Broker Check

June Newsletter 2022



June 2, 2022

How Well Do You Sleep at Night?

Recent events around the country have made it exceedingly difficult to focus on the daily gyrations of market activity resulting from the economic concerns over inflation and interest rate hikes. Like most of you, I have school age grandchildren (or children) whose lives need to be protected from the violent acts of troubled individuals suffering from mental illness and the confusing world we live in. I can only pray that our leaders can agree on how to best protect our children. There must be a way to solve this growing problem!

I hope that you took time this last holiday weekend to remember why we observe Memorial Day. My family heritage in America dates all the way back to the landing at Plymouth Rock. Through the family history website, which Jeannie gifted to me several years ago, I have traced my ancestors back to the Revolutionary War, the Civil War, the Indian Wars, World Wars I and II and beyond. We all enjoy the freedoms we have because of what our brave ancestors gave in service to our country for us. Let’s never forget why we have what we have! I am teaching my grandkids to thank every member of the military they encounter for their service to our country.

Just yesterday, I was talking with a long-time friend of mine (who has also been an investment management client for over 20 years) and he asked me, “Are we okay?” His comment coming from the barrage on the markets almost daily from declines prominently displayed by the nightly news networks. Red ink seemingly everywhere driven by reporting of sustained inflation, rising interest rates and the pain at the pump as Americans try to “make ends meet” when their paychecks are consumed by the second week of the month.

Now mind you, he and his wife have been receiving generous monthly distributions from their managed accounts for many years without us ever selling into a down market to make the planned-for distributions. In fact, over the last twenty years, their accounts have grown in the good years, and we have never dipped into the invested principal with which we were entrusted.  Along the way, the underlying growth and cash inflows from interest and dividends have more than covered all the monthly distributions; and even some larger payouts to pay for the many “bucket list” items accumulated in their working years. I also reminded him that not all years result in positive returns and that his portfolio of broadly diversified and exceptionally well-managed fund positions in all categories has survived such disastrous economic events as 9/11, the Financial Crisis in 2008 and beyond, the Great Recession lasting several years as well as the Covid Pandemic. In the scheme of things, the current economic crisis will be survived on the backs of well-managed American companies and the resilient American workers and consumers that drive our capitalistic economy.

No doubt, it will be painful; but WE CAN DO IT! And it could take several years of hard work, if we continue to see similar circumstances to the seventies. I told him that his planned-for monthly distributions are “in the bank” through at least 2026 with a combination of CD/Bond ladder maturities and the regular cash inflows from interest and dividend receipts. In all the above listed market downturns, our aggregate managed portfolio completely recovered and went on to new heights in three years or less. Could it be different this time? Only time will tell. To that point, several of our Core portfolio positions are equity funds which have been well-managed from their start in the 1920s; they survived the Great Depression and have regularly been “top performers” throughout our 26-year history.

So, here are the numbers from our managed portfolio of income and equity categories over the twenty-two-year period ended May 31, 2022. We have always managed for Total Return to meet each client’s financial goals. The “income engine” (the long underappreciated), which includes the CD/Bond Ladder has managed to eke out a return of 238.45 percent over the extended period; for an “average annual return” of 10.84 percent. For reference purposes only, the Barclays Bond Index has returned an average annual return of 6.99 percent over the twenty-two-year period. For the twelve-month period ended May 31, 2022, the income portfolio has declined in value by 6.68 percent, as rising interest rates have devalued all fixed income securities. Those “unrealized” losses will evaporate as those positions mature at full face value. It is worth noting that the 2021/ 2022 period is only the second annual period in the last twenty-two periods that has shown a negative return. The 2008/2009 period reflected a 3.83 percent decline during the Financial Crisis.      

The ”equity engine” which drives both growth and dividends, has been the portfolio category that has provided the opportunities to “sell high” and put the profits “in the bank”. It is also the category that reports both ups and downs reflecting both our economy and the stock markets we invest in. For the same twenty-two-year period, our equity portfolio category has returned 323.92 percent; for an average annual return of 14.72 percent. For reference purposes only, the S&P 500 returned an average annual return of 8.76 percent over that same twenty-two-year period. Keep in mind that the S&P 500 returned a net loss for the first ten-year period of this century! Our equity portfolio did reflect a decline of almost forty percent in the first year of the Financial Crisis, which was fully recovered in the following two years on the backs of the well-experienced managers of all positions in that category.

When we combine both engines and net out our management fees, our aggregate managed portfolio returned 210.75 percent over the twenty-two-year period; for an average annual return of 9.58 percent. Keep in mind that the portfolio income and equity percentage returns will be similar for all individual managed portfolios. However, when you look at your portfolio, the combined total return reflects your individual risk profile and the corresponding allocation between equity and income positions reflected in your Investment Policy Statement. In general, the higher the equity allocation, the higher long-term total return.  To help you visualize all the above analysis, Laura has prepared the following graph of our twenty-two-year total performance history. The graph starts from zero and reflects the CUMULATIVE return at the end of each annual period, ending with the 210.75 percent end point on May 31, 2022. The twelve-month period just ended reflects a decline of 5.35 percent for the total portfolio, net of fees. Please find the downturns on the graph and the following upturns. Our expectation is that the current downturn will once again be followed by another turn up to another high point as we grow out of the current recessionary period. It will certainly take some time; but WE CAN DO THIS AGAIN.        


Putting the twenty-two-year period of our management of client portfolios in perspective, here are the rounded off dollars that are reflected in the above percentages and graph: Realized gains from sales of securities of $5.0 million; unrealized losses, mostly in the income portfolio from rising rates of -$1.6 million, that figure was surpassed by Interest received into the income category of $6.3 million; Dividends received from equity positions and preferred stocks in income portfolio of $33.3 million. All in, after management fees, our aggregate portfolio has returned $36.3 million to our family of clients to meet their financial goals. 

Many of our relationships are with single independent women and with women who may be on single in the future. We have helped those women secure their financial futures by listening to their concerns and then implementing portfolio decisions expected to return meaningful results and allow them “to sleep at night”, knowing that they are in capable hands. At the request of several clients, we are proud to present: “Women, Wealth and Well-Being”, an informative and casual seminar addressing women’s concerns about financial independence, planning and security. Please join us for an evening of food, wine, art and information on Thursday, June 23rd at 6:30 PM at Create Art and Tea at 1015 Main Avenue. Please RSVP to either Laura ( or Helen ( by June 15th. Tell your friends, family and neighbors about this fun and informative evening presented by two of our principals, Jeannie Wheeldon and James Brost as well as the entire team at IIM.

In closing, I would be remiss if I did not highlight the talents of the women who contribute to our office. Collectively, Laura, Helen and Jeannie keep us “on our toes” and “out of trouble”. The office clearly would not run smoothly without them.

As always, please contact any of us if you have questions.


Intelligent Investment Management, LLP