Edgerton “Ketchie” Welch, a lifelong resident of Chillicothe, Missouri began his career at his family’s Edge-Mar Dairy but later came to run the local Citizens Bank & Trust Co., serving for a total of 55 years. At various points in his role as CEO, he reported an investment performance that beat the nation’s biggest banks and insurance companies. When interviewed by Forbes on his exceptional success, he admitted that he was not smart enough to play the stock market and never even heard of modern portfolio theory.

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Recency bias is a term used in behavioral economics that describes the tendency of people to believe that recent events will occur again soon, that the current state of being will continue indefinitely, that headlines which feel ominous and immediate necessitate urgent action. Lacking the wider-angle lenses of history and mathematical probability, this type of bias affects trading and other short-term decisions that people make — panic selling, bubble buying – fueled by fear or greed in volatile moments.

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The Goosebumps books are written at a third to seventh grade reading level, unlike the minutes of the Federal Open Market Committee which cater to the ivory tower crowd. They feature no violence or death, unlike the trade press which has been reporting on the past year’s devastating market losses in brutal detail, and the mainstream media which has documented pandemic casualties for the past three years. A common theme in Stine’s writing is the use of wit and imagination to escape horrendous situations. This is an approach that we all cling to in this second decade of the third millennium as we wrestle with all our grown-up fears.

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The Goosebumps books are written at a third to seventh grade reading level, unlike the minutes of the Federal Open Market Committee which cater to the ivory tower crowd. They feature no violence or death, unlike the trade press which has been reporting on the past year’s devastating market losses in brutal detail, and the mainstream media which has documented pandemic casualties for the past three years. A common theme in Stine’s writing is the use of wit and imagination to escape horrendous situations. This is an approach that we all cling to in this second decade of the third millennium as we wrestle with all our grown-up fears.

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Wealth today is generally defined as the value of all assets of worth owned by a person, community, country or country. Back in the heyday of the pantheon of the Greek gods, wealth was largely measured in agricultural terms. Today, respondents in the latest annual Schwab modern wealth survey concluded that having a net worth of $1.9 million qualifies a person as wealthy. However, the top 1% of households by income lost almost 16% of their overall wealth from the fourth quarter of 2021 to the third quarter of 2022.

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In January 1969, the inflation rate was 4.4% and the unemployment rate fell to 3.4%. In the decades since, inflation has frequently fallen below 4%. Federal Reserve Chair Ben Bernanke in his key role made 2% the official target in 2012. But we have not seen unemployment in the range of 3.4% in the last 54 years. Last Friday, the Bureau of Labor Statistics reported that the economy added a reported 517,000 jobs and that the number of jobless Americans as a percentage of the population fell to 3.4%.

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The first month of the New Year is already behind us and how fantastic it would be if we could keep the rally going at this pace for the rest of the year. Heading into Groundhog Day, we would welcome six more weeks, six more months of this performance with low volatility and strong returns. It certainly does not feel like we are about to enter into the recession that economists have threatened for more than a year.

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Some Asian markets are closed all this week for the Lunar New Year holiday. Sunday marked the first day of the Year of the Rabbit, said to be a symbol of happiness, prosperity, abundance, peace, elegance, and longevity. Our colleagues at MacKay Shields have also dubbed 2023 as “The Year of the Bond”, and it has indeed begun with rallies across corporate, government, and municipal markets.

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Markets around the world were stunned when the gold standard credit rating of the United States of America was downgraded by Standard & Poor’s from triple-A to AA+ after the close on Friday, August 5, 2011. S&P had issued a negative outlook in July after warning that failure to reach a sufficient compromise on slashing the deficit would risk this action. They boldly told the world that “the effectiveness, stability and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges”.

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This new year with its winds of change requires quite a bit of adjustment but, as with every new beginning, it brings a jolt of excitement, a yearning for change, for betterment. There may be worry but there is hope and underlying it all is our unquenchable American can-do spirit and drive. There are problems to solve and we will find the ways. We not only carry on, we prevail in new and challenging conditions.

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