Broker Check

May Coffee & Chocolate Newsletter

May 7, 2022


“Drink Coffee. Eat Chocolate. Live Happier and Longer.”


As an investment advisor, I need to “get going” first thing each morning and prepare for the day’s market activity, as I manage our broad portfolio of investments with the task of minimizing risk, while maximizing returns to meet all of our clients’ varied long-term goals. Much like my college days when classes started at seven AM, after studying late into the night and my CPA days with long hours during the seemingly endless tax season.  I “start my engine” each morning with a large mug of Joe while watching the over-night and pre-market results to get some idea of what the day will bring. Jeannie has me hooked on the “Coffee That Won the West”, Arbuckle’s Ariosa; roasted fresh daily in Tucson since 1864. A real treat and a great way to start my day. With stiffness in my hands from years of holding  my pencil and mouse, I enjoy my daily brew from a large earthen clay mug so I can wrap my hands around it for the warmth and hold on with the oversized handle that accommodates my large paws. My mug is a prized possession as Jeannie gave it to me as a special gift.

With my synapses hitting on all cylinders by 7:30 AM, my second cup of Joe gets my juices flowing as I review market commentaries and opening quotes of all positions in the portfolio.  With cash balances and active management rebalance decisions in mind, my third cup of Ariosa puts me in high gear and I am “off to the races” as trades are executed for client portfolios needing attention. Before I know it, the Closing Bell has rung at 2 PM and I can take a lunch break. I cannot even imagine getting that all done without the help of my good friend Joe!

Well, as it turns out, drinking three-to-five cups of coffee a day is good for all of us (not just for investment advisors). According to the good folks at John Hopkins and Healthline, there are nine unique benefits of consuming coffee on a regular basis:

  • Coffee contains caffeine, a stimulant that has been shown to increase energy levels and decrease fatigue. My number one reason for my daily Joe.
  • Regular coffee consumption may be linked to a lower risk of developing type 2 diabetes over the long-term.
  • Some research suggests that coffee may help protect against certain neurodegenerative disorders, including Alzheimer’s disease and Parkinson’s, in addition to a lower risk of dementia and cognitive decline. And a lower risk of depression.
  • Your liver will thank you. Research shows that coffee drinkers are more likely to have liver enzyme levels within a healthy range than people who avoid coffee.
  • Your odds of getting colon cancer will go way down; in fact, twenty-six percent less likely to develop colorectal cancer. Who knew?
  • Coffee supports heart health. Studies have shown that drinking three-to-five cups of coffee daily reduces the risk of heart disease by fifteen percent; reduces risk of stroke by twenty-one percent; and significantly reduces the risk of heart failure.
  • Your DNA will be stronger by drinking “dark roast”; decreasing breakage in DNA strands that can lead to cancer or tumors.
  • As an “ergogenic acid”, coffee may enhance athletic performance, endurance and improve power output.
  • My favorite: coffee could help extend longevity, thanks to its multitude of potential health benefits.


It has been reported that coffee consumption rose during the Pandemic and continues to rise. As a matter of fact, our broadly diversified portfolio includes positions in “consumer staples”, including coffee. As a coffee “proficianado”, I know that I will continue to consume my three cups daily, even with the inevitable inflationary price increases. Clearly, I function better with it!

For the year-to-date period ended May 6, 2022, our aggregate managed EQUITY portfolio continued to feel the effects of over-extended individual investors (gamblers really) running for the exits to cover their margin calls; in many cases selling high quality funds and stocks at near 52-week lows; companies that truly represent the future of our economy. Like the time-tested managers of each of our fund investments, we will look for opportunities to add to those positions by “buying low”. Nevertheless, our current portfolio values have been dragged down by the herd mentality of inexperienced speculators. Our equity portfolio results, representing fifty one percent of the total portfolio, are:

Once again, the Alternative Equity category continues to “hold up” the entire equity category by its rising underlying asset values (seemingly immune to the current inflation) and the out-sized dividends from increasing rents for most properties.  For reference purposes only, the S&P 500 index fell by 13.49 percent for the same period. And the NASDAQ index (of mostly tech stocks)  fell by 22.37 percent. 

 Our aggregate INCOME portfolio did not fare any better, as rising interest rates announced by the Fed to fight inflation, inherently devalued all income investments paying interest and dividends at “fixed rates”. If there is any good news, it is that the devaluation will not be “realized” if the positions are held to maturity when the full invested principal will be returned. Looking forward, several of the income positions have “inflation adjustment terms” that will result in rising underlying rates to match the increase in market rates. Also, as the Bond Ladder matures, we will have the opportunity to reinvest the proceeds at the new, higher rates of interest offered on new issues. Our income portfolio results for the period, representing 49 percent of the total portfolio, are:  

For reference purposes only, the Barclay Bond Index fell by 22.00 percent for the period; the worst start to a year for bonds since 1926.  Of note, bonds have never lost value over a four-year period.    

On a Total Portfolio basis, the aggregate portfolio of equity and income positions has been temporarily devalued by 10.86 percent (net of management fees) for the year-to-date period ended May 6, 2022.

The remainder of 2022 (and even into 2023) does not look bright economically as the war in Eastern Europe rages on and China is continuing to “shut down” its people as cases of the Virus are on the rise. Due to on-going supply chain issues, manufacturing companies worldwide needing micro-chips and micro-processors are being held hostage by the lack of production.  At home, the Fed has announced its intentions to regularly increase the Fed funds rate to slow down the devastation brought on by the ever-increasing cost of everything. With rising interest rates, the housing and related industries will be “put on hold”. We also have concern over the impacts on small businesses and growth companies in need of financing for growth and innovation. To put this in perspective, inflation can only be brought down when interest rates exceed the inflation rate. Or, when the current three percent treasury interest rate equals eight, or ten percent.  The process will certainly be painful!

Even as we navigate the expected minefield of economic and geo-political events that inherently move the markets to “a bottom”, as mainly individual investors capitulate under the weight of the nightly news and month-end statements, we will never lose sight of the fact that you, our clients, continue to trust us to manage your portfolio and meet your goals. As a small token of your continued support, please watch your mailbox for a package from us that contains a made-in-Durango hand crafted coffee mug from a talented local artist from Red Cliffs Pottery. Sean Stewart has been making handmade pottery in Durango for over twenty years.

It also turns out that eating dark chocolate may also be as beneficial as drinking coffee. Dark chocolate contains powerful antioxidants that can: Increase heart health; Balance the immune system; Combat diabetes ; Improve brain function; Boost athletic performance; and Reduce stress. Just imagine what benefits would be obtained by drinking coffee and eating dark chocolate! So, be sure to look inside your mug for a treat (courtesy of Laura’s recommendation).

We hope that you enjoy your mug and chocolate as we diligently work on your behalf to ride-out the current market declines brought on by raging inflation and the Fed’s attempts to control it.  It will certainly be a difficult period and we firmly believe that our time-tested strategies will once again show resiliency as we “stay the course”.

As always, please contact either me or James if you have questions.


Intelligent Investment Management, LLP