Recently a decision was made to sell my 1973 Piper Cherokee which I had owned and loved for almost 20 years and to purchase a 2000 Commander 114, a North American Rockwell design. Timing is everything. The inflation that has ensued over the past several years created an opportunity to cash out of the Cherokee at a highly inflated price allowing me to recover all (most) of my “investment” made into the plane over 20 years of ownership. An outcome which I thought as likely as winning on the Black Jack table, an event that I recognize is possible, but one that has never actually occurred. Fortunately, I gamble at casinos about as often as I buy and sell airplanes. Being a value investor (a term used synonymously with frugal) I was able to purchase the Commander at a price which was discounted significantly due to perceived issues with a very recently overhauled engine. Suffice it to say, after having the engine extensively inspected, consulting with several very experienced aviation mechanics, and speaking with the engine manufacturer, all was apparently normal for a recently overhauled engine. Only by flying the engine and watching the engines parameters would we know with certainty if the engine was indeed good to go. This all sounds more perilous than it is. The issue was not would the engine quit while flying, but would the engine last to its useful life of 2000 hours in flight. My due diligence having been satisfied that all was well, I bought the Commander low and sold the Cherokee high!

The Commander is a step-up for me. It is heavier, more powerful, more complex, and, in theory, more useful. It regularly flies at 175 mph versus the Cherokee’s 130 mph, with retractable landing gear and a variable pitch propeller. With a variable pitch propeller, the pilot can adjust the propeller’s blade angle in flight, thus increasing the plane’s speed. Allowing me to get nowhere, my usual flying destination, faster. What this all boils down to is its more aerodynamic without the landing gear waving in the wind, more efficient with the variable pitch propeller acting like a car’s transmission allowing you to drive in a higher gear at higher speeds, and more powerful with a bigger engine. North American Rockwell, the company that designed the Commander has its roots in designing and building aircraft for the U.S. defense department. Its engineers over engineer everything, unlike the manufacturers of most small airplanes. The result of this engineering mindset created a strong, solid and very comfortable flying machine The front seats are 6 inches wider than the Cherokee’s, providing more room to spread out. It has higher wing loading providing a smoother, more stable ride, the difference between a compact car and an SUV. And it simply looks better sitting on the tarmac. On the ground other pilots comment on its good looks, a boost to my already inflated ego.

However, nothing is without costs and flying machines epitomize this fact. In addition to burning more fuel and having higher maintenance costs, take off distance is longer. This is especially true on hot, humid summer days. The kind of days which are perfect for fun filled flights. On a 90 degree, August day in Chicago, the Cherokee was up and flying after using 1000 feet of pavement and was at 50 feet off the ground, above the Oak tree at the end of the runway, in another 1000 feet. Thus, it was up and flying in less than a ½ mile, less than the distance of most runways at the small airfields we fly into and out of. The Commander is different, its built more tank-like. On that 90 degree, Chicago day, it uses 1500 feet to get airborne and another 1500 feet to clear that Oak tree at the runway’s edge. Still manageable, but a bit of a stomach churner when the runway at my home base airport in Schaumburg is 3800 feet. Overall, with approximately 150 hours piloting the Commander, I believe that I made a good decision and if I wanted to sell, I would get back my “investment”, a polite way of referring to funds spent on frivolous luxuries.

Investment time horizons for investors are similar to takeoff distances for airplanes. The young, a relative term for many of us, have a long runway ahead and more ability to manage the distance to liftoff. Assuming they have diversified investments, history shows that the market’s volatility will have little impact on their retirement. The ups and downs of the market year by year matter little, they need to average a solid return, which history indicates increases in probability with time. They simply need to push the throttle forward, i.e., keep investing, to achieve the desired results. This is not the same for a investors nearing or in retirement. The runway is shorter and they can not always make up for market losses while at the same time withdrawing monies to cover their expenses. Pushing the throttle forward, i.e., investing more aggressively, is not necessarily the correct response. History shows us that they require a more nuanced approach to investing and in this way, a professional can help.

We continue to believe that patience and a long-term perspective will provide our clients the best probability of reaching their goals and objectives.

As always, we thank you for your business and for your continued trust.

Sincerely,

Jack P. Cannata