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January, 2021
Armor Investment Advisors, LLC
Zombieconomy 2025
L
et us be grateful 2020 is finally behind us. No one saw the pandemic coming. We can at least en-
ter 2021 with renewed hope for a better year. Two vaccines are currently being distributed, with a
third due in early January. My 92 year-old father has had his first shot. Prospects for a better 2021
have been a significant driver for recent record market performance.
Many areas of the economy continued to perform through the crisis, which was reflected in consistently
better results than forecast. As vaccinations are increasingly rolled out and more people carry immunity,
the worst hit economic sectors will begin to recover, sooner or later. We are optimistic that this will pro-
vide the next leg up for investors.
Expectations for 2021
In many ways, society has been permanently changed by the forced protocols of
2020. Work-from-home practices will be a larger part of the work ethic. Our firm
has successfully used videoconferencing to expand communication with clients,
providing more frequent and personal meetings. It has also relieved all of us from
wasted road time. Many will have been exposed to expanding telemedicine ser-
vices. It remains to be seen how the retail sector will emerge, but the process of
consolidation was severe for many firms, and familiar names have disappeared
forever. And food delivery became the norm for many.
Our expectations are the economy will continue to rebound, and that is in line with
most financial industry forecasts. Interest rates should remain low, which is bullish
for housing and automobile purchases. Large SUV’s are being sold with up to 7-
year loans, at prices more than double the cost of my first home!
One surprise in the past year is the US personal savings rate has gone up to exceed By Jeffrey R. Miller, CFA®
all highs for the past 60 years. This was of course helped by mandatory stay-at-home orders, and fear. The
elevated savings should provide additional fuel for the economy as we loosen up in 2021.
Finally, adding to expectations for markets is the anticipation of an unending spending spigot from Wash-
ington DC. However, this gives us great angst for the longer term, as federal deficits explode to all-time
highs never seen in the history of the republic. Unfortunately, one of the lingering effects of the virus is
that we may be morphing our economy into a state of Zombie life over the longer term, similar to Japan for
the past 30 years.
The Bugaboo – Unrestrained Spending
Forgive me for being the Bugaboo – it’s part of my job. Few investment strategists and other so-called ex-
perts, especially those on mainstream news channels, are willing to discuss the implications of unrestrained
spending and debt. But it cannot be ignored in the context of the current trend, and future implications. We
have received many questions from clients about this.
A familiar term found in the financial press is the emergence of the “Zombie Company” referring to highly
leveraged firms which make little money, but survive by rolling cheap debt. They are like a Zombie, nei-
ther dead or alive. To their lenders, they are better off making just enough to service their loans.
The US Federal government is running deficits exceeding post World War II records in order to support a
damaged economy. The pandemic accelerated a process where political expediency is overwhelming the
longer-term economic health of the nation. If this continues, the US and the rest of the world face dire
Please see disclosures on page 4
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choices as the dollar faces a major devaluation - it has been falling for the past year. We are creating
digital dollars by the Trillions. Before computers, this was called money printing. Today it is called
quantitative easing, on steroids.
An expanding field of opinion called Modern Monetary Theory is promoted by some to deflect concern
about expanding deficits. These experts go to great lengths to create the rationale to support it.
The only rationale that explains it is a global lack of political will to really do something responsible
about the imbalance. And herein lies the danger – much of the budget is composed of entitlements - the
will to control those does not exist. They kick the can down the road, but someday the road will end.
Raising taxes in a fragile economy is also risky. When you want the economic engine to grow, taxing it
only slows it. While you may raise some taxes, the amount of taxes you would have to raise to balance
the books is catastrophic. There are not enough billionaires.
If inflation rises, and interest rates on the debt follow, the debt compounds itself.
I won’t go further in the weeds on this. However, all of this leads to further devaluation of the dollar,
which has been occurring for over a year. Everyone’s standard of living will fall.
The government and the Federal Reserve are backing themselves into an increasingly tight corner. Zom-
bieconomy 2025?
Investment Strategy Implications
But wait, there’s more. Tesla now trades at a market value exceeding that of the 8 other largest car com-
panies in the world combined, while selling a tiny fraction of cars by comparison. Almost all markets
are selling at valuations well beyond the excesses 1929, 2001, and 2008. At some point, these valuations
will correct.
Our asset allocation will be increasingly shifted on building inflation resistance into overall strategy.
This will include real assets, commodities, and Treasury inflation-protected bonds, and a shift from gogo
growth sectors toward value-based investments.
Afterword
Let’s all get our shot(s), and work for a better tomorrow.
Armor Happenings
Armor Gives Back Happy New Year! Join us this quarter for our Armor Volunteer Day as
we work with Raleigh Parks, Recreation and Cultural Resources to clean-up litter in Dor-
othea Dix Park on Friday, March 12, 2021.
We extend an invitation to join us at Dorothea Dix, as well as welcome any suggestions for
volunteer initiatives you are passionate about.
Reach out to Allison at amiller@armorinvestmentadvisors.com with suggestions or requests to partici-
pate. Space is limited for this event!
Webinars We hosted a very successful webinar with Harrison Miller from Fidelity Charitable in No-
vember discussing charitable planning during and after the pandemic. If you were unable to attend, we
would be happy to share the recording.
Keep an eye out for an invitation to our next webinar in late February/early March, which will be fo-
cused on Environmental, Social, and Governance (ESG) and Socially Responsible Investing (SRI) top-
ics.
Please reach out if you have not received an emailed invitation. Feel free to share with family, friends,
and colleagues that may find the information helpful.
Please see disclosures on page 4
Planning for Incapacity and Long-Term Care (Yuk!) Page 3
In coming decades, medical advances and healthy lifestyles will allow many Americans to live past 90 and
in doing so, increase their likelihood of needing long-term care. Planning for long-term care and incapaci-
ty is something that most people would like to avoid, and we understand.
Planning for an eventuality where we put our care in the hands of others is hard to conceptualize. It is our
nature to feel more secure when we are in control and planning for incapacity and long-term care are truly
planning for when we will not be in control.
Most of us are happy to look the other way and delay, pretending that we will
figure it out when the time comes. But we know that resignation and delay are
not the right answer.
So, what is the right path to making the plans for our future care?
For many years, Armor has worked with a nationally recognized long-term care
consultant who has literally written the book on how to plan for long-term care.
We work with him to guide clients through a complete decision-making process
that, when integrated with their financial plan, gives comfort and control.
The first step of the long-term care planning process is to understand the contin-
uum of long-term care options and what you would like your optimal care ex-
By John V. Purrington, CFP®
perience to be. Is this care at home, in a continuing care retirement community
(CCRC) or other long-term care facility, or with a family member?
Step two is integration with your financial plan and planning for the additional costs of long-term care.
What can you afford? What are your funding risks? Will you rely on personal assets, family, LTC insur-
ance or even welfare? What is your family history and your ‘personal odds’ of needing long-term care? If
insurance is an alternative, do you even qualify?
After reviewing care and funding alternatives and choosing your desired options, develop a written plan
and share it with family members. It is not a topic that any of us want to dwell on, but we do a disservice
to our families and ourselves if we do not communicate our plan.
Finally implement and monitor the plan. Does the plan involve earmarking funds or evaluating insurance?
The plan should be reviewed and updated every year. Sometimes things change and you are allowed to
change your mind.
The mission of Armor Investment Advisors is to make a positive impact on the lives of our clients by re-
ducing financial stress in their lives. Helping clients build a funding plan, evaluate CCRC options, and as-
sess insurance alternatives are all services that we provide in order to reduce the stress of long-term care
planning.
Financial Wellness in the New Year
(or, how to control what you can while COVID-ing).
I’ve never been one to make or stick with resolutions – I’m still hoping to be an astronaut when I grow up
– but I don’t think I’m alone. According to a recent Forbes article, about 80% of resolutions fail (most by
the end of February), and in some cases make their owners end up feeling worse off than they did before
resolving!
In fairness to resolutions and treadmills-that-become-clothes-hangers everywhere, however, the intentions
behind them are pure. So perhaps instead of aiming too high or too far all at once, execution is about
breaking goals down into baby steps, and executing on only one or two things at a time. While Armor isn’t
necessarily the most qualified organization to help you exercise more (though the stairs to our office are a
Please see disclosures on page 4
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doozy!) or eat less (Chick-fil-A is only 2,600 downhill feet away), we are here to help coordinate an executa-
ble vision towards financial wellness in 2021 and beyond.
Approaching retirement and wondering about replacing your paycheck? Wheth-
er you’re 5 months or 5 years from walking away, we enjoy collecting data and
turning it into a picture of your retirement readiness. From there, we can discuss
next steps to fill in gaps in your plan or address any “what if?” scenarios that
are keeping you up at night. Because a successful retirement plan doesn’t hap-
pen overnight, we are here to help you take it one step at a time.
Perhaps you are a younger earner who is finding that you have a little extra cash
each month? We will start with exploring what you’d like to accomplish – our
“Risk Analysis Grid” is a great place to begin – and break down goals like “pay
off debt” or “save for the future” into measurable feats and practical steps
that align with your values and the practicalities of where you find yourself. By Matt Miller, CFP®
Whether the next phase of your life will revolve around charitable intentions or focus on security for a future
generation, our team’s experience and access to experts in these areas – as well as ability to help you invest
for the long term – can help make these dreams an achievable reality.
Core Macro Asset Allocation
Strategy 4 Moderately Aggressive
1st Quarter 2021
Large Cap US Equities 46%
Small and Mid-Cap US Equities 10%
Equities 80% International Large Cap Equities 12%
Emerging Markets 6%
Real Estate Investment Trusts 6%
Multi-Source Income 5%
Alternatives 8% Long/Short Strategy 3%
Commodities 0%
Long-term Bonds 0%
Intermediate/Floating/Preferred 5%
Short-term Bonds 5%
Fixed Income 12%
High Yield Bonds 0%
Global Bonds 0%
Cash/Money Market 2%
This is for illustrative purposes only. Actual allocations may vary from this representation when a portfolio is invested.
Nothing contained in this publication is intended to constitute legal, tax, securities, or investment advice, nor an opinion concerning the
appropriateness of any investment, nor a solicitation of any type and does not guarantee future results. The information contained in this publication should not be
acted upon without specific legal, tax, and investment advice from a licensed professional.
Armor Investment Advisors, LLC
P 919.571.4382 • F 919.571.4368 • 4101 Lake Boone Trail, Suite 520, Raleigh, NC 27607
www.armorinvestmentadvisors.com
Investment Advisory Services provided through Armor Investment Advisors are not legal services, and the protections of the lawyer-client
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