Some of What I Learned in 40 Years and More!

Sunday I presented my 40th annual financial program and also distributed a 180 page handout which included many of the financial planning and investment blogs I’ve posted here. Part of my introductory remarks are shown here in bullet points.

• President FDR died in 1945 of heart disease, and my father died 31 years later in 1976 of heart disease. In the 1980s Statins were invented and the mortality rate from heart disease dropped by 90%.
• 40 years ago in 1980 Genentech had its IPO giving birth to the biotech industry. In 2009 it was purchased for $100 billion.
• 40 years ago IRAs were brand new having been established by legislation in 1975, and 401k account were first used in 1981. Last year over 13 million taxpayers contributed to IRAs and over 50 million had an IRA account of some sort, and there are also over 50 million 401k accounts. A new way to invest with tax-sheltered or tax-deferred dollars was born and grew up in the past 40 years. It also caused pension plans to dwindle to insignificant numbers.
• In 1980 the postage stamp cost 15c vs 55c today. A 266% increase.
• $100,000 spent in 1980 needs $311,000 today to buy the same things. A 211% increase.
• The Dow Jones Industrial Average ended 1980 at 964 and 2019 at 28538 an increase of 2900%. Unimaginable wealth has been created.
• The 1980 Gross Domestic Product (“GDP”) was $3 trillion. $12,553 per person. Today it is $22 trillion (a 7 fold increase not adjusting for inflation) and $66,000 per person (a 5 fold increase).
• The 1980 National Debt was under $1 trillion at $908 billion and was 32% of GDP. Today it is $24 trillion and 106% of GDP.
• Apple was incorporated in 1977 and Jeff Bezos was in high school in 1980. Today Apple and Amazon are each valued at over $1 trillion.
• The first index fund was in 1976 and today index funds makeup 14% of the US stock market.
• In 1981 when IBM jumped into the PC computer market, IBM’s $13 billion sales was greater than its next 7 competitors combined. The big smart brilliant IBM decided to not get involved with the inside of the box and outsourced the software to Microsoft that had 32 employees and gave the microprocessor development to a near-bankrupt Intel. In 2005 IBM sold its PC business. Today IBM has a market cap of $127 billion while Microsoft has a $1.3 trillion market cap and Intel’s is $270 billion. 10 times and 2 times IBMs. IBM’s revenue is $77 billion about the same as Intel’s $71 billion, and below Microsoft’s $129 billion.
• A fourth company, Alphabet, was founded in 1998 and is approaching a market cap of $1 trillion. None of these trillion-dollar companies manufacture anything. There has been a definite paradigm shift in wealth creation over the last 40 years.
• The NJ Governor is stricken with a religious fervor wanting to add an additional tax millionaire would pay. He must be unaware that this target group has much more mobility than the rest of us. For instance, David Tepper moved out of NJ a few years ago and saved the $300 million a year he was paying to the NJ State Treasury. Carl Icahn moved out of New Year last year taking his State and City tax dollars with him as well as many jobs since he also moved his business to be near him.
• With regard to tax payments, the richest 1% pay 39% of the federal income tax and contribute 33% of all of the charitable contributions; and when they die, they will leave bequests that will provide a much greater percentage than that to charities.
• I told many interesting [at least to me] stories that were originally posted as blogs and are included the handout with points related to sensible investing and careful and deliberate personal financial management.
• I also gave many examples to “prove” my points and validate the advice I provided to clients over the last 40 years, some of which is still relevant today and is included in my blogs.
• An FYI, the average PGA tournament golf drive in 1980 was 256 yards. Today it is 40 yards greater. Technology, tools, training, and techniques make the difference but the same size ball is still being struck.

These are just some of the many changes in the past 40 years.

Putting the handout together was a lot of work [which I enjoyed] and hopefully I can organize it so it could become a published book later this year. Two of my prior speeches have been published and are still available at Amazon.com and BN.com. They are Power Bites and Getting Your Affairs in Order.

If you would like a free PDF of the 180 page handout, email me at [email protected]. If you want a hard copy of the book, mail me a self-addressed stamped Priority Mail flat rate envelope and I’ll put one in the envelope as long as they last. My mailing address is Edward Mendlowitz, CPA, c/o WithumSmith+Brown, PC, 1 Tower Center Boulevard, 14^th Floor, East Brunswick, NJ 08816.

Do not hesitate to contact me with any business or financial questions at [email protected] or fill out the form below.