"Real Historical Perspective"

Our firm held our annual Holiday Party to thank our “Friends of Deacon Wealth Management” early this week.

 We have recently been engaged by a local historical society to manage investments to promote their long term goals. I guess that is what got me thinking a bit deeper with regard to historical perspectives on markets, communities, economies, etc.

 When we looked at the calendar, it struck us that our event was taking place just a few days ahead of the anniversary of a significant event that occurred in and around our town 150 years ago.

 The Battle of Fredericksburg took place from December 11-13, 1862. It was one of the bloodiest battles ever contested by Americans, resulting in over 18,000 casualties. Our event was being held at Hartwood Winery in Stafford County, in an area mainly occupied by Union Troops before and after the battle.

So, we decided to see if we could engage an expert on the battle speak to our friends about the battle at our gathering. We were referred to G. Scott Walker, a noted local historian.

 Mr. Walker is the President of the Historic Fredericksburg Foundation, Past President of Civil War Roundtable of Fredericksburg, and many other notable achievements with regard to local history, including producing a DVD entitled “Civil War Fredericksburg: Then and Now”. He also serves as a National Park Service volunteer at the Chatham Manor site. Chatham Manor overlooked and was engaged in much of the Battle of Fredericksburg.

 Obviously, we had the right man for the job.

 Mr. Walker set the scene from 150 years ago with regard to the effects of the battle and of the occupation of Stafford by Union troops. He explained the physical devastation of the terrain, how the weather affected the engagement, and described the economic and demographic impacts on the local area from the physical and psychological damage of the battle on the local population. His discussion of the battle brought home the very real impact of true political strife.

 The issues our country faced in 1862 makes our current economic and legislative challenges appear to be child’s play by comparison. However, it is instructive that many issues faced in 1862 are present today.

 There are very real, divisive partisan political discussions taking place in Washington, DC. There is a large, national discussion over the spread of Federal power and regulations, versus individual state regulations regarding issues such as healthcare. There is a lot of confusion in the country with regard to its future direction. Then, as now, the President is seen as a beloved or despised figure, depending on one’s individual political opinions.

After Mr. Walker spoke, we opened the floor to an open forum of questions our guests posed about the current financial markets and economic forces at work.

 The question that became the “Elephant in the room” was “What is the Fiscal Cliff, and How Do We Deal with It?”

 The Fiscal Cliff, as most are aware, is the expiration of Bush tax cuts, and the imposition of spending cuts that will take place on December 31, 2012 if Congress cannot arrive at an agreement with regard to taxation and spending policies.

 The simple answer to “How Do We Deal With It?” is: “It Depends”. There are three possible scenarios that may happen: 1) We run over the “cliff”, 2) Compromise is struck in the short run and the politicians continue to haggle and individuals and businesses are kept in limbo with regard to long-term planning, and 3) There is a long-term solution agreed to by both parties, and the county moves forward.

 I do not presume to predict what will happen. But, if I were forced to place a bet, I would bet that either “the cliff” is imposed, or a short-term compromise will take place, keeping the politicians in the spotlight.

 The thing that I know for sure is that the American people are very resilient. We will find a way to deal with the issues facing the country and overcome obstacles.

 Real historical perspective, based on Mr. Walker’s discussion and through personal observation, provides me with a sense of calm by understanding that “this too shall pass”. The current issues facing this country are not as severe as what we as a people have survived in the past.

 Americans will persevere in difficult times, and thrive in the years to come.

 The upshot of taking an historical perspective is that history tells us we must come together by realizing that we are all in this together.

 What financial markets and investment professionals dislike is uncertainty. The country is facing uncertainty with regard to fiscal policy going forward. Monetary policy has been set and is projected to maintain its course through 2014. Once the fiscal policy has been set, a sense of “certainty” should prevail, and markets and professionals will act accordingly. Folks should be getting prepared to make changes if necessary, but not act rashly. Just because you may hear thunder in the distance, does not mean it will rain today.

 If current conditions concern you about your or your family’s personal financial condition, contact a trusted advisor that can help lend perspective to your situation.