you are able to stick to and stick to it.

If you have any questions about how you are invested or would like to talk about your plan, please call at any time. We sincerely hope you got value from this newsletter. We appreciate your business and trust. We hope you all had a good Thanksgiving.

On a separate topic. It looks like the tax preparation software will be available in our office early this filing season. There were almost no changes in the tax rules this time. Please call with tax questions or if you wish to do some tax planning. Taxes are a very important part of your financial plan.

Dan and Eli


As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

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Investment Newsletter for the End of October, 2019

The market this month is up about 130 points. Added to the upward movements that we have already experienced this year means the Dow is up about 3500 points. Despite the volatility, if you had invested at the beginning of the year and endured the volatility, you would have made a lot of money. In today’s newsletter, we are going to talk about two topics.

The first topic is diversification. Diversification is essentially the expression “do not put all your eggs in one basket”. Unfortunately, no asset goes up in value forever. No matter what it is, for every rise there will eventually be a crash. Thankfully, not everything rises and crashes at the same time. That is the value of investing in multiple things. Ideally when one thing crashes, another thing rises and the roller coaster is much smoother. No matter how carefully you invest, chances are you will invest money into something that will lose value. If you are invested in many things, that one thing losing value won’t hurt your portfolio by much. Diversification can be done across asset classes (stocks, real estate, etc.), across countries (United States, England, etc.) across industries (healthcare, defense, etc.) etc.

The second topic will be real estate. The usage of real estate can be a valuable addition to a portfolio for it rises and falls in a different way from traditional stocks. There are multiple ways to invest it. The classic way of investing is by buying a property. The advantage of this approach is that you can directly affect the value of the property via your own actions (painting it, repairing things, etc.) and there could be some tax advantages. The disadvantages are twofold. First, is that it is very capital intensive. As a result of being so expensive, it is unlikely you can achieve diversification in your real estate portfolio. You likely can only afford a few properties. Those properties you do have are likely to be in one geographic area. Second, property is not liquid. It takes weeks or months to turn the property into cash. There will be a 6% or 7% sales commission plus other closing costs. Finally, you cannot tell exactly what the property is worth at any time.

Another way of investing in real estate is by investing in a REIT. A REIT is like an ETF or traditional mutual fund. It is a collection of properties, managed by someone else, that you can buy and sell shares of. The main advantage of a REIT is that you get diversification due to many properties being owned and it is much cheaper to get started. The commissions in or out are minimal. I can tell you at 11:15 am, for example, to the penny what your REIT is worth.

If you have any questions about how you are invested, please call at any time. We sincerely hope you got value from this newsletter. We appreciate your business and trust.

Dan and Eli


As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

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Investment Newsletter for the End of September, 2019

The stock market over the last month is up a little bit. The Dow is up roughly 513 points or about 1.9%. The quarter is about flat. The topic of this newsletter will be currency and inflation. Let’s start with currency.

What is Currency?

Currency is a medium of exchange. Prior to currency being used, we had barter. That means we exchanged physical goods or services for other physical goods or services. For example, if I had excess cows but needed a sheep and someone else had excess sheep but needed a cow, we could exchange a cow for a sheep and we would both be happy. The problem is that I would need to find someone that had what I wanted and wanted what I had, and vice versa. Therefore, it would be difficult to find trading partners. With the usage of currency, I could trade my cow for currency and that currency for a sheep. Everything is more efficient because we are always trading with a good that everyone wants (currency) so we don’t have to hunt for trading partners. What you need to remember is that by itself, currency has no value. Its value is what you can trade it for. That ties into our next topic which is inflation.

What is Inflation?

Inflation is simply an increase is the cost of the goods and services within an economy that can be purchased. Most importantly it eats away the value of your currency. If a sandwich costs 5 dollars and you have 10 dollars, what’s the value of your currency? The answer is 2 sandwiches. If the cost of a sandwich rises to 10 dollars, the value of your currency is 1 sandwich. You are poorer, even if your level of currency stays the same. Remember currency has no intrinsic value.

Why this is important

There is an expression that says “Cash is King”. If you have a lot of liquidity needs, the expression is correct. Perhaps you are about to buy a property or pay tuition for junior (or the old age home for your mother). For everyone else it is wrong. You do not want your wealth to be held in cash. Bank interest will not keep up with inflation. If your wealth is held in currency, your wealth will hemorrhage away. You lose money in a slow steady drop. You want your wealth in something that will keep up with or exceed inflation such as stocks, real estate, certain types of bonds, etc. When you are risk adverse and hold cash, you are making in reality making a decision that is guaranteed to lose over time.

We sincerely hope you got value from this newsletter. We appreciate your business and trust.

Dan and Eli


As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

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Investment Newsletter for the End of August, 2019

The market during August was down somewhat. Despite various news items sending the market up and down, in the end the market was only down in August about 450 points. That number of points is not insignificant, but to keep it in perspective, the month before that the market went up. For July and August combined, the decline was a boring 197 points. In the long run, these monthly fluctuations are meaningless noise and should be interpreted as such

That brings us to the point of this newsletter, which is volatility. The stock market is volatile. Some days it goes up, other days it goes down. Sometimes the reason is understandable and sometimes the reason for the market movements are completely inexplicable. It is a wild ride but, in our opinion, it is a ride that is worth riding. However, if you were to listen to the various talking heads on television you wouldn’t think so. They keep saying things like “is now the right time to be in the stock market?”. The answer in our opinion is always yes. A recession is eventually coming as they always eventually do, but nobody knows when exactly its coming. Anybody who says they know is wrong. Anyone who truly knew when a recession was going to hit would stay quiet about it and make a gargantuan amount of money via the use of put options (derivatives that pay out when securities go down in value).

Timing the market is a fool’s game. More importantly, it is also an unprofitable game. The stock market is one of the most potent wealth creators in the world. To use a cliché turn of phrase “you need to be in it to win it”. Over the long run, the stock market has steadily gone up. It has approximately doubled every 10 years. In order to enjoy that increase you need to be invested. The US stock market could crash tomorrow, but it could also keep going up for another 5 years. Nobody knows. Even if the market crashed tomorrow the stock market would eventually recover. Even after the crash in 2009, the market eventually recovered and soared to higher peaks. If you withdraw your money during a crash you are assuming you know when to get back in. Realistically you are not going to know when to do that.

Don’t be scared off by volatility. It is scary when the market plunges 30% but realize that decline is very temporary. Don’t be distracted by the wildness of roller coaster, remember the roller coaster will eventually end safely at its destination.

We sincerely hope you got value from this newsletter. We appreciate your business and trust.

Dan and Eli


As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

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Investment Newsletter for the End of July, 2019

July was a very flat month. The Dow Jones is up approximately half a percent, which is insignificant. In today’s newsletter, we will discuss 2 things about the stock market. 1. Its value to you and 2. Its purpose to society.

The stock market is composed of companies that via the stock market you are able to buy into. When you buy Apple stock, you are buying equity in the Apple company, and your investment over the long run will track the growth of the company. In the short term, investing is volatile, but in the long term, a broad index like the S&P 500, is, at its essence, a reflection of the economy. When you invest in the S&P 500, you are betting on the continued growth of the United States’ economy. In our opinion, that is a good bet to make. If you disagree, do you believe the same about the economy of England, Canada, Mexico, etc. The stock market is a global marketplace. Investing in the stock market will enable you to keep earning money long after you retire, so any financial burdens you have in the future are reduced. As retirement involves a reduction of income, any reduction in your financial burden is essential. The stock market is one of the most effective wealth builders in the world. Over the last 35 years, the Dow Jones has grown at annualized rate of about 9%. Due to the power of compound interest, that’s huge. If you invested 50,000 dollars into the Dow Jones in 1985, you would have over 970,000 dollars right now. That is a level of return that vastly exceeds inflation and is statistically superior to other methods of investment. There is an incredible amount of wealth being created all over the world, the stock market is a way for you to share in that wealth.

The purpose of the stock market is to raise money. In order to grow, companies sometimes need more money than they are willing to obtain through borrowing or internal fundraising. They might need money to hire more people, to buy equipment, research and development, etc. The companies thus sell part of their equity to others in the Primary market and those buyers in turn if they need money can sell that equity to us on the Secondary market. Without the stock market, companies would be forced to grow much slower and there would likely be a lower quality product offering for us to purchase.

We sincerely hope you got value from this newsletter. We appreciate your business and trust.

Dan and Eli


As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

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