A Milestone Worth Remembering

This year we celebrate our company’s 45th anniversary. While I recognize that the past few years have been difficult for everyone, especially those preparing for retirement, this is exactly the environment we at Life Financial Group (LFG) have invested in since founding the company in 1978.  A wise man (King Solomon) once said there’s nothing new under the sun. We find that his words ring true, even today! The more things change the more they stay the same.

  • In 1978 the country was in a recession. We were experiencing a period of stagflation and interest rates were 10%, eventually topping out at 21%. This was unprecedented!
  • In 1983, LFG had our 5th anniversary and the U.S. was in a deep recession. We had negative worldwide GDP growth in 1982, similar to what recently happened in 2008. Oil prices were collapsing, which had a big impact on the western states, and the auto industry downturn was causing layoffs in the Midwest.
  • In 1988, on our 10th anniversary, the DJIA was recovering from a 45% decline in the prior year.  The DJIA declined nearly 23% on a single day in October 1987.  This never happened before – it was a scary time for all.
  • In 1993, we had our 15th anniversary. The Resolution Trust Corporation (RTC), similar to U.S. Treasury Department Troubled Asset Relief Program (TARP) was in place to bail out the savings and loan industry. In 1990 and 1991, the DJIA declined 21%.  A record number of Savings and Loans were bailed out – 747 in one year!  Unheard of before.
  • In 1998, we had our 20th anniversary. Russia defaulted on its debt and a number of developing countries were borrowing from the International Monetary Fund to survive the crisis. The credit markets were locked up and bond prices were declining. Long-term Capital Management, a hedge fund, was taken over by a number of banks and investment banks, under the direction of the New York Federal Reserve Bank.
  • In 2003, we celebrated our 25th anniversary. The NASDAQ continued its decline after the technology stock bubble burst in 2000. The DJIA declined 30% in 2001 in response to the 9/11 terrorist attack on the U.S.  Everyone was asking, “What was next?”
  • In 2008 we celebrated our 30th anniversary. We experienced a major credit crisis worldwide and the DJIA declined over 45% since October 2007. The U.S. Treasury initiated a $700 billion rescue package to assist the banking and insurance industry. It was a very ugly year for nearly everyone. Jobs were lost, families lost their homes, and some panicked and sold their investments at the wrong time losing significant wealth.
  • In 2013 we celebrated our 35th anniversary.  At the start of the second quarter, the intensifying European debt crisis and concerns about the impact that it would have on global economic growth prompted a sell-off. By the start of June, U.S. stocks had given up the year’s gains. Borrowing costs for Spain surged and investors fretted over the outcome of Greek elections that had the potential to pull the euro currency bloc apart.  The DJIA fell as low as 12,101 on June 4. The S&P dropped to 1,278 on June 1.  Through it all, the Dow gained 7 percent for the year, its fourth consecutive annual advance, having started the year at 12,217. The S&P 500, which started the year at 1,257, is up 13 percent, beating the 7.8 percent average annual gain of the past 20 years (Daily Finance).
  • In 2018 we celebrated our 40th anniversary.  On February 5 – The Dow Jones share index closed down 4.6%, its biggest drop since the 2008 financial crisis.  President Trump announced tariffs on up to $60b in Chinese goods and planned to limit the country’s investment in the US. The Dow Jones fell sharply in response. The national unemployment rate hit 3.9 percent, the lowest rate since 2000.  Mid-term elections: The Democrats gained 40 seats to take control of the House of Representatives, but lost two seats in the Senate. Gubernatorial elections: The Democrats gained seven new seats. Michigan became the tenth state to legalize recreational marijuana. On December 21, The Dow Jones closed at 22,445.37 after its worst week since 2008. Two retail icons went bankrupt: Founded as a mail-order watch business in 1886, Sears filed for bankruptcy, marking the end of an era for many Americans who remember paging through its massive catalog. And after declaring bankruptcy, the former toy giant Toys “R” Us closed all of its stores after more than 65 years in business.
  • In 2023 we celebrate our 45th year in business. We are maintaining a cautious but balanced approach to investing.  We cannot worry about what we cannot control or change.  We will not get caught up with the paranoia and fear of those profiting from the sale of Gold and the latest and greatest new trend. We know that politicians come and go and economies go in cycles.  We also know that the Lord is coming soon and He is still in control.

So, what can we learn from the last 45 years?

  • First, an historical perspective is valuable considering the current investment environment.
  • Second, despite all the problems over the last 45 years, America has grown and prospered and so have our clients.
  • Third, we are in the business of looking for investment opportunities that exist beyond the difficulties and emotions of the day.  A doctor is always his worst patient because of emotion.  Those who try to invest on their own usually get tripped up due to this same emotion.  For nearly 50 years we have helped our clients build their portfolios and prepare for retirement.  We have protected them from costly mistakes and helped keep them on track.
  • Remember, we can all look forward to a bright future, especially if you know the Savior. Jesus is quoted in Matthew 6:25 saying “Do not worry…who of you by worrying can add a single hour to his life?”  We value and protect the wealth God has provided, but keep our trust in God (not our money).  We are honored to be your trusted family advisor.