In America We Trust


Americans have some major trust issues as we approach November 8th. We are mired in distrust of our Presidential candidates, Congress, the media and each other!  It is election week and the biggest hurdle facing both of our Presidential candidates is their inability to inspire the trust of the American voters.  Poll after poll highlights this seemingly national concern and has been fodder for debate all year.  In a September Wall Street Journal poll, far less than half the voters believe that either of the major party candidates are trustworthy.  A recent CBS/NYT poll showed that 2/3 of likely voters view both candidates as untrustworthy.  Not only that, but we don’t even trust each other.  A Gallup poll, also in September, showed that only 56% of us have a great deal or a fair amount of confidence that our fellow Americans will make good judgments about the issues facing our country.  Wow!  Not surprisingly, the same poll shows that only 32% of us have even a fair amount of trust in the media and 57% have little or no confidence or trust in those currently in office or running for office.  That is an awful lot of American cynicism!

Are these political campaign season statistics and events unprecedented in history?  Nope.  Even the Founding Fathers were full of distrust.  The framers of the Constitution created the Electoral College to decide the presidential election. Instead of allowing for “one person, one vote” presidential elections — as the democratic process would imply — the founders opted to place the responsibility in the hands of a select few who “will be most likely to possess the information and discernment requisite so complicated an investigation,” or so wrote Alexander Hamilton in The Federalist, No. 68 [source: League of Women Voters].

Because Electoral College voting does not necessarily reflect the vote of the American people, a president can be elected without receiving the majority vote. Looking back in history, we have had a few disputed outcomes to our Presidential elections that caused distrust on all sides.  For example, in 2000, George W. Bush won the presidential election by winning in Electoral College votes even though neither Bush nor Al Gore, Jr. had a clear popular vote victory – remember the hanging chads in Florida?  In 1824, Andrew Jackson charged that a corrupt deal led Congress to award the Presidency to John Quincy Adams when no candidate received enough Electoral College votes.  Sometimes we don’t even trust our democratic process!

Of course, the financial services industry is under perennial scrutiny, especially this year with some of the banking industry issues we have seen.  In order to restore a sense of trust, the Department of Labor rule defining fiduciary responsibility will begin taking effect in 2017. It will require that financial institutions and advisors give advice in the “best interest” of the client and that they comply with a professional and reasonable standard of conduct and compensation.  See our previous blog:   DWM welcomes these changes and believes it is the right way to do business.  As members of NAPFA, the National Association of Personal Financial Advisors, we have always adhered to these principles.

The National Association of Personal Financial Advisors (NAPFA) is the country’s leading professional association of Fee-Only financial advisors—highly trained professionals who are committed to working in the best interests of those they serve. Since 1983, Americans across the country have looked to NAPFA for access to financial professionals who meet the highest membership standards for professional competency, client-focused financial planning, and Fee-Only compensation.”


One thing we can trust is that, once this election is over, there will be a renewal of the iconic American optimism, no matter who wins.   We certainly hope that, as Americans, we can begin to re-establish a belief in our democratic process, in our leaders, in the media, the financial services sector and in each other.  At DWM, we are confident that we have earned the trust of our clients and will continue to operate with the integrity that you have come to expect.  Happy Election Day-please make sure to vote!!

Five Years Later: “Advantage America” by Dr. Gary Shilling

Lehman collapseLehman Brothers collapsed September 15, 2008. Five years later, the world is still struggling to recover from the most serious crisis since the Great Depression. Our government seems to be in perpetual dysfunction. The media seems intent on focusing on real and potential problems. It is easy for Americans to feel pessimistic about the future.

There is another side to the story. It is presented by Dr. Gary Shilling who has become quite bullish about the future prospects of the U.S. This is particularly interesting, since Dr. Shilling has been a “confirmed bear” and may be best known as the author of The Age of Deleveraging- Investment Strategies for a Decade of Slow Growth and Deflation, originally published in late 2010.

Dr. Shilling, in his July 2013 issue of Insight, wrote that prospects are bright for a return to rapid U.S. economic growth and a resulting decline in the federal debt-to-GDP. He outlined six key areas where the U.S. is better positioned for the future than any other country- developed or developing. These include:

1.  Demographics. The U.S. fertility rate is currently 2.06 to 1. That is close to the 2.1 rate needed to sustain the population in the long run. All of Europe, and even Canada and Australia, are below the reproduction level. Japan is at 1.30 and China at 1.55. In the long run, this means our population should stay roughly constant and there should continue to be a large percentage of younger workers. This is critical for future economic growth. No other developed country has these characteristics.

2.  Entrepreneurial Spirit. “Despite perceptions of an erosion of U.S. economic vigor, America still seems way ahead of whoever is in second place,” wrote Dr. Shilling. Our educational systems encourage free inquiry and challenging the accepted doctrine. Japan and China discourage individuality and education typically is based on rote memorization and lack of inquiry. In addition, U.S. manufacturing has regained its spot as the most favorable spot for foreign direct investment, pushing China into second place.

3.  Labor Flexibility. In the last 40 years, union membership in the private sector has been reduced from 40% to 6% of the workforce. In the last five years, Americans that are out of work have accepted new jobs, many at lower pay. In the auto industry, for example, the average pay of autoworkers is now less in the U.S. than in Germany or Japan. As a result, American made vehicles are beginning to be shipped abroad in significant numbers.

4.  Declining Need for Foreign Financing. Americans are saving more. Most recognize that you cannot count on double-digit returns every year from your investment portfolio. In addition, you cannot plan on your home equity providing the funds you need for retirement. Therefore, Americans need to save more and they are doing that.

More savings means consumption will grow more slowly. In addition, when spending growth is retarded, this means buying fewer imports. The result will be, in Dr. Shilling’s estimate, a reduction in the U.S. trade and account deficits. This will put fewer U.S. dollars in foreign hands. And, it would mean that America could meet more of its financing needs internally.

5.  Strong Dollar. Despite all of the issues here in America, the U.S. dollar is not even close to being unseated as the world’s primary reserve and trading currency. We have the largest economy, deep and broad financial markets, free and open financial markets and economy, lack of substitutes and credibility in the value of the currency. No other country can boast these attributes. Hence, the U.S. dollar is the only safe haven of any size in a persistently uncertain world.

6.  Energy Independence. America is on the way to self-sufficiency in energy. There are predictions that the U.S. could be relatively free from foreign oil dependency as early as 2020.

Certainly, no one can predict the future. However, Dr. Shilling’s remarks do unmistakably outline the reasons why America is better positioned for the future than any other country in the world. With all the negative media we see, hear, and read daily, it is nice to be reminded and encouraged by positive facts foretelling a brighter future.