Inflation has been dropping precipitously in the last couple of quarters. But one part of the economy experiencing high inflation is ticket prices for high-profile events. As the pandemic restrictions eased, people wanted to live life and catch up on experiences they missed. With plenty of cash in hand from pandemic relief programs and work savings, they were willing to pay top dollar to do so. It started with Taylor Swift and Beyonce concerts and has shifted to sporting events. Tickets to sporting events jumped 25.1% in October 2023 from the same month a year ago. Over that time, overall inflation only increased 3.2%. Some of this is a reflection of supply and demand, as ticket sale volumes have doubled in the last year. The demand may be driven by those working from home who are drawn to getting out and being part of a community and, so far, are willing to pay up for it. Other parts of the economy had sky-high inflation but it moderated once consumers had their fun and eventually moved on (see lower airline ticket prices to Europe below in Quick Hits). For now, “funflation” is the price you’ll pay to cheer on your favorite team in person. CNBC
Charlie Munger, the Passing of an Investing Titan: Warren Buffett’s Berkshire Hathaway sidekick (and some would say his consigliere) of six decades passed away this week. He was known for his business acumen, mathematical skills, and, most of all, his quick wit. Before meeting Munger, Buffett’s investment philosophy was to buy “cigar-butt” investments – mediocre companies at bargain prices. Munger convinced Buffett to change his investment strategy from “buying fair companies at wonderful prices, to buying wonderful companies at fair prices.” Hence today, Berkshire Hathaway has a portfolio of strong companies that deliver consistent growth, year after year. The company has had a succession plan in place for years for when either Buffett or Munger passes. So the company will be fine, but his witty axioms will be missed. Some of my favorite quotes by him are at the end. WSJ Bloomberg
Henry Kissinger Passes: Another titan passed, though this time in the field of foreign relations. Admired and admonished by many, Henry Kissinger was a huge influence on world events. To that point, the U.S. has had 46 Presidents since its founding and 14 of them sought his council. A controversial but important historical figure. MSN BBC News
Financial Planning/Investment Strategy Corner:
Year-end Gifting of Low-Cost Basis Investments: As we approach the end of 2023, one item frequently on clients’ minds this time of year is gifting. If you are gifting to family, the IRS allows each person to gift up to $17,000 to anyone without affecting your lifetime estate exemption amount. Therefore, a couple can gift up to $34,000 in 2023 to kids, relatives, or friends. Many times it makes sense to gift low-cost-basis investments instead of cash. Recipients in lower tax brackets can frequently sell those investments at either no capital gains tax or a lower capital gains tax than the original owner. After selling the investment, they will then have access to the funds. Next year the annual gift exclusion rises to $18,000. Forbes
Gifting stock to charities is another year-end planning strategy but unlike gifting to family, could provide you with tax benefits. If the charity is an IRS-recognized non-profit organization, gifting low-cost basis stock is a great idea because non-profits do not pay taxes. The charity can sell the securities and receive the full value of the gift. If the grantor of a gift itemizes their taxes, then they will receive a tax benefit. If the grantor usually uses the standard deduction when filing taxes, they may want to look into “bunching” multiple years of donations into one year and itemize their tax filing for that year to receive more tax benefits. A donor-advised fund is a great tool to utilize for bunching as you can donate the stock one year, but grant gifts over many years. If you have any questions about your year-end gifting and the most tax-efficient way to gift, please reach out to your Financial Advisor. CNBC – The Matthew Perry Foundation Uses DAF RSWA Blog – Donor-Advised Funds
Quick Hits:
- If you are in a funk, maybe some new mini-adventures are just what you need: Axios
- Can’t sleep? Cognitive Behavioral Therapy may be more effective than medication: NYT
- Traveling to Europe next summer looks to be much cheaper than it was in 2023: WSJ
- The days are getting shorter, here’s how to combat seasonal depression: Axios Everyday Health
- Save money by making better coffee at home: Get Pocket
- How to prepare and make a habit of morning workouts: Real Simple Harvard Business Review
How to Improve Performance and Success, Increase Resilience and Discipline, and How to Make Failure Work For You – In Just Two Podcasts! Some clients may remember we hosted presentations in 2017 by mental skills coach, Gio Valiante. Gio is one of the most successful performance coaches in the world and has worked with top golfers and Olympic athletes, was the Head Performance Coach of the Buffalo Bills and has also worked with some of the world’s best investors. He frequently does interviews, and we came across some of his recent podcasts. Gio gives tips on how to change your habits, discusses the role your environment plays in discipline and how to develop resilience in yourself as well as your children. He also discusses how the fear of failure holds people back from making the most of their talent and that shifting from an ego orientation to a mastery orientation can greatly improve performance. He even reviews how to learn when it’s time to cut your losses and move on to another challenge. These were some of the best interviews I’ve ever heard on how to improve performance and success and I highly recommend them. The Knowledge Project – Dr. Gio Valiante Part 1: Discipline and Resilience The Knowledge Project – Dr. Gio Valiante Part 2: Failure and Success
Charlie Munger Quotes:
On passion: “You’ll do better if you have passion for something in which you have aptitude. If Warren Buffett had gone into ballet, no one would have heard of him.” – Berkshire Hathaway annual meeting, 2008
The Importance of Learning: "I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you." Poor Charlie’s Almanack
On Mismanagement: “Invest in a business any fool can run, because someday a fool will. If it won’t stand a little mismanagement, it’s not much of a business.” Poor Charlie’s Almanack
On Success: “It’s so simple. You spend less than you earn. Invest shrewdly, and avoid toxic people and toxic activities, and try and keep learning all your life, etcetera etcetera. And do a lot of deferred gratification because you prefer life that way. And if you do all those things you are almost certain to succeed. And if you don’t, you’re gonna need a lot of luck.” Poor Charlie’s Almanack
Why Envy is Dumb: "The idea of caring that someone is making money faster [than you are] is one of the deadly sins. Envy is a really stupid sin because it's the only one you could never possibly have any fun at. There's a lot of pain and no fun. Why would you want to get on that trolley?" Poor Charlie’s Almanack
On Old Age: “The best armor of old age is a well-spent life preceding it.” Tao of Charlie Munger: A Compilation of Quotes from Berkshire Hathaway’s Vice Chairman on Life, Business, and the Pursuit of Wealth With Commentary by David Clarkhis
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