The Greatest Experiment

The Greatest Experiment

On July 4th we celebrate America’s 250th birthday. 250 years isn’t that old when you compare our nation’s age to countries like Japan and China, but the milestone is significant to humanity. I would say divine. The United States is the world’s oldest continuous constitutional democracy. Take a moment to think about that. As Charles Dickens once wrote, “Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation of the first link on one memorable day.”

I have a George Washington shirt that I wear on the 4th that says, “It’s not treason if you don’t lose.” It’s a tank top which makes it even more amazing, and by 1:00 it will have barbeque sauce on it from our annual rib grill, a family tradition. However, the signing of the declaration was no laughing matter. Our founding fathers risked their lives by signing that document. "We mutually pledge to each other our Lives, our Fortunes and our sacred Honor." Had we lost they surely would have been hanged or imprisoned. On that document, Thomas Jefferson penned the most beautiful words ever written in human history: "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

What you probably don’t know about me is that I have a book that has been ½ written for over 20 years. Maybe one day I’ll get back to writing it. It’s about divine intervention in American history. I find it very difficult not to see the “help” from above. You can go as far back as the Mayflower, blowing off course. The Pilgrim’s originally intended to land in Virginia. While I’m sure they would have preferred Virginia’s climate. Without the hardships, we may not celebrate Thanksgiving today. George Washington's survival is maybe one of the most astounding events. During the French & Indian War his jacket was full of bullet holes. In the Battle of Long Island, the Continental Army was trapped by the British, the American experiment was on life support, until a mysterious fog rolled in and allowed his army to escape under cover. When the fog lifted, the British were baffled to find Washington and his men nowhere to be found. At the battle of Monmouth, Washington rallied a retreating army and rode his horse to the front line, waiving his sword in the air and daring the bullets to strike him. They could not. His men, inspired by his courage, reengaged the enemy and salvaged a tactical draw from sure defeat. The storm at Yorktown, discovery of Benedict Arnold, Lee's secret plans to invade the north, the D-Day weather, the Cuban Missile Crisis, one could literally make a book out of the list of improbable events…the long chain of iron or gold, of thorns or flowers that never would have bound you but for the formation of the first link on one memorable day.

I am very proud to be an American. We are a special breed of many people...all hungry for what we can become. As a whole, we are a nation that still chooses liberty above all else. As Lincoln wrote, we were constructed of the people, by the people and for the people, we have had and will have flawed moments. Show me a single person who does not. But in America we have a proud history of perseverance, getting better and outlasting. Ask the British, it's just what we do so get used to it. Whether you are grilling ribs, or hotdogs or tofu, I hope you have a wonderful 4th of July, and perhaps in spirit we will raise our glasses together. John Adams envisioned that years into the future, July 4th would be celebrated with fireworks and festivities nationwide. He was indeed a wise man.

How Markets Historically Perform After Mid-Terms

Article provided by Derek Ballinger, Crosby Advisory Group partner and Chartered Financial Analyst charter holder.

Investing based on “Seasonality” means that investment returns can be explained by recurring events. This only makes sense if there is an economic reason why the market would move in response to certain dates on the calendar, not because the arbitrary Gregorian calendar has any power over the universe. We do not make investment decisions based on horoscopes, but sometimes there is value in looking at seasonality and it does have some explanatory power on investment outcomes. For instance, it's a midterm election year in the U.S. I was curious how markets performed during midterm years and what investment returns looked like over the next 12 months after midterms. This analysis only looks at the midterm election cycles from 1990-2026, so the sample size is pretty limited but there are some interesting results.

Midterm years are typically underperforming years for the stock market; the average midterm year return is around 1.63% with the median -0.89%. This might be explained by investors cautiously investing based on uncertainty on what the political landscape will look like for the next few years. Subsequently, when that uncertainty resolves markets perform very well with an average post-midterm year performance of 20.5% and median 26.29%. The worst post midterm year performance was in 2014 where the market returned 1.4%. The worst post midterm year performance for a republican was 5.49% in 2006.

An interesting insight was this result is bipartisan as well, in both Republican and Democrat administrations post-midterm years produced above average returns. After doing this analysis I will pursue this further over a larger sample size and see if there is any difference if the president and congress are the same party or if the incumbent party loses/wins. 

Summer Checklist

• Review savings rate. We are halfway through the year and have an idea of annual income. Should you be deferring taxes or looking for tax-free?
• Can't fund a Roth because of income or want to contribute more than a Roth will allow? Talk to your advisor about other tax-free options.
• Create a list of important information (accounts) and let a trusted person know where they can find it.
• Don't put off that meeting to get your Will or Trust updated.
• Have fun. It's summer!

Give our office a call if you have questions or need help reviewing your checklist. 

Disclaimer: Crosby Advisory Group, LLC is a registered investment advisor. This newsletter is for informational purposes and does not reflect direct investment or tax advice. Investing involves risk including the potential loss of principal. Not all investments are suitable for all people. Crosby Advisory Group, LLC has ownership interest in NMD Insurance Agency and CAG Marketing.