The Ascend Letter

Planning Corner: Controllables and Uncontrollables

I have been in Colorado visiting family the last couple of days. While I was here I sat down with my brother, who owns a dental practice. Those conversations reinforced something I already believe. Planning is a must for business owners, no matter their size.

First, my brother hopes to sell his practice someday. He is young, so that is likely a long way off. I asked him if the business has produced any real capital appreciation so far. There isn't much. It cash flows well. As far as scale, there isn't a lot of room to grow given the city he lives in.

So the work, for now, is simpler than a grand exit. Pay down the practice debt so that cash flow can start funding his personal wealth accounts. He dreads the thought of selling to private equity or a large group. He wants an independent doctor who will actually care for the families who gave him their loyalty for so many years. That kind of optionality is impossible if the only asset he has is the practice itself.

Second, he told me about a dentist in a nearby city. Some things are impossible to plan for. That is the point.

This dentist's 20-year-old son was caught doing something extremely wrong with minors. You cannot pin that on the father. But patients no longer wanted to be associated with the firm. He had to move his family and scramble to sell. Over about six months they found a buyer and were close to finalizing. Then that buyer was in a car crash with his three kids. He was drunk. Arrested for DUI. A multi-million dollar practice went to nothing in less than a year.

I bring up both stories because they split cleanly. There are things you can plan for and things you cannot. Controllables and uncontrollables.

In both situations, the principal is the HOW behind the personal wealth creation and how it fuels personal wealth when the business is working, so you are left with options at the end, not forced to sell the asset to someone misaligned with your values.

That planning should start early. It should be fueled by the business and work in conjunction with it.

The Macro

I said last week I thought we would get a hold. I was wrong.

The Fed hiked 25 basis points on Wednesday, to a 3.75–4.00% target range. First hike since 2023. All 12 voting members said yes. No dissents. Inflation is still running too hot, unemployment is still healthy, and the committee decided that was enough.

It makes sense when you look at it that way. Headline CPI is 3.4%. Core is a more modest 2.4%. Energy is doing a large share of the work on that gap, with gasoline up more than 27% from a year ago and oil back above $100 on the Iran war. Warsh's line was simple. Inflation is too high, and has been for too long.

The market wobbled, then recovered most of the damage. The S&P 500 finished the week almost unchanged. Under the surface it does not look that calm. Breadth has been fading for weeks. Fewer stocks are doing the lifting. The Nasdaq held up. The Dow and small caps did not. That is classic September, and it's why I have spent the past month building cash in client accounts, so I can put money to work if the month hands us better prices.

Here is the more interesting part is the standoff. A unanimous hike runs directly against what the President has been pushing for. Trump wants rates at 1% or less. This would help his "Golden Age" rhetoric. The Fed just moved the other way in lock step reinforcing their independence. It also puts the next move in the President's court.

I read the hike as a message. Inflation is too high. End the war. That would bring oil down. If it does not, the committee has already penciled in room for another hike this year. More tightening is how you put pressure on a "Golden Era" that still needs cheaper money to look golden.

I do not think another hike does much damage to the AI trade other than the companies with massive debt on the balance sheet. AI is also deflationary by nature. What higher rates really do is send more interest income to the top half of a K-shaped economy, while mortgage rates grind higher making it harder for everyone else to acquire assets.