I went to see “King Kong” a few weeks ago. It was a hoot…at least it was for me. I can remember how exciting it was to see the old 1933 version on our little black & white TV back around 1960.   Given the reception we had, I thought it snowed on tropical islands until I finally made a trip to the Bahamas about 20 years later!

So what, you may ask, does the big guy have to do with investing? Not much, I’ll grant, but there is this: I believe the movie I saw last week corresponds to reality with just about the same level of fidelity as what I hear reported out of Washington today.   While we can sometimes chuckle, it’s a sad state of affairs when the affairs of state are reduced to so much foolishness, dishonesty and absurdity, isn’t it?

If that isn’t bad enough, it’s doubly insulting that the disingenuous pontificating that we get from our elected officials, and the over-the-top screaming dialog the press somehow has the gall to label as reporting, is so obvious in its transparency. It seems as if they are not even trying to present believable information. It is wearing me down…can you tell?

And the problem is, of course, that it matters. I will admit, however, in this age of social media everything seems to matter.   I am quite confident after hearing the recent hullabaloo over “Shaq” (jokingly) endorsing a “flat earth” belief that there are all too many that will take the leap from watching matinee monster movies to assuming there are dinosaurs and the like roaming the Pacific Islands.

I got up early to see the 7 AM monster movies on Saturday mornings when I was a kid. They switched off with Tarzan movies every few months or so as I recall.   On rainy afternoons, the double-bill Creature Feature was just the thing to pass the dreary day. Unfortunately, my over-protective mom wouldn’t let me watch monster movies until I was in my 30s (ok, that’s a bit of an exaggeration); perhaps it was because I didn’t sleep the second half of my fifth year on earth after watching those flying monkeys steal Dorothy away. Full Disclosure: They still give me the creeps.

Now it’s the creatures’ features in Washing DC that are keeping me awake. When did the culture of Professional Wresting and Jerry Springer TV extend itself into our political discourse? I’m not sure when it happened, but happened it has.

Okay, that’s probably enough venting on my part.   Let’s get down to what matters to investors.   At this writing, the probability of smooth passage of new health care legislation looks shaky at best.   If this effort fails in March, it will likely cast doubt on the market’s confidence in the ability of the administration and the congress to cooperate, regardless of party affiliation. This, then, casts doubt on the ability of congress to pass meaningful tax relief this year, and at this point, faith in tax relief is the biggest driver for the stock market.

I believe we’ve seen a significant increase in the US equity markets since the November election. The DOW was a nominal 18,000 during the first week of November and hit an intraday high of 21,000 on March 16th.   That’s a smoking 16.7% by my calculation. It’s also an indication that the new administration’s commitment to regulatory easing and the Federal Reserve’s projection for slow tightening are now priced into a market that was starved for hopeful signs from Washington for a long time.   If we get tax relief, we will probably see some additional upside, but if we don’t, we will more than likely see a significant pullback.

This, as you might guess, leads me to the conclusion for my investing of “stay the course”. Neither a potential market surge’ nor a possible pullback in the latter half of 2017 have me planning a significant change to my long-term strategy. As I’ve told you, I am a long-term investor and I believe in holding good quality and growth over time.   Steady as she goes, is where I’m living these days, even if the politicians and the markets aren’t.

If you asked your children to define the word rich, what do you think they would say? What’s surprising is that their answer, at its core, would be largely the same at any age including most adults, “Rich is the accumulation of stuff.” The child may say, “lots of toys” or “mounds of candy” or “a giant house with a swimming pool.” The adult may say, “a million dollar income” or “the ability to eat out every night” or “a giant house with a swimming pool.” It is all the same – more and more stuff.

There are two problems inherent with this definition. A definition, by the way, that is repeatedly sounded by every magazine, movie or TV show we come across. The first problem with the ‘accumulation of stuff’ definition is the appetite mentality it promotes. An appetite is never fully and finally satisfied. Therefore, this definition has a constantly moving and unattainable target. For example, will you ever expect to hear your child say, “No more toys, mom. I’m good. I think I have all that I need from here on out.” Think about this, if someone told you as a teenager that someday you would have what your current household income is today, your teenager-self would be excited about the prospect of so much money. Yet you do not feel that way today. This phenomenon is the appetite mentality. No matter what you have, you always want more.

The second problem with the current definition is the ceiling it can subconsciously manifest. Most kids will think you need to be a doctor, lawyer or business owner to have the income needed to be rich in the first place. Why would we want to allow our children to carry a definition that they may see as an impediment for them to attain or fulfill without a specific title?

Time for a new definition that doesn’t suggest that only certain stratospheres of income can reach it. Let’s define rich in such a way that allows our kids to achieve the mark AND feel emotional benefit. To that end, here is your new definition of rich:

Rich is having breathing room in your finances. Rich is spending less than your income.

Let’s look at it from a different perspective…

Imagine you are at the Grand Canyon. You’re standing on the edge of a cliff with your toes hanging over and a strong tailwind behind you. Where is your focus? All of your being is concentrating on not falling. You can’t relate to anything going on around you and you certainly can’t relax. But what if you were 30 feet away from the edge? You’re enjoying the majesty of the site before you, aware of your surroundings and relaxed. Why? Because you have margin, room between you and the chasm. Our new definition of rich centers on the quality of life and the emotional benefits of having distance between income and spending.

Rich = Breathing Room

Wow. Donald Trump has been President of the United States for less than three weeks and he has caused a stir that no one predicted. Okay, perhaps he predicted it, but none of us were taking him at his word by the date of election. As Brian Wesbury (Chief Economist for First Trust Advisors Chicago, IL and our speaker at the annual Lakeland Economic Forecast Breakfast) said, “you don’t necessarily take Donald Trump literally, but you must take him seriously”.

By the way, if you missed the Economic Forecast Breakfast and haven’t heard the podcast yet, go to Allen & Company’s website and find the presentation at:


Brian is interesting, funny and encouraging and it is certainly worth a listen. Laura Hawley introduces him beginning at the 19:00 mark of the pod cast.

So back to President Trump, what is he going to do next?   It is high entertainment for me to watch the Twitter blasts coming out of the White House and the subsequent wringing of hands in the media each day. It is more interesting than college basketball even…at least until March.

But don’t let my glib statement fool you, while it is interesting, captivating and yes even often entertaining to see the approach to governing this administration is taking, It is deadly serious business for all of us.

As an investor, I am encouraged by President Trump’s commitment to deregulation – the broad statement that departments must reduce the number of existing regulations by 2 to enact one new one is probably a good tone-setting approach to the beginning of this change in Washington. While not all regulations are bad, and many are essential, most of us would agree that the regulations stifling economic growth have swung to the excess level since 2008.

The old debates will remain: can we have economic growth fueled by fossil fuels, and maintain the quality of the environment?   Can we relax banking regulations to encourage lending and support business growth, but not create a lending bubble like we saw in 2008?

I will not try to sort out those arguments here because (a) it would take too many words and pages of carefully reasoned, unemotional thought-filled arguments, (b) at least 50% of you would get angry and stop reading me forever, (c) something closer to 100% of you will disagree with me anyway and find my arguments to be more emotional that factual, simply wrong in too many specifics, and generally ill-informed and unenlightened.   As I say: The debates will remain.

And while our country seems to be divided into camps that hurl the “you are more emotional than factual, simply wrong in too many specifics, and generally ill-informed and unenlightened” responses back and forth, there are a couple of things upon which the investor should focus.

While I was more pessimistic in 2016 regarding the equities markets than I have been in a long time, with the market up 10%+ since October, I am now cautiously about the equities market this year. Why do I feel this way?   Because the Administration’s commitment to cutting regulations, coupled with the commitment to tax cuts by both the Administration and Congress, has the potential to give freer rein to economic growth and could possibly move us above the anemic 1% to 2% growth range we have seen the past 8 years.

On the other side of the coin, I am fearful what a trade war could do to the US, as well as international, economies. The tendency to discuss international negotiations via Twitter is a concern, as is the stance on free trade and threatened tariffs.

But we will save international trade discussions for another day since the topic is too vast and I don’t understand all the nuances of cause and effect (like everybody else that pontificates on that particular subject).

But for now, let’s be cautiously optimistic and enjoy the day. If nothing else, it’s February in Florida and the highs are hitting 75 degrees F!

LAKELAND – Ralph Allen recalled the time in the spring of 1986 when he was approached about sponsoring a new initiative of the Lakeland Area Chamber of Commerce.

“We were very appreciative of the invitation and proceeded with the planning of the event for early 1987,” said Allen, chairman of Allen & Company of Florida.

The event was the first Economic Forecast Breakfast, a yearly collaboration between Lakeland-based Allen & Company of Florida and the Lakeland Chamber. On Thursday, The Lakeland Center hosted the 30th edition of the forecast.

“The objective of the first breakfast was to give business owners and their senior management information to make better business decisions,” Allen said. “That’s the primary purpose today.”

To commemorate the event’s 30-year anniversary, Allen & Company commissioned a 10-minute video from Lakeland-based Indie Atlantic Films.

The video – which was shown in lieu of the traditional local and state forecast from Tony Villamil, co-founder of the Washington Economics Group in Coral Gables – featured input from 15 local and state influencers, including Villamil, Florida Commissioner of Agriculture Adam Putnam and Lakeland City Manager Tony Delgado.

The participants reflected on the region’s evolution throughout the past three decades and offered optimistic views of its future.

“If you look at where we are today and where we are positioned to go in the future, Polk County is at the center of the I-4 corridor, which is really the fulcrum of the biggest swing state in the country,” Putnam said in the video.

“I hope we become a regional and significant entity,” Delgado added. “Believe in this community, give it a chance, take that second or third shot.

“Take what has been given to you from a historic perspective, which is a great foundation, and build on it.”

Brian Wesbury, a fixture at the Economic Forecast Breakfast for 25 years, served as the keynote speaker and was presented with a key to the city of Lakeland by Mayor Howard Wiggs. He is the chief economist for First Trust Advisors, an Illinois-based financial services firm.

“I believe the U.S. economy is going to do very well over the next couple of years,” Wesbury said. “And you, because you’re in Florida, are America on steroids. You get turbo-charged.”

He believes increased activity in the private sector – including record-high rates of “real business investment,” which is adjusted for inflation – is responsible for the current upswing.

“We have had massive entrepreneurship in the last eight years, and the government didn’t do any of it,” Wesbury said. “Please stop believing they create growth in the economy because what you’re doing when you buy into that stuff is you’re undermining your own efforts.”

Wesbury’s address focused on the impact President-elect Donald Trump will have on the national economy, particularly Trump’s vow to lessen the size and impact of government.”He learned how to build a business empire, he didn’t learn how to build a bureaucracy,” Wesbury said. “He’s going to build his business sense into a government that we all know gets out of control.

“I’m not an anarchist. I believe a smaller government helps the economy grow, not zero government.”

The Economic Forecast Breakfast concluded with a question-and-answer session. Given his optimistic forecast for 2017, Wesbury was asked whether anything keeps him up at night.

“There are always four threats to prosperity: tax hikes, spending and regulation, excessive Federal Reserve tightening, and trade wars,” Wesbury said. “I am worried about Donald Trump’s comments about putting a border tax on, which would cause a trade war.

“I believe that you want to woo companies to stay here, not punish them for leaving.”

-John Ceballos can be reached at john.ceballos@theledger.com or 863-802-7515.