When Sonny Liston fought Cassius Clay in 1964, he was widely regarded as the best fighter in the world. Paul Gallender, in his biography of Liston, reported that several boxing writers actually thought Liston could be damaging to the entire sport because he was so dominant, that he simply could not be beaten.
LPL Financial, with its 17,000 brokers and $12 billion market cap, is the Sonny Liston of today’s independent financial advisor industry. On the other hand, RG is the young Cassius Clay, and after exchanging jabs for three straight years over there, it came time to tell LPL exactly what Clay told Liston as their famous third round in Miami ended: “You big sucka, I got you now!”
That wasn’t long before Liston failed to answer the bell, spit out his mouthguard and quit.
______________________________________________________________________
It has been a while since our last Insights column, so I figured I had better roll a grenade down the hallway this week. The reason for the radio silence here on our Insights page has been for good cause: The RG Bar Investment Group has moved on from LPL and joined Aegis Capital Corp.
As many of you know, we’d dramatically outgrown our relationship with LPL Financial over the last couple of years, and this transaction will allow for us to increase our customer service personnel, to offer new investment banking capabilities and to provide a dramatically improved technology experience.
Of course, RG will continue to offer its own fiercely independent brand of wealth planning and investment services through our new clearing relationship with RBC Clearing and Custody whose parent company, Royal Bank of Canada (NYSE: RY), is one of the world’s leading diversified financial services companies. Clients can and should expect the capabilities of one of the world’s largest investment institutions along with the family office service model for which RG has become known.
______________________________________________________________________
Enough about us. We know you read this column for more than just tidbits of boxing history.
According to Bankrate, the average interest rate for savings accounts right now is 0.06%. Six basis points. It begs the question, why in the world do we currently have nearly $13 trillion of liquid assets being held in those types of accounts???
There is over $1 trillion more stashed in bank savings accounts than there was before the onset of the pandemic in early 2020. The whole U.S. stock market is worth somewhere in the neighborhood of $50 trillion, so the amount of money sitting in cash is meaningful.
______________________________________________________________________
September is notoriously the worst month of the year for stocks. The new iPhone launch looks to be a dud. The Delta variant continues to run wild. The Fed has indicated that it will begin to taper soon. Inflation. Evergrande. Oh, and the government won’t stop lying to us about how badly we need boosters because they fear there won’t be enough.
Yes, there are a million reasons to be defensive now, but I think there’s an overarching theme that needs to be recognized: The ultra-rich are very different than you and me. They don’t need encouragement to refrain from buying goods and services because, no matter how expensive your tastes, there’s a limit to how much you can consume. …Maybe not if this diamond-studded monstrosity is your car, but you get the idea:
Why is that important? Because it means that any income above that threshold goes into savings, so it follows that any increase in income concentration would put downward pressure on interest rates in savings accounts. Conversely, increases in income concentration would have the effect of boosting the demand for financial assets such as stocks. We feel like this is the long-term trend.
Shorter term, we’ll have an eye on the Fed like everybody else and maintain our expectation for higher interest rates to take a toll on equity valuations in 2022, but stocks aren’t a short-term investment. …And you can hardly call six basis points even a “return of principal” when you consider what inflation is doing.
For disclosure information please visit:
Comments