Realto Insights – Jeff Kinney
Greetings from Kansas City, where the holiday season was a welcome break with friends and family. I hope your time with loved ones was equally enjoyable.
The precious downtime of the past couple of weeks found me going down memory lane and thinking back to my childhood. In particular, I thought about our family’s annual visit to see my grandparents in the little southwest Nebraska town of McCook, population 7,698.
I vividly remember pulling into McCook and riding along B Street with each of its light poles festively decorated. We turned on to Norris Avenue and storefronts were adorned with lights and Christmas greetings. My favorite was always Sehnert’s Bakery, and our mouths watered as we knew Grandpa would take us there the following morning for a delicious peanut butter cinnamon roll.
Finally, as we passed the last store on Norris, there it was, Santa Claus Lane. Santa Claus Lane!!! The center island dividing the roadway seemed to stretch for miles with everything beautifully decorated by local organizations and businesses. It was like an endless parade of holiday floats that not even Macy’s could top.
We always made one loop before we turned into Grandma and Grandpa’s driveway. They lived right there on the main drag and, though I didn’t realize it at the time, their perfectly situated house was a great example of the long-held real estate axiom, location, location, location. They were in a prime spot.
Decades later, McCook remains as vibrant as it was in my youth, yet many other small towns have not been as fortunate. Flight to the big cities have devastated rural America and data shows that the median age of small-town folks is significantly higher than those in cities.
However, as America changes, McCook and some other small towns are embracing technology such as robotics and artificial intelligence and continue to be great places to live. While unleashing a strong entrepreneurial spirit to create jobs, they are also incentivizing young folks to return home, offering safety and security in the wake of Covid.
I see this and think there is a lesson there for me, and for all of us. As life changes – as our country changes – it is important for us to adapt in order to succeed. That goes for every aspect of our lives, including investing, where strategies like “buy and hold” and a 60-40 equities-fixed income split are becoming less commonplace. Of course, some sayings continue to stand the test of time, such as “Be fearful when others are greedy and greedy when others are fearful.”
The hard truth is that many of us know our retirement savings needs to last 20 or 30 years (or more) so, as we enter 2022 thinking about our financial security, we should ask if we are diversified enough and whether our portfolios can indeed last for decades. Will what we are doing stand the test of time? Do our strategies meet the challenges of our ever-evolving world? And will our investments provide the critical durable income we need?
One area to consider as we optimize our portfolios is the world of real estate and alternative investments, including secondary market opportunities that exist for these asset classes. Whether in equities, fixed income or other areas, secondary markets have long been a key to growing wealth and, though new markets appear and old markets change, secondary markets remain important as we chart our respective financial paths.
So, while there are questions to be answered and research to be done, we can take comfort in the fact that there will always be unique investment opportunities that can provide stability and diversification for the decades ahead. And, if we take a sound approach and stay the course, it may allow us to enjoy more much-needed time with family and friends, including a drive or two down Santa Claus Lane.
Jeff Kinney – President Realto