Let’s Agree on “How Much Is Enough”

Alexander Green
by Alexander Green, Chief Investment Strategist, The Oxford Club
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Editor's Note: Me again! If you've been keeping up with your Investment U emails this week, you're probably thinking, "Get on with it, already! Tell us about these new and exciting changes coming to our free subscription!"

(And if you haven't been keeping up, now's your chance!)

In yesterday's note, I tempted you to a game of Clue. There were two key words that stood out in ETF Strategist Nicholas Vardy's article, The Father of Free Markets Is Not Who You Think.

Well, several of you wrote in and... all of you guessed correctly - well done!

The words that summarize Investment U's evolving brand and mission are "liberty" and "wealth".

We want to do more than just teach you the ropes and leave you to your own devices. Instead, we want to involve you every step of the way on the journey from financial literacy... to financial liberty.

We're convinced that's the shortest way to a rich life.

I promise to provide more details next week after Memorial Day.

But for now, because Alex is in transit home from The Oxford Club's Chairman's Circle Wealth Cruise, I'm bringing you his original answer to the column, "How Much Money Is Enough?"

Wishing you a terrific holiday weekend with lots of friends and family, beer and burgers, and health and wealth.

Donna DiVenuto-Ball, Managing Editor


I've written several columns addressing a foundational question about money: How much is enough?

There's no shortage of opinions on the subject, as readers demonstrated with their own thoughts in Monday's column. (It was a smorgasbord of the practical, the political and the philosophical.)

In our increasingly competitive world, some feel that money is the way we measure our competence, our success, even our worth as individuals.

This isn't just wrongheaded, in my view. It's offensive. There are plenty of folks doing incredibly skilled and underpaid work such as social workers, nurses, high school basketball coaches or Navy SEALs, to name just a few.

Many feel there is a gap between how they live and the way they should be living - and that money would make up the difference.

And perhaps it would. Money is a linchpin issue in all our lives. We want and need things. It takes money to get them.

Some live openly with the accumulation of money as a primary goal. Others think it isn't important - or shouldn't be.

Yet millions harbor a chronic fear that they will never truly have enough - or be able to keep it.

It's easy for those of us with money - even if we came from nothing - to forget what a struggle life can be without it.

Studies show the majority of Americans spend almost everything they make, shouldering enormous stress as they live paycheck to paycheck.

It's not just the poor and lower middle class, by the way. A realtor friend once told me I'd be shocked to discover how many neighbors in his gated community were "just two mortgage payments from the edge."

Money can do great things and promote important causes. But it can also dissolve business partnerships, cause friction between family and friends, and end marriages.

Even in households where the cash flow is ample, partners often fight over how much to spend, how much to save or how to invest.

If you're reading an investment column like this one, you almost certainly have more money than most (or soon will).

Our primary concern here, of course, is not wages or savings but wealth - and its successful management.

So let's be clear in our terms. Wealth is not what you make. It's what you have: stocks, bonds, cash, real estate, precious metals and other financial assets.

Most decide who is "rich" with a particular number: $1 million... or $3 million... or $20 million.

I can tell you that as a kid growing up in a middle-class household, I thought anyone with a million dollars was unspeakably rich. While that is still not an inconsequential sum, it is no longer rare.

Thanks to inflation and our society's increasing affluence, a net worth - total assets minus total liabilities - of a million dollars or more is now pedestrian.

Market researchers Spectrem Group counted a record 10.8 million millionaire households in the U.S. at the end of 2016. That's 1 in 9. (And given the red-hot real estate and stock markets of the past year, the 2017 number will be even larger.)

Are the folks in these millionaire households satisfied? Do they feel like they have enough?

Not necessarily. According to a 2013 report from investment bank UBS, only 28% of Americans with $1 million to $5 million consider themselves wealthy.

No matter what some people have, they will feel it's inadequate when they learn what someone else has. (Even the men and women on the Forbes 400 are acutely aware who is ahead of or behind them.)

How much you "need," of course, is very much tied to where you live, the size of your family, your monthly overhead, and your desire to travel or enjoy the finer things in life.

"The finer things" are hardly necessities, of course. I grew up without them and could easily live without them again.

Indeed, many of my most enjoyable years were spent as a largely impecunious bachelor in my 20s. (Thank God some women don't care what kind of car you drive if you can work small miracles on the grill.)

Bottom line: When it comes to how much is enough, only your own definition matters.

My view is you're wealthy if you have the resources to live the way you want to live.

Money unspent - capital - is power. It gives you the freedom to make choices, help others and enjoy what's important to you: family, friends, hobbies, volunteering, whatever.

It's hard to argue with the words of Sophie Tucker...

"I've been rich and I've been poor - and believe me, rich is better."

Good investing,

Alex

Linking Health With Wealth

While having a lot of money does not guarantee happiness, studies show that good health and well-being is linked to living financially stress-free. That may not mean you have enough money to buy your own island... but perhaps an alcohol-free (because we're living healthy) green smoothie on that island.

Alex is a believer in the interconnectivity of body, mind and money - and in companies that promote solutions to some of our biggest health worries. So earlier this month he added Integra LifeSciences (Nasdaq: IART) to his Momentum Alert portfolio Here's why he thinks it has near-term potential...

Based in Plainsboro, New Jersey, Integra LifeSciences (Nasdaq: IART) is a midsized company that is quickly becoming a dominant force in the production and sale of medical devices for neurosurgery, orthopedics and soft tissue repair.

It also makes orthopedic products, including devices and implants for foot and ankle, hand and wrist, shoulder and elbow, tendon and peripheral nerve protection, and wound repair.

Integra also has a highly successful research and development division.

The company has successfully launched new products to worldwide acceptance virtually every year. Instead of trying to simply grow sales of established product lines, it is continually creating new profit opportunities.

Already Integra is ranked No. 2 in the world. The biggest neurosurgery products vendor is goliath Johnson & Johnson.

However, Integra's ambitious goal is to overtake it. And if you look at Integra's growth rate, you'll see that day might not be too far off.

Earnings are growing 57% year over year on a 44% increase in sales. The company enjoys a 15% operating margin. And annual revenue will top $1.2 billion this year.

I estimate that Integra will earn $2.42 a share this year and about 20% more in 2019.

And that may prove conservative.

Integra has a long history of gobbling up smaller companies (dozens in the last 15 years). And it should continue to grow through acquisitions.

Insiders own 19% of the outstanding shares here. That's a plus because when the officers and directors own a ton of shares, the other shareholders tend to get treated well.

Note, too, that the company operates in a recession-proof industry. Medical conditions don't ebb and flow with the tides of the economy. So sales and earnings will increase in good times and bad.

With soaring sales and earnings, aggressive growth tactics, and a proven ability to adapt to the market, Integra is well on its way to becoming the No. 1 seller of neurosurgery products worldwide.

- Donna DiVenuto-Ball with Alexander Green

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