September 1 , 2010

My Summer Vacation
School's Back

One morning last week, our calm and orderly parking lot transformed into an utterly chaotic jumble of illegally parked SUV’s.  This was the annual signal that school is back in session in Miami-Dade County. Each morning and afternoon now,  oversized vehicles occupied by impatient parents and their school age children swarm our lot and the surrounding area and traffic comes to a grinding halt. If you are wondering why I would buy an office building in the center of a school zone, the answer is, I didn’t.

When I bought our property back in 1998, it was a partially operational, unimproved  strip center in a quiet, forgotten part of Northern Dade County. The property was adjacent to one of the last undeveloped parcels of land in the County that was still covered with thick tropical vegetation. At our office, we simply referred to our untamed neighboring property as “the jungle.”

Fast-forward 6 years and the County, bursting with students and replete with cash, seizes “the jungle” through an eminent domain action. The County also attempts to take our property, offering up about 40 cents on the dollar. However, after realizing that I’m not ready to rollover and that I want to fight for a fair price, the County backs off. They re-think their project and   build a K-8 school on the land surrounding our property.

Fast-forward another 6 years to 2010, and as I look outside at the sea of mommies, daddies, kids and backpacks, I can only reflect and chuckle.  Who could have predicted this back in 1998? During the 12-year period of my ownership, the value of the property literally quadrupled during the real estate bubble, before falling 50% from its peak during the current meltdown. During the same period, Miami-Dade County went from being cash strapped to a flush, school building period, and then back to broke again. And my neighboring natural jungle that teemed with wildlife, turned into an asphalt jungle teeming with SUV’s looking for parking.

FIRST DAY OF SCHOOL
Now don’t get the wrong idea. If I had to do it again I wouldn’t change anything. In fact, there are some benefits  to being next door to a school. For example, as I write this piece, I can hear the mellifluous, high pitched sound of children playing in the schoolyard that provides a pleasant and even  inspirational  background soundtrack to my  work day. The familiar sound   brings back memories of my own school days and I was reminded last week of the dreaded yearly  return to school at summer’s end. In my day, and it still may be the case today, during the first week of school, the teacher would inevitably ask us to write an essay on what we did during the summer. Back then I hated to write and the abhorrent assignment at hand would put me into a state of panic and paralysis. After agonizing over the task, ultimately, “My Summer Vacation” essay would  always be a variation of  the following; “ I went to camp. I played sports and swam in the lake. I hit a home-run and we won color war. I made lots of friends and had a good time”. Of course,  for  my  meager  efforts, I always received  a dismal  grade, and would then have to have my paper  signed by a parent.  I never quite understood how most of my classmates could write at length and so descriptively   on the same subject matter.

MY 2010 SUMMER VACATION (BUSINESS REVIEW)
In honor of all those failed summer vacation essays of yester-year, I will now fast forward and do a modern business version of “My Summer Vacation” essay for 2010. Once again I am paralyzed by the task!---things don’t really change—do they? Because while I’m the type of person that tries to find  a silver lining in every black cloud, or to make lemonade out of lemons, I am finding it a challenge  to write anything encouraging about what occurred business-wise during this long brutally hot summer. 

Throughout the summer of 2010, we experienced a constant stream of annoyingly  contradictory reports and observations. We were told the economy was back on track in July and then that it  fell off the track in August. We were told to expect and fear inflation in June and then told to fear falling prices and the insidiousness of deflation in August. Stock prices fell sharply, rose sharply and then fell sharply again. Bond prices fell due to   the fear of rising interest rates and then rallied back when interest rates dropped. The housing and real estate industry was finding traction early in the summer only to be followed by dismal performance indicators  at summer’s end. Many clients of ours were feeling sanguine in July about their businesses and portfolios, only to lose confidence in the economy by the end of August.

Does this make any sense to anyone? Perhaps the media and markets, experiencing the doldrums of summer,  were trying to stay awake by focusing on the daily fluctuations  that have  little relevance in determining the success of our financial plans and goals. So here I am, after all these years and I am still experiencing that same uncomfortable inability to succinctly sum up my summer. Alas, these are the most important facts to remember about my summer of 2010; I went on vacation. I swam in a lake. I hiked up some mountains. I made a couple of new friends. (Dad—I think I’m going to need you to sign this)

WE ARE ALWAYS HERE FOR YOU
While the geography and landscape around our office have changed over the years, in many ways we at Frye Financial Center haven’t. This company was founded 31 years ago with the objective of guiding business owners, professionals and families in securing and protecting their wealth and their futures. --- and we continue to do so! Most of our employees have had long tenures with us and in fact, some of our staff members, such as  Robin Newman and Rhonda Gavsie have been with us for almost  the duration.

Yes, the technology involved in the running of  a wealth management firm has changed dramatically.  In fact, as an example, this very newsletter was printed and sent by old-fashioned mail for many years (we still mail a few hard copies to some clients). But some things never change; like the cycling of the economy. In just the last 12 years, coinciding with my ownership of this office building, we have seen the real estate market go from flat, to a time of unprecedented demand and values, and then to its current state of virtually no demand and plunging values. We have seen the economy go from expansion to recession to expansion to recession again. After 30 years in the industry I have learned that helping clients refrain from over-reacting in either direction is one of the most valuable services I provide.  We have experienced all of this  before in one form or another and I’m positive we will see it all again.

Another important aspect of wealth management that has remained constant involves how to plan effectively to ensure your family’s future financial security. Everyone needs a well constructed, integrated financial plan that is tailored to his or her own needs and risk tolerance levels. Piecemeal investing and planning  is not the  way to maximize long term success.  Once a well constructed, strategic plan   is in place, tactical portfolio changes must be made to take advantage of shifting market opportunities. Appropriate risk level modifications must be made as one approaches retirement and updates must be made when family situations change and when there are changes in the laws affecting your planning. But sticking with your  integrated plan to secure and protect your family’s wealth  and monitoring your progress toward reaching your goals is the key to potential success.

Many of our clients are now retired and living the dream. Planning works—impulsivity doesn’t---As dramatically as things have changed in our lifetimes and will continue to do so in the future, that is a reality that never changes. 

Austin A. Frye, MBA, JD, CFP®

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