The Gold Leaf – December 2023

2023 is quickly coming to a wrap. I hope everyone was able to slow down and reflect on the lessons of 2023. We appreciate your trust and consideration in reading our newsletter. Our objective is simple, we want to serve as a voice of actionable value in a world dominated by clickbait. We deliver value from lessons learned and ideas that enhance freedom.

The top 3 themes for 2023 were:

1. Change and uncertainty are here to stay

2. There is a disconnect between historical valuations and current prices

3. Perspective Matters more than ever

Navigating Change and Uncertainty

There was discussion all year the US was destined for a deep recession. The Federal Reserve continued to raise interest rates despite its actions pushing food and energy prices up and putting its actions directly against its policy mandate. It’s not that they want to push up prices, they didn’t have any other tools available. When the Federal Reserve was formed in 1913 the national debt was 2.91 billion which grew from about $1.55 billion in 1893 to $2.91 billion in 1913. During this time the idea was to create a centralized entity that could control bank lending and overall economic activity. The cartel sold politicians and voters on the idea they would smooth out natural cycles that exist in a free market. This worked about as expected up until 1970 when the pace of technology coupled with politics shifted the world from a gold standard to fiat. Since this change, we now have government spending that drives credit and economies. The banking industry still drives local economies and small businesses but consumer spending is largely driven by low interest rates and government subsidies like student loans, home loans, and Medicare among other programs.

What the Federal Reserve is observing is they can raise rates and crush local economic activity however they cannot fight the fiscal dominance of Uncle Sam’s fiat money printing machine. The punchline to the changes we are experiencing is high rates with high debt do not push prices lower. Ray Dalio writes on these cycles extensively.

Historical Valuations Require Inflation Adjustment

There is an illusion of control from the central planners and politicians. I believe that most politicians and central planners, like Federal Reserve Board Members, legitimately believe they are serving for good. Yet these disconnects and the focus on their policies have created a disconnect from local investors like you and me. The legacy media outlets (Like NBC, ABC, CBS, and Fox) focus on the effects of the recent policies rather than the solutions that require action. There have been countless headlines on how higher interest rates are impacting 1st time home buyers. There are discussions on how rising interest rates are putting pressure on business owners. There are also articles discussing the benefits of earning 5% on savings through money market accounts and treasury bills. However, what can an investor do if valuations still don’t make sense with today’s inflated prices? This is the conundrum of losing purchasing power called inflation. To preserve and grow wealth there are 3 principles that every individual must learn:

1. Preserve capital from loss

2. Preserve capital from inflation

3. Generate income that keeps pace or beats inflation.

This is why everyone must build a team of trusted professionals to align timeless principles with modern challenges. It’s never been more important for individuals and families to have an unrelenting standard on the 3 principles that BMD Investment Group builds every investment around. Robert Kiyosaki teaches us in Rich Dad Poor Dad that an investment isn’t something we buy and hope it goes up in time, that is speculation. This is why I believe that investing in stocks is difficult. You are betting the stock will go up unless you have a system and strategy that generates value and an income stream. To achieve these principles investors must develop a portfolio strategy that aligns assets that serve their needs. Here are a few examples:

1.     Capital loss – Real Estate, Gold, Commodities, Notes (loans) with first position on collateral above the note value.

2.     Preserve capital from inflation – Real estate, land, gold, commodities.

3.     Business income, Rental income, dividends, option selling, notes (loans and bonds).

Make it stand out

Whatever it is, the way you tell your story online can make all the difference.

Perspective Matters

A favorite movie of mine is “It’s a Wonderful Life”. The movie highlights the character, George Bailey, who is depressed when focused on his situation. He contemplates suicide because he is terrified about what others may think because of events he cannot control. When he is visited by Clarence Odbody, he recognizes that despite the challenges he experiences his life has a transformative impact on families in his community. When he chooses to embrace the perspective of all the blessings in his life he is showered with more and more blessings. This is a very similar concept to the book “The Gap and the Gain”, by Dan Sullivan and Benjamin Hardy.

As we close out the year, it’s critical to reflect not on our personal opinions of what central planners should do. Or focus on the impact that higher interest rates may have on our situation. Like George Bailey, it’s easy to get caught in the impact of how external events affect our lives. I challenge everyone to realize that despite the many challenging circumstances we may face ahead there are more solutions than problems. You may think it’s impossible to build a portfolio that protects capital from loss and inflation while generating income. However, at BMD we believe it’s up to each investor to set the standard for their investments. We can help investors find partners to meet each of these criteria. We build balanced portfolios to preserve capital. From the hard lessons learned, we know the importance of aligning capital with investments that protect the principle and generate yield. By aligning capital to specific investments, we align with each investor's needs. It’s an honor and a privilege to work with investors. We have never been more excited for the opportunities ahead. Our next newsletter will identify the changes we have seen through higher interest rates and decreasing money supply. We will explore the possibilities this creates, if you would like to learn more about our portfolio strategy, or upcoming investment opportunities please reach out directly at info@BMDInvest.com and I would be honored to connect with you.

Until Next Time, Share the Wealth