�?�July 2022 - Earnings Season is Around the Corner

Who's Your Caddie 

The month of July brings two major events that I enjoy, Wimbledon and the British Open at St. Andrews.  These events are the oldest in their respective sports and provide an indoor respite to many viewers like me on muggy July mornings.

Since 1877, ladies and gentlemen have dressed all in white to compete at the All England Lawn and Tennis Club for the Wimbledon Championships.  It�??s the greatest of the tournaments in the Grand Slam circuit and also the toughest to win because the grass courts create a fast pace of play. Tennis balls bounce lower off the iconic grass.  This creates an advantage for players with a strong serve and powerful ground strokes.  Some competitors are suited for this type of tournament, while other accomplished athletes struggle as their game isn�??t as compatible with the grass courts.

The British Open (or the Open Championship as it�??s known) kicks off in July as it returns to St. Andrews in Scotland.  St. Andrews was founded in 1754 and is known as the �??home of golf�?�. This links course with its hellish pot bunkers and windy conditions was the home of the first Open Championship in 1873.  It is seen as the truest and purest test of a golfer�??s skill and determination, and its tournament trophy, the Claret Jug, is prized by golfers worldwide.

�?�Like tennis stars competing in London realize, the unique course at St. Andrew�??s tests its challengers�?? mettle.  The Gael storm-like conditions require mastery of certain shots to hit the green and even greater skill and patience to get out of the sand traps along the course. It makes the best golfers in the world appear to be mortal when their shots inevitably fall into unplayable lies or fly errantly into the rough due to the elements.

Past Wimbledon Cup and Claret Jug winners have proven an ability to adapt their game to �??survive and advance�?� their position and use patience and opportunity to weather the conditions and execute the right shot or volley at the opportune moment.

Bobby Jones was a 3-time British Open champion and one of the most influential golfers of all time.  He was quoted as saying that �??competitive golf is played mainly on a five-and-a-half-inch course�?�the space between your ears.�?�  To manage the distractions on the course top golfers don�??t rely solely on their own ability. They are never more than a few steps from their secret weapon �?? their caddie.

Caddies not only carry the equipment that golfers need to finish a round, but provide insight and expertise on how to move through the course. A great caddie knows his golfer, his best shots and his weaknesses. He will advise his golfer on not only how to proactively approach the next shot, but how to recover from a poor shot that rolls into the rough or a bunker.

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Kevin Painter,
Managing Partner
LeConte Wealth Management

CAN I STILL AFFORD A HOME OR EVEN AN APARTMENT?

As my son works his way through college, we�??ve started having discussions about where he will live upon graduation. Until recently, that had never been a concern of mine, but the housing situation has changed rapidly on us from when he started college only a few years ago. Unfortunately, he�??s not the only one that is walking into this situation. Many young people are trying to buy their first house or upgrade to a larger house, but they are being met with limited inventory, higher prices, and rising interest rates.

According to a recent CNBC article, home affordability is �??nearly the worst on record�?�. Locally, we�??ve all seen or heard stories of limited inventory and bidding wars taking place on almost any house that hits the market. Realtors have told me stories of offering $100,000 over asking price on homes and losing out on the deals. These higher prices have been blamed on many things like the Covid pandemic, limited supply due to worker & material shortages, high land costs, and new residents moving from higher cost areas willing to pay with cash. According to this CNBC article, the increased costs have caused consumers to stretch their payment-to-income ratio to a staggering 32.5%. According to Black Knight, a mortgage technology and data provider, if prices increase 5% more, home affordability will be the worst on record. At this rate, that increase seems very possible.

The impact can be seen in a couple of local examples. A colleague and I were discussing the purchase of a $350,000 house, and the monthly loan payment grew by over $500 due to the recent mortgage rate increase of 2%. Lenders are also aware of this issue as they have started reevaluating the pre-approvals provided to buyers. We�??ve seen a local example of a buyer originally prequalified for $310,000, and the bank sending a letter informing them that now they only qualify for $255,000. All of this while houses are only getting more expensive; thus, significantly reducing their purchasing power.

Communities have started to adjust their housing options to fight this affordability issue. According to Bryan Daniels, President/CEO of the Blount Partnership, our community has started switching to building multi-family dwellings, such as Condos and apartments, to battle these higher housing costs. However, these options are also seeing increasing costs. This article tells the story about a Knoxville man whose rent was increasing approximately $300 a month, which was about 25% of this previous rental payment. Per the article, that is right in line with Knoxville�??s rent increase as �??rents in Knoxville are up by 36.3% since the start of the pandemic in March 2020.�?�

As these costs increase, consumers are going to have to make hard choices in their financial lives. I�??ve always been an advocate for saving for a 20% down payment, but of course, I�??m a CPA and conservative by nature. Dave Ramsey feels the same way and promotes 20% down on a 15-year mortgage, but this can limit the amount of house you can afford under his philosophy. If you�??ve got the discipline to make this happen, you are setting yourself up to be successful financially and not overspend on the housing portion of your budget.

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 Jon Dockery, CPA
Managing Partner
LeConte Wealth Management

FATHER'S DAY IS PERSONAL TO ME

�?�In 1971, a seven-year-old boy was swimming in the pool of the Days Inn Motel in Orlando Florida. As he swam, a police officer walked up to him and asked, �??Are you Hoy Parker?�?� When I responded, the officer asked me to come with him. The short walk to his patrol car seems a faint memory now. At the time it signaled a major change in the direction that my life would take. I learned that the police had just arrested my mother for writing bad checks. I also learned that The State of Florida would soon become my legal guardian.

My mother was convicted and began serving her sentence in a Florida women�??s prison. I spent my childhood being raised by people that were not my family. My natural parents divorced while I was very young. And even after my mother�??s imprisonment, I was not allowed to live with my natural father. I spent the next 8 years of my childhood in a children�??s home and 4 different foster homes. Some of these were good and some were abusive. I attended 6 different elementary schools, three different middle schools and three different high schools.

During my seventh-grade year of school, my mother was granted parole and was released from prison. As we arranged to be reunited, she was arrested again for writing bad checks. After this I made an unusual request to the State. I asked them to remove my mother�??s parental rights to me. After a series of IQ and Aptitude tests to determine my ability to make such a decision, the State granted my request.

During the summer following my 10th grade year in school and after 2 1/2 years in the same foster home, I was notified by the State of Florida that they were making some arrangements concerning my future. The State explained their decision. �??Since it is nearly unheard-of for 15-year-olds to find adoptive parents, we decided that your best chance for the future was to become self-sufficient as soon as possible�?�. The State was arranging to enroll me in a special school in Georgia the following summer. There I would finish high school in about 18 months. By the time I turned 18, I would be working and able to support myself.

As you can imagine, that is not the kind of news that 15-year-old boys are accustomed to hearing. What would you have done in this situation? I can remember very clearly that despite the uncertain circumstances that I faced; God gave me peace about my future. He also gave me an overdose of determination.

I became determined to have a say in my own future so after the initial shock wore off, I got involved. I called a lady named Angela Babcock. Angela�??s son, Wes and I became close friends during my stay at a previous foster home. Despite my lack of any genuine parenting, and her position as a single parent to her own two children, Angela treated me like a son. She often comforted me during troubled times in my abusive foster home. We stayed in touch even after I left that foster home and moved to a new one. As I spoke to Angela on the phone, I explained my predicament to her. I asked her if she might know someone who would like to adopt an �??adorable�?� 15-year-old teenager as their son.

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Hoy Grimm
Managing Partner
LeConte Wealth Management

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