Betting on America
By PDS Wealth Management on January 28, 2022
Each February, Berkshire Hathaway CEO Warren Buffett issues his annual “Letter to Shareholders,” which artfully blends financial reporting and homespun wisdom. In 2021, as in some prior years’ messages, he admonished: “Never bet against America.”
For the past three years, American investors have been presented with a stark contrast. The financial results of the companies we own have been terrific, while our political news has been anything but. American business has produced results that are among the best in its history, while America’s regard for its elected officials is at an all-time low. Since January of 2019, the value of the S&P 500 Index has doubled, while the public approval rating of the US Congress has hovered at around 20%.
My next birthday party had better be held outdoors, because my cake will bear 70 candles. For the past four years our firm has been steadily enacting the transition of management responsibility to our younger generation of partners because we respect the inevitable. Yet in Washington, our political “leaders” are mired in the selfish habits of a group of curmudgeons whom time has passed, who fight old fights and hold old grudges. Progressive Insurance advises us to avoid behaving like our parents, but our elected representatives are acting like theirs.
The conclusion to be drawn from the following table is obvious:
When I blow out my candles this fall, I will wish for an ascendancy of youth in our elected representatives.
American CEOs are chosen according to their ability to lead diverse enterprises, and stamina is a prerequisite. They serve at the mercy of their shareholders, who replace them when their leadership falters. Among the list of American CEOs above, Mr. Buffett is an outlier with respect to his age, which alone raises the average of the CEO group by four years. Remarkably, for decades he has served his shareholders well by publicly admitting his errors and demonstrating the ability to learn from them.
Our political class is incapable of admitting that they serve only themselves. In 1776, Thomas Jefferson celebrated his 33rd birthday. For America to continue to lead the world, American voters must wield the authority our Founding Fathers gave us to retire the has-beens and energize our democracy.
Tom Parker, CFP®
Managing Director