May 2026 Missive

HUNKY DORY: SATISFACTORY, FINE

Hunky dory is an Americanism meaning satisfactory, fine. The term appears in the 1860s, and while its origin isn’t known for certain, we have a pretty good idea how it came about. It most likely is an expansion of the older slang term hunk, meaning safe, in a good position, which in turn is from the Frisian honcke or honck, a refuge, safe place, home, which appears in children’s games in New Amsterdam and later in New York before entering adult slang in the nineteenth century.

Hunk appears in the phrase to get hunk, meaning to be made whole after a loss, in a 24 May 1845 article in The Spirit of the Times about a horse race:

It is not a little singular that in one instance only did the favorite win! Those who lost their money on Fashion, had two or three chances to “get hunk,” especially on the last day.

And it appears regarding bank reserves in an article in New York’s Weekly Day Book with a dateline of 12 August 1853:

The great peculiarity of these institutions is, that they have plenty of money when everybody else has, and none when others have none. Just at the time when the merchants want money the most, and when, to carry one their business properly and successfully, they absolutely need it, the banks are short—haven’t a cent—can’t discount a dollar—“are absolutely borrowing to keep all hunk.”

And it’s recorded in the 1859 second edition of Bartlett’s Dictionary of Americanisms:

HUNK. [...] 2. (Dutch, honk.) Place, post, home. A word descended from the Dutch children, and much used by New York boys in their play. “To be hunk,” or “all hunk,” is to have reached the goal or place of meeting without being intercepted by one of the opposite party, to be all safe.

The -dory is added by 1864. The origin of this element is not known for certain, but it is most likely simply reduplication, as in hotsy-totsy, hootchy-cootchy, or hoity-toity. The earliest use of hunky-dory that can be reliably dated is by Henry Warren Howe, a Union soldier in the Civil War. On 3 November 1864, Howe wrote in a letter to his family:

Fran., if you can obtain the use of a good piano I will hire it for you, with pleasure, and, perhaps, purchase it, and let it remain in the family until I get a “bonnie guid wife.” Captains Johnston and Ferris are in the hospital at Annapolis, Maryland, and doing well. I send you a sprig of cedar. Mr. B. goes in the morning, and it is late, so I will close. I am “Hunkey Dora.”

It is often claimed that hunky-dory has its origins in Western sailors visiting Yokohama, Japan. One of the streets in Yokohama is named Honchodori, and in the mid nineteenth centuries it was lined with bars and brothels, just the place for sailors arriving in port after a long sea voyage. The chronology of this explanation works—Japan opened up to foreign trade in the 1850s. If this explanation is correct, the American adoption of the term would likely have been a combination of sailors bringing tales of the place home and the older slang term hunky. Unfortunately for this explanation, however, it is just conjecture. There is no evidence linking American use of hunky-dory to Japan. None of the early uses are by sailors or in nautical contexts. So, while the explanation is chronologically plausible, the lack of evidence makes it unlikely. https://www.wordorigins.org/big-list-entries/hunky-dory

The views expressed in this missive are the personal opinions of the author and do not necessarily reflect the views of Capital Asset Advisory Services, LLC. This material is provided for general informational and educational purposes only and should not be considered a solicitation, research material, an investment recommendation or advice of any kind. It is not intended to, and does not, relate specifically to any investment strategy, product, or service offered by The Prizant Group. Certain statements herein reflect opinions, beliefs, or forward-looking views that are subject to change without notice and may not come to pass. While the information presented is believed to be reliable, no representation or warranty is made concerning its accuracy or completeness. Past performance is not a guarantee of future results, and investing involves the risk of loss. Readers should consult their own financial professionals before making any investment decisions.

There has been much talk about the “K-Shaped Economy” in the media. The higher-earners are spending like there is “No Tomorrow," and the rest of us are struggling to put gas in the car, food on the table, cover health/home/auto insurance premiums, pay for college, and try to save for retirement. I wouldn't say that today's economy mirrors the Roaring 1920's, but there is a certain feeling of the “Rich Get Richer and The Poor Have Babies” class differentiation. We are going to examine the difference between a “K-Economy” and an “E-Economy." I am partial to the “E," but “Why Would Anyone Listen To Me?” Thus, I present the differences below and allow my intelligent, insightful Missive readers to come to their own conclusions.

A K-shaped economy is one where different parts of the economy move in sharply different directions at the same time: one group rises while another falls or stagnates. The phrase comes from the shape of the letter “K,” with the upper arm representing people or sectors doing well and the lower arm representing those doing worse.

Simple example

High-income households and asset owners may benefit from rising stock and home values, while lower-income households face higher costs and weaker wage gains. That creates a widening divide in economic outcomes rather than a broad, shared recovery.

Why it matter

The term is often used to describe inequality inside an economy, especially when aggregate numbers like GDP look strong but many households still feel financial pressure.

‘E-shaped’ economy is replacing a K-shaped one in 2026, economist says: The middle class is ‘spending in a nervous way’ now

It’s difficult to describe the U.S. economy in black and white terms like “good” or “bad.” On several fronts, the data says the economy is healthy. But surveys show American consumers don’t feel that way.

“There’s no doubt right now that different data can show slightly different narratives,” says Heather Long, chief economist at Navy Federal Credit Union.

Depending on which measure you look at, inflation is falling or staying flat in recent months, Long points out. The consumer price index has dropped from its 9% peak in June 2022 and hovered around 3% since June 2023, according to U.S. Bureau of Labor Statistics data. Personal consumption expenditures has remained relatively flat for the last year, coming in at 2.9% in December 2025, the latest reading from the Bureau of Economic Analysis.

But prices for many consumer goods remain far above what they were in 2020, and wages have roughly plateaued over that time when adjusted for inflation, according to nonpartisan economic research group, The Hamilton Project. That disparity could be contributing to Americans feeling bad about the economy. Consumer sentiment is down nearly 13% year-over-year as of February, according to the University of Michigan Survey of Consumers, which is released monthly.

Many economists referenced the U.S. economy as “K-shaped” in 2025, illustrating how higher earners were doing alright — continuing to spend and driving economic growth — while lower-income Americans pulled back.

Long, who was among the economists using the phrase “K-shaped,” says the economy is taking more of an “E-shape” in 2026, with three tiers of consumer behavior instead of two. A middle group is distinguishing itself, and those people’s behavior is starting to show that they’re experiencing growing signs of strain, she says.

Here’s what she’s seeing.

Top tier: ‘Driving a lot of the consumption’

Like the tip of the K-shape, the top tier of the E-shaped economy is comprised of high earners — the consumers who continue to spend money despite elevated prices. The top 20% of earners account for nearly 60% of all U.S. consumer spending, a recent analysis from Moody’s Analytics found.

“This top tier [of earners] that’s doing really well, that’s driving a lot of the consumption,” Long says.

The difference between the K-shape and the E-shape: Middle-earners’ spending growth was closely aligned with higher-earners until it started diverging toward the end of 2025, according to Bank of America Institute data released in February. As of January, the gap between high-income households and all other households’ annual spending growth reached its highest level since mid-2022, the bank reported.

Wealthy consumers aren’t just continuing to buy what they always have, despite higher prices. Some retailers and brands, especially in the food and hospitality industries, are increasingly boosting their premium offerings to attract those big spenders, Long says.

Premium credit cards like the Chase Sapphire Reserve and AmEx Platinum recently upped their annual fees to $795 and $895, respectively, betting that additional perks will lure in more high-earning cardholders. “Look at all of these exclusive platinum credit cards,” Long says. “Almost every company is trying to move up the value chain, and you can see that in the earnings calls.”

The strategy has paid off for the airlines, hotel brands, and food and beverage companies that have reported strong demand for their extant and newer premium offerings since fall 2025 — even as sales for their standard and discount products slow down.

Middle tier: ‘Treading water’

Spending behaviors among middle class Americans is where you start to see signs of the affordability crisis, Long says. They’re still spending on their necessities and some discretionary categories, but “the middle class is treading water so they can still pay their bills,” she says.

Long calls this tier the “Costco economy,” referencing consumers who aren’t necessarily in a full-blown panic yet, but are increasingly shopping at discount and wholesale retailers like Costco and Walmart to get the most bang for their buck.

“They’re obviously spending in a nervous way,” she says, “They feel they need to stretch every dollar they feel they need to buy in bulk, to do whatever they can [to save].”

Regardless of where they’re shopping, a growing number of American households are living paycheck to paycheck. Nearly 24% of households had expenses eating up the bulk of their earnings in 2025, according to data from Bank of America Institute published on Nov. 10. The bank’s report defines “paycheck to paycheck” as having costs for essentials like housing, groceries, utilities, gas, child care and more that exceed 95% of income.

The share of paycheck-to-paycheck households has been on the rise since at least 2023, the bank’s researchers found.

Middle-class households may be getting by for now, but Long says they’re experiencing stress in waves. “Not only are they facing high prices, but it’s every couple of months, something else surges,” she says. Eggs, for example aren’t nearly as expensive in 2026 as they were in 2025, but in January, beef prices were up 22% from the previous year, per the Labor Department.

“It’s just whack-a-mole inflation,” says Long.

Bottom tier: Taking on debt

The bottom tier of the E-shaped economy is characterized by high credit card usage and Buy Now, Pay Later usage, Long says.

While middle and higher-earners certainly use credit cards and sometimes carry balances on them, lower-earners are more likely to report carrying a balance. Among card holders, 59% of those earning between $25,000 and $49,999 say they’ve carried a balance from month to month at least once in the last year, according to the Federal Reserve’s latest Survey of Consumer Finances which was conducted in October 2024 and released in May 2025.

Half of cardholders earning between $50,000 and $99,999 say they’ve carried a balance at least once in the last year, compared to just 38% of those earning $100,000 or more.

As for Buy Now, Pay Later plans, adults earning between $25,000 and $49,999 are mostly likely to have used the installment loans in the last year, the Fed reports. Lower earners, households earning less than $25,000, were the most likely survey respondents to report being paying late on a Buy Now, Pay Later plan, data shows.

A quarter of Buy Now, Pay Later users reported using the loans to pay for groceries in 2025, up from 14% in 2024, found a February 2025 LendingTree survey.

The 2026 tax season may come as a lifeline for Americans in the middle and bottom tiers, Long says. Over a third — 35% — of Americans expecting a tax refund say they’ll use at least a portion of it to pay down debt, a Feb. 23 Intuit TurboTax survey found. But even large refunds are only a temporary fix for an ongoing affordability problem, Long says.

https://www.cnbc.com/2026/03/06/e-shaped-economy-replacing-k-shape-2026.html?__source=iosappshare%7Ccom.microsoft.Office.Outlook.compose-shareextension

It is time to leave the “Alphabet Economy” and concentrate on the ERISA retirement plan sector. I want to focus on the move by 401(k)/403(b)/457/401(a) vendors away from static target-date funds (TDFs) to the “supposed” advantage of “Separately Managed Accounts” (SMAs). As my avid readers know, I have NEVER been a fan of target date funds.

WHAT IS A TARGET DATE FUND?

A target date fund is an all-in-one investment fund designed for a specific future year, usually your expected retirement year. It starts out with more stocks for growth and gradually shifts toward bonds and other more conservative investments as that date gets closer.

How it works

The fund’s built-in changing mix is called the glide path. Early on, the portfolio is usually more aggressive; later, it becomes more conservative to help reduce risk as you near the goal date.

Why people use it

Target date funds are popular in 401(k) plans because they offer a simple, hands-off way to invest for retirement. You choose a fund based on the year you plan to retire, and the fund manager handles the rebalancing over time.

What to watch

They are convenient, but they are not risk-free, and the “right” fund still depends on your own retirement timeline and comfort with risk. Different target date funds can also have different glide paths, so two funds with the same year in the name may not behave exactly the same.

A simple example: if you expect to retire around 2065, you might pick a 2065 target date fund, and it will generally be stock-heavy now and more bond-heavy later.

Having given thousands of education seminars over the last 25 years, I have no problem stating that 99% of TDF participants do not understand what they have invested their life savings in. Most importantly, participants aged 55 and older have no inkling of their overexposure to the equity markets. Due to this exposure, older participants do not have the time or patience to recover “unrealized” losses (that become “realized” when they need the $$$) from major stock market corrections or a true “Bear Market." Let me remind you that a 40% loss in your retirement account balance requires a 70% gain just to get even! Furthermore, their “static” composition (one-size-fits-all) does not account for the multiple risk levels of your average investor. However, this really has little to do with the “push” to enroll participants in SMAs. I know you might consider this “heresy,” but it all comes down to the Almighty Dollar. With the continued march towards “Fee Compression” (i.e., the race to the bottom), industry players need to find greater profit margins. They still have their proprietary Stable Value/Guaranteed Investment Contract (GIC) funds, but the ongoing Bull Market/lower interest rates have not been kind to regular inflows, and outflows are common. SMAs are an excellent way to improve the bottom line by suggesting that participants are better off in an account tailored to their age/risk tolerance and managed by professional money managers. As one who has seen the underperformance of these SMAs and the higher costs.

COSTS OF SMA ACCOUNTS

The additional cost of a separately managed account (SMA) in a 401(k) is typically about 0.4% to 0.6% of assets per year, with some participant managed accounts ranging from 0.25% to 0.75%. That is usually on top of the plan’s underlying fund expenses, so the all-in cost can be meaningfully higher.

Typical fee range

Managed 401(k) accounts often average 0.4% to 0.6% annually.

Broader SMA pricing can run roughly 18 to 60 basis points for management alone, depending on strategy.

Some 401(k) participant managed accounts are quoted at 0.25% to 0.75%, and combined costs can reach 1.25% to 1.50% in some setups.

What that means in dollars

If you had a $250,000 balance, a 0.4% to 0.6% SMA fee would cost about $1,000 to $1,500 per year before considering the underlying fund expenses.
For a $100,000 account, a 0.4% fee is about $400 per year, while a 0.6% fee is about $600 per year.

Practical takeaway

For most people, the key question is not just the SMA fee itself, but the total cost after adding fund expenses and any recordkeeping or advisory charges.

The mantra that the SMA providers trumpet is that they will perform “significantly better” that a static TDF in a Bear Market. Considering we really haven't endured a classic Bear Market since 2022 and that one was a mere 6-months with an S&P 500 loss of 21.6%. To me, this was a mere correction and I am talking about a “real” Bear Market producing equity losses of 40-50%. I wager that these SMAs will do just as poorly as the TDFs in this situation. We will need to wait whether your's truly is Nostradamus or a Chicken Little.

We, at The Prizant Group, are well aware that our retirement plan participants have a long list of life priorities, and their retirement plan is certainly not in the Top Ten. The industry vendors have convinced the Department of Labor (DOL) that either a TDF or an SMA is a pragmatic investment for the “Great Unwashed.” Either can be used as a QDIA (Qualified Default Investment Alternative) when an enrolled employee has not made an investment decision. Furthermore, TDF/SMA options are “sold” as a “One-Stop Shopping” option for all your retirement plan needs. We categorically say “Phooey” at that premise. If given the chance, rare in this day and age of webinars/automatic enrollment, we painstakingly explain the pros/cons of these alternative investments. To round out this month's Missive, I could do no better than David Bowie's 1971 “Hunk Dory” condensed soundtrack. Pay attention to the “Changes” and “Life on Mars?” hits.

Sanford Prizant (President) The Prizant Group, Ltd.

sanford@prizantgroup.com/847-208-7618

www.prizantgroup.com/@prizantgroup

Call, Email, Twitter, LinkedIn, Carrier Pigeon, Smoke Signals, Naval Flags

Advisory services offered through Capital Asset Advisory Services, LLC. A

Registered Investment Advisor.

39W849, Kellar Square
Geneva, IL 60134-5309, United States