February 2024

“I have ever deemed it more honorable and more profitable, too, to set a good example than to follow a bad one.” – THOMAS JEFFERSON

Have you ever wondered why telephone numbers are seven digits long?  When the telephone was new technology, the American Telephone and Telegraph Company (AT&T) conducted a study of how to get widespread adoption.  At that time, they could have chosen any combination of numbers.  There were no technology conflicts; they were literally inventing it as they went along.  They gathered groups of people and had them memorize a series of numbers.  AT&T was looking to see what amount and configuration of numbers would allow the most people to memorize, or just hold in their short-term memory.  They found that number was seven.  If they went beyond seven digits, the ability to recall the numbers on the short term and the long term went down dramatically. 

They also cleverly figured out that putting a dash so people would see three numbers followed by a series of four numbers made the memory recall even more effective.  There really is no other reason for the dash.  This was a great use of industrial psychologists.  How many parents said that a psychology major was good for nothing?  The psychologists and the company created a standard that has stood the test of time.  I am reminded of this story every time I am trying to keep one of our client’s account numbers in my memory.  We use eight-digit account numbers, and often I must go back and look up a number I had just been using. 

Human behavior and psychology also give your Collins and Krank team great job security.  There are two big components of value that we deliver to you, our clients, regarding investing.  One component of great value is our expertise and overall knowledge of investing, the markets, the economy, and individual companies.  As you know, we spend a great deal of time to know what we know and to stay current.  The other component is maybe even more important; that is the psychology of money and investing.  As human beings, the way we are wired works against us as investors.  Our emotions tell us to be fearful at times when we should be bold and take action.  Later when the risk is high and prices are elevated, our emotions tell us we need to take action when we should perhaps be more guarded.  At Collins and Krank, we recognize this. It is why we work hard to get each of our clients into a formal Goal Plan and investment strategy, which helps to remove the emotion.  Then we do our darndest to help you stick to the plan when your emotions and psychology are screaming at you change things. 

We have been through a difficult few years.  The Chinese Covid craziness and the self-inflicted economic bloodletting, followed by the infusion of too much economic Vitamin-B and other government stimulus, sent the economy and the markets spinning like a tilt-a-whirl at the county fair.  When trying to correct things (we may have over corrected), we have been dragged through even more strange happenings in the financial world with signs of recession and abundance competing for our attention.  This type of uncertainty gets many people to pull in their horns and their pocketbooks, pad their savings accounts, or even get more conservative in their investing.  Unfortunately, many investors got too conservative.  They didn’t have a plan, and they didn’t have trusted advisors keeping them in that plan.  They got too conservative when they should have been leaning toward growth.  Bear markets tend to do that to people as does the shiny effect of CD rates people have not seen in a while.  You will recall that I warned our clients not to be distracted by shiny objects and to stick with the plan. 

This past year as Artificial Intelligence (AI) has become the hot investment buzzword, those people who stuck to the plan have been rewarded.  I am amazed by all the people who have come out of the woodwork asking about our strategies.  We are hearing from people who tell us they may want to come to our firm, admitting they “may have been too conservative,” or that they may be “ready to get into the market.”  I have people who even go out of their way to tell me they heard about some of our stocks that have risen dramatically and now that want to get into those strategies.  The key word is “NOW.”  

Now they want to get in!  Now they want to invest for growth.  They are interested in growth strategies only after seeing those types of stocks have doubled in price in this market.  The time to do that was two years ago when the markets and these very companies were unloved.  At that time, we had unfettered access to these great companies at very reasonable prices.  Now that the stock market is “cool” again and some of the stocks are “rock stars”, access is limited, or you must pay up for a backstage pass.  Psychologically investors en masse are doing it to themselves again, but alas job security for Collins and Krank. 

The other day I spoke with an individual who was telling me he was buying shares of a certain popular tech company.  He is not a client; he hears me on the radio and was hoping I would give him my blessing.  I politely told him I could not give him advice like that.  He is not a client, and I don’t know his situation.  In my mind however, I was making a mental note that here was another person buying something that we have owned for our clients for some time, and we are actually selling because it has gotten ahead of itself.  Knowledge and psychology strike again. 

A great amount of time, knowledge, and collaboration goes into creating both an investment plan for you and a Goal Plan for your life.  We care less about the latest stock everyone is talking about and more about making sure you get to your goal of the lifestyle you want when you want it.   Once again, our advice to you is stick with the plan. 

By the way, last February I wrote “I love that people are in their shorts, smiling, chipping away at the ice and slush at the end of their driveway, in February!”   Who would have thought this year would be even warmer. 

Sincerely,

Brien Krank
Financial Advisor, RJFS
Senior Portfolio Manager
Managing Partner – Collins and Krank

Hear me on the radio Wednesday mornings from 7:35am to 8:55am on 1100am The Flag and 970 WDAY.

Any opinions are those of Brien Krank and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance does not guarantee future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Individual investor’s results will vary. Raymond James is not affiliated with Nick Murray, Federated Hermes, or First Trust. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax or legal issues, these matters should be discussed with the appropriate professional. The information contained in this letter does not purport to be a complete description of the securities, markets, or developments referred to in this material and does not constitute a recommendation.