1Q 2018 Market Observation Newsletter

We are pleased to provide you with our First Quarter 2018 Market Observation which shares relevant articles about the current market environment. We hope you enjoy this quarter’s edition. As always, if you have questions regarding your account or your financial planning needs, please contact us.

Warren Buffett Shares the Secrets to Wealth in America

For the first time in the magazine's history, Time recently handed their editorial reins over to a guest editor, Bill Gates, for an issue. The result is a special edition of the magazine titled, "The Optimists" (Time, Jan. 15, 2018). One of the highlights of the issue is an essay penned by Warren Buffett. While pessimism seems to be pervasive currently, Buffett offers a healthy dose of optimism and suggests that in spite of our country's challenges, "American children are going to live far better than their parents did." Buffett opines that the key driver of his optimism is a market system that fosters innovation and invention, leading GDP growth to continuously compound at a rate above the rate of population growth. Over the course of a generation, this leads to a larger economic pie that can potentially offer more to every individual. Buffett cautions, however, that it is important for society to protect workers who are displaced by this productivity growth, but he remains confident that, "America can both deliver riches to many and a decent life to all." Read more

Bloomberg: Behind the Breakneck Unraveling of Toys 'R' Us

In "The Sun Also Rises," one of Ernest Hemingway's characters is asked how he went bankrupt. He replies, "Two ways. Gradually, then suddenly." This could well be the answer given if you were to ask the same question of Toys 'R' Us, the 70-year old toy store that recently announced that it intends to liquidate and close all of its stores. The easy answer is to attribute the struggles of any brick-and-mortar retailer to the Amazon effect; however, with Toys 'R' Us the story is more complex and involves a decade-old leveraged buyout, a mountain of debt, some strategic missteps and a weak holiday season (which proved to be the final dagger for the company). This Bloomberg article details the gradual, then sudden demise of America's best known toy store. Read more.