At Monotelo Advisors our accountants work hard to free up cash flow by helping you minimize your federal tax liability, giving you more money to reinvest into your future. Simplify Your Taxes with Trusted Experts Accurate, stress-free tax preparation for individuals and businesses. Learn More Schedule Meeting Start your 2025 Tax Return Tax Season Resources Social Security Changes for 2026: A Complete Guide for Retirees and Working Beneficiaries Jan 15 4 min read Key Tax Season Deadlines for Monotelo Small Business Clients in 2026 Jan 13 2 min read Important Tax Dates for Small Businesses in 2026 Jan 8 3 min read Social Security Changes for 2026: A Complete Guide for Retirees and Working Beneficiaries Key Tax Season Deadlines for Monotelo Small Business Clients in 2026 Important Tax Dates for Small Businesses in 2026 Looking for Financial Planning Help? Our values-based retirement planning will give you the quiet confidence that everything is on track for you to achieve your life goals. Get Started Learn More Run your business, we'll handle your finances. Small business owner? Yes, we can help you with your tax, bookkeeping and payroll needs. But there is so much more to having the right financial partner. Get Started Learn More

Contact us Phone: 800-961-0298 Fax: 847-929-9134 Email: Info@monotelo.com Give us a call Schedule an appointment Schedule an Appointment Client Portal resources Need help with the portal? Click below to get help. View Resources Tax tools & tax tips Refund Tracker W-4 Withholding Calculator Documents checklist Tax Bracket Calculator File Upload Our Team Recent posts & news Social Security Changes for 2026: A Complete Guide for Retirees and Working Beneficiaries Social Security plays a crucial role in the financial security of more than 70 million Americans. For 2026, the Social Security Administration has announced several important updates affecting retirees, workers claiming early benefits, SSI recipients, and individuals with disabilities. Below is a comprehensive overview to help you stay informed and plan financially for the year ahead. 1. A 2.8% Cost‑of‑Living Adjustment (COLA) The biggest change for 2026 is the 2.8% COLA appl Key Tax Season Deadlines for Monotelo Small Business Clients in 2026 As the 2026 tax season gets underway, our goal is to ensure that all of our small business clients experience an easy and stress-free filing. The following dates highlight essential deadlines for S-Corps, partnerships, and C-Corporations—these are intended to keep you organized, help you avoid penalties, and clarify what you can expect from us. Feel free to bookmark this page or revisit it during the season; it's your key resource for the most important tax milestones. Key Important Tax Dates for Small Businesses in 2026 As a small business owner, staying on top of tax deadlines is essential to avoid penalties and keep your operations running smoothly. Below is a clear timeline of key dates for the 2026 tax season, along with an important update on 1099 reporting requirements. January January 15, 2026 – Fourth-quarter 2025 estimated tax payment due (Form 1040-ES). January 31, 2026 – Deadline to issue W-2 and 1099 forms to employees and contractors. Since January 31 falls on a Saturday Important Tax Updates for 2026 As the 2025 tax season approaches, taxpayers and businesses must stay informed about critical updates and deadlines to ensure a smooth filing process. Here’s a comprehensive guide to help you navigate this year’s tax requirements. Key Dates Individual Tax Filers: Jan. 31, 2026:  Deadline for employers to furnish Form W-2 to employees and for businesses to provide certain Form 1099s to contractors and recipients. Late Jan. 2026 (TBD):  The IRS is expected to begin accept A Journey Toward the King Merry Christmas! As we gather with family, reflect on the year behind us, and look forward with hope, we want to welcome you to this year’s Christmas message. At Monotelo Advisors, it is a joy and a privilege to walk alongside you—through every season and every milestone. This Christmas, we invite you to pause with us and revisit one of the most awe‑inspiring moments in history. The night a star lit the sky and hope entered the world: The Star That Changed Everything I s Gratitude, Generosity, and the Power to Change Lives As Thanksgiving approaches, many of us pause to reflect on what we’ve been given: family, health, opportunities, and the simple blessing of food on our Thanksgiving table. Gratitude is more than a seasonal sentiment; it’s a transformative force that shapes our mental health, relationships, and even our financial decisions. Why Gratitude Matters Research consistently shows that people who intentionally count their blessings live happier lives and experience less depression View More Stay up to date with the latest tax and market analysis. Subscribe to receive our weekly market and tax analysis. Site Title

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THE MONOTELO TEAM Jim Richter, CFP®, CAIA®, EA, CEPA ® President jim@monotelo.com Jim Richter is the President of Monotelo Advisors. Jim sets the strategic direction for the firm, including oversight of all tax and financial planning services at Monotelo Advisors. He brings 20+ years of experience in the financial services industry, including 10 years of hedge-fund specific work across diverse investment products. Prior to founding Monotelo Advisors, Jim spent 7 years as a Managing Director and Partner at a Chicago-based asset management firm. Prior to his time in the asset management industry, Jim spent 9 years as a fixed-income specialist in the banking industry. Jim is a CERTIFIED FINANCIAL PLANNER™ and a Chartered Alternative Investment Analyst with a degree in Finance from the University of Illinois - Chicago. He is an Enrolled Agent, a federally authorized tax practitioner empowered by the US Department of the Treasury to represent taxpayers before the Internal Revenue Service. Jim is also a Certified Exit Planning Advisor (CEPA®), trained to help business owners align their goals and build transferable value to successfully exit their companies. If you asked Jim where he would like to be right now, it would be in the Northwoods of Wisconsin. Ron Rindone, CPA Certified Public Accountant ron@monotelo.com Ron is a Certified Public Accountant with more than 40 years in public accounting. Ron has extensive experience with accounting and taxation in the manufacturing and service industries. He is a member of the Illinois CPA Society. Ron has a deep understanding of the Internal Revenue Code and how it intersects with our small business owners and individual families. He has a Bachelor’s degree in accounting from the University of Illinois. Ron and his wife have one son and two grandchildren. In Ron’s free time he enjoys spending time at his home in Lake Geneva with family and friends. Little known fact about Ron: he has been to the World Series of Poker more than once! Nicknamed “Best Dressed Ron” by the Heartland Poker Tour announcers in 2016, Ron was perfectly fine with his new nickname after he walked away with $74,000 in tournament winnings. Gavin Tabb, CPA Certified Public Accountant gavin@monotelo.com Gavin is a Certified Public Accountant and small business specialist for Monotelo Advisors. He is responsible for supporting our small business clients throughout the United States with seamless payroll, bookkeeping and monthly accounting services throughout the year. Gavin has a Bachelor’s degree in accounting from Northern Illinois University. He is an Intuit QuickBooks Certified User. Gavin and his wife have a five-year old daughter and one-year old son. Mike Matousek, CPA Certified Public Accountant Mike@monotelo.com Mike has extensive experience, spanning over four decades, starting as a staff accountant, and eventually becoming a partner at his own firm. His responsibilities included preparing and filing individual and business tax returns, assisting in audit field work for corporations, assessing the risk of material misstatement in financial statements, and designing audit procedures in accordance with Generally Accepted Auditing Standards (GAAS) for various accounts. As a partner at his firm, Mike was also involved in training and supervising staff, playing a leadership role in the development of his team. His current focus at Monotelo involves researching tax positions for clients to minimize tax liabilities and filing complex corporate tax returns. Mike has a wealth of experience and expertise in tax planning, auditing, and leadership within the field of public accounting. Jessica Padden, EA Tax Specialist jessica@monotelo.com Jessica is a tax specialist and paraplanner with Monotelo Advisors. Her expertise lies in personal tax returns and comprehensive tax planning, especially during significant life transitions. Jessica excels at deciphering the complexities of tax returns, helping clients minimize their taxes by addressing issues such as basis calculations, farm income, and company stock plans. With a Master's in Financial Planning from the American College, she is also an Enrolled Agent and Accredited Financial Counselor. Since 2011, Jessica has been dedicated to helping clients achieve more secure financial futures. Her commitment to her clients is unwavering, and she strives to provide personalized and effective financial solutions. When Jessica is not assisting clients, she enjoys spending her time reading, crafting, or hiking with her family. Starla Dolihite, EA Tax Specialist starla@monotelo.com Starla is a tax specialist with Monotelo Advisors. She serves in our personal tax department where she brings her best to Monotelo clients each day. Her attention to detail and commitment to excellence are what make her special. She is passionate about studying tax law and getting into the nitty-gritty so she can apply that knowledge to make a difference in the lives of our clients. Outside of work she enjoys hiking, mountain biking, paddleboarding and serving in her church. Starla and Brian, her husband of 33 years, have three adult children and one daughter-in-law. If Starla could be anywhere right now it would be working out at the gym, or at the beach. But not just any beach! The beach has to be on the Florida Gulf Coast. Starla and her husband are Florida natives. Starla has a Bachelor Degree in Accounting from the University of West Florida. Starla is an enrolled agent, a federally authorized tax specialist that operates to provide advisory services to American taxpayers about matters concerning the Internal Revenue Service. Michelle Hartley Tax Preparer & ParaPlanner michelle@monotelo.com Michelle serves as a Tax Preparer and ParaPlanner for Monotelo Advisors. Michelle spent two decades travelling the U.S. and Pacific region as a military spouse. Along the way, she earned a Bachelor of Arts in psychology at the University of Texas at San Antonio, where she engaged in PTSD research, earned her Accredited Financial Counselor® certification as a 2014 FINRA Foundation Military Spouse Fellow, and continuously pursued her passion for financial counseling and education. This spring she will complete her Master of Science degree in financial planning with a financial psychology certificate from the American College of Financial Services. Michelle enjoys working with families to help transmit money values and improve communication to attain shared goals. Her free time is spent baking, rushing to install and enjoy gardens before the next set of military orders arrives, and drilling her son on Latin grammar forms. Michelle also spends time volunteering with organizations that build financial literacy within the military community and serves as a mentor and scorekeeper for a youth robotics league. Alejandro Almaraz Accountant Alejandro.alamaraz@monotelo.com Alejandro Almaraz is an accountant in Monotelo’s Client Accounting Services and Personal Tax department, where he plays a key role in maintaining accurate, organized financial records for our small business clients. He supports clients with accounting, bank reconciliations, payroll processing, accounts payable and receivable, and tax preparation, ensuring financial data is timely, reliable, and easy to understand. He works closely with clients and internal team members to support smooth onboarding, efficient workflows, and compliance throughout the year. While Alejandro is one of our newer team members, he has over twelve years of experience in tax, having joined us from KPMG LLP where he was a Senior Tax Associate. Alejandro has a Bachelor of Science Degree from DePaul University and a Masters of Business Administration with a concentration in Accounting from DePaul University. Alejandro lives with his wife and three young children. Renee Katschke Small Business Specialist renee@monotelo.com Renee is a small business specialist for Monotelo Advisors with over 15 years of public accounting experience. Renee works alongside Mary Bresson in our West Brooklyn office serving our small businesses and farming clients. She started her career in banking and has been providing bookkeeping, payroll and sales tax return preparation services since 2006. Renee also supports our team in preparing individual 1040, corporate and partnership tax returns. Marianne Richter Engagement Manager marianne@monotelo.com Marianne Richter is responsible for ensuring that Monotelo is delivering a high level of customer service and meeting the expectations of Monotelo’s small business relationships. Marianne brings 13+ years of diversified training and marketing experience in the consumer goods industry to Monotelo. Marianne and her husband, Jim have two adult sons. Little known fact about Marianne: she is a certified personal trainer and health coach. If Marianne could be anywhere, it would be on a beach. Anita Ruffin Accountant anita@monotelo.com Anita is a seasoned accounting professional who has served in public and corporate accounting over the course of her career. Working in the accounting department at Motorola for a decade, Anita played the role of staff accountant, compensation analyst and team leader in Motorola’s network services business. Anita holds a Bachelor of Science degree in Accounting from the University of Missouri. She and her husband have three adult children and a dog! Anita enjoys traveling, gardening, leading her BSF bible group and spending time with family. If she could be anywhere right now, she would be on the beach, in a tropical island! Cassie Beesley Associate Cassandra@monotelo.com Cassie is a long-time resident of Bunker Hill, and is thrilled to assist Monotelo clients in the local communities she loves. Cassie earned two bachelor’s degrees from Eureka College, one in Mathematics and one in Secondary Education. After graduating from college, Cassie worked as an administrative assistant for over 5 years, where she found her calling in accounting and her love for numbers. In her spare time, Cassie coaches girls and boys volleyball at her alma mater high school. When Cassie is not caring for the needs of Monotelo’s clients, you might find her writing her own fictional stories, or hiking and kayaking Sarah Blatter Administrative Assistant Sarah.blatter@monotelo.com   Sarah Blatter serves as an Administrative Assistant in Monotelo’s Personal Tax department, providing essential operational and client support during tax season and throughout the year. She assists with document management, correspondence, scheduling, and client communications, helping to ensure a smooth and responsive experience for every client. Sarah brings strong organizational skills, professionalism, and a service-oriented approach to her role. She is highly skilled in document preparation and workflow coordination and is often the first point of contact for client inquiries. Her attention to detail and commitment to accuracy help the tax team operate efficiently while clients feel informed, supported, and well cared for. Sarah has a Bachelor of Arts in History along with a Master of Arts in History and Museum Studies from the State University of New York, Buffalo State. She enjoys riding horses, cooking, reading and collecting books, and spending time exploring the world with her husband and pre-school aged daughter. 

Small-Business Provisions of the CARES Act Access Presentation Slides

SMALL BUSINESS TIPS Small Business Tips Deducting 100% of your Business Meals In the past, the tax deduction for business-related meals has generally been limited to 50% of the cost of the meal. However, to help the restaurant industry recover from the Covid-19 pandemic, the relief bill signed into law at the end of last year temporarily increased the business meal deduction to 100% for tax years 2021 and 2022. This means that you can now fully deduct the cost of your business meals provided they meet a few requirements. What Qualifies as a Business Meal? The first step is to make sure your meal qualifies as a business expense. Deductible business meals include: Meals for yourself while out of town on a qualified business trip. Note that you cannot deduct your own meals while working unless you are either out of town on an overnight business trip or meeting with a potential business associate. To substantiate your meal as a qualified business expense you should save the receipt as well as document who you met with or the purpose of your out-of-town trip. Meals shared between you and a person with whom you could reasonably expect to engage in business activity, such as a customer, supplier, employee, partner, or professional advisor. How Do You Qualify for the 100% Deduction? In the past, the tax deduction for business-related meals has generally been limited to 50% of the cost of the meal. However, to help the restaurant industry recover from the Covid-19 pandemic, the relief bill signed into law at the end of last year temporarily increased the business meal deduction to 100% for tax years 2021 and 2022. This means that you can now fully deduct the cost of your business meals provided they meet a few requirements. What Doesn't Qualify for 100% Deduction? Businesses that are not qualified restaurants include any that primarily sell pre-packaged food or beverages not for immediate consumption, including: Grocery Store Specialty Food Store Liquor Store Drug Store Convenience Store News Stand Vending Machine Meals purchased from any of the places mentioned above would still be limited to the 50% deduction. If you choose to use federal per diem rates to deduct your meals during business trips or to reimburse your employees for business meals, you are also limited to the regular 50% deduction. To qualify for the 100% deduction you must use the actual cost of the meals. Read More Articles Summary Business meals have traditionally been a sore spot for business owners due to the limited tax benefits relative to other business expenses. With this temporary increase you can now fully deduct your business meals as long as they are a qualified business expense and are provided by a qualified restaurant.

SMALL BUSINESS TIPS NEW PROVISIONS FOR THE PAYCHECK PROTECTION PROGRAM After months of negotiations Congress has come to an agreement on another stimulus package which was signed into law on December 27th. Included in the many provisions in the bill is some welcome relief for small-business owners through enhancements to the Paycheck Protection Program. Deduction for Expenses Paid with Loan Funds When the first round of Paycheck Protection loans were approved by Congress earlier this year it was the intent of Congress that forgiveness of the loans would not create taxable income for the recipients. The IRS, however, had their own interpretation of the law and in May issued a notice stating that any expenses paid using funds from a forgiven PPP loan could not be used as deductions on the recipients tax returns. By disallowing the associated expenses, the IRS in effect made the forgiven loans taxable against the wishes of Congress. This disparity between Congress’ intentions and the IRS’ interpretation of the law was corrected with this new bill which clearly states that no deductions will be denied due to the forgiveness of the PPP loans. By reinstating the deductions for expenses covered with PPP loans Congress has finally made the PPP forgiveness tax-free as originally intended. Second Round of PPP Loans The bill also provides for another round of PPP loans which means small-business owners who either didn’t receive a loan in the first round or have exhausted the funds from their first loan can now apply to receive another. The criteria to qualify for this second round are stricter than they were for the first: Only businesses with 300 or fewer employees are eligible Businesses who received a previous PPP loan must either have already used the full loan or demonstrate that they will use the full loan To be eligible a business must have experienced a drop in revenue of at least 25% in any one quarter of 2020 when compared to that same quarter in 2019. You only need to demonstrate a 25% drop for a single quarter to qualify, but it must be compared to the same quarter of 2019. You cannot compare your third quarter of 2020 to your second quarter of 2019. As with the first round of PPP loans a business must have been in operation as of February 15th 2020 to be eligible for a loan. The deadline to apply for the second round of loans is March 31, 2021. Summary If you received a PPP loan during the first round earlier this year you can now rest assured that your forgiven loan will be fully tax-free. If your business experienced a decline of at least 25% in any quarter in 2020 relative to that same quarter in 2019 you have until March 31st to apply for another PPP loan to cover your expenses.

July 2019 SMALL BUSINESS TIPS Quarterly: Oct 17 Deducting the Business Use of Your Vehicle If you operate a small business and you drive regularly for that business you have two choices: you can either drive your personal vehicle and reimburse yourself for the business portion of the associated costs, or you can transfer the vehicle to the business and pay all of the associated costs directly from the business. Which of these options you choose depends on the vehicle and how you use it within the business. There are no inherent tax benefits to titling your vehicle into your business, in fact doing so limits your options in how you deduct the cost of that vehicle. However, when your vehicle is 100% business use then titling it to your company can simplify your record-keeping requirements and allow you to pay for your vehicle costs directly out of your business account. The first step to decide where you should place ownership of your vehicle is to determine which vehicle cost deduction method is more beneficial in your situation. Standard Mileage Rate vs Actual Expenses There are two primary methods for deducting the cost of using a vehicle for business purposes: The standard mileage rate method and the actual costs method. Standard Mileage With the standard mileage rate you can deduct a specific dollar amount for each business mile you drive during the year (for 2022 the standard rate is 58.5 cents per mile). The standard mileage rate is used more often since it only requires you to keep track of the miles you drive throughout the year and does not require records of any other expenses. However, the standard mileage rate can only be used for a vehicle that is in your personal name. If your vehicle is titled to your business, you are required to use the actual expense method.. Actual Expense With the actual expense method you can deduct your out of pocket costs for fuel, insurance, repairs, etc. You can also deduct the cost of the vehicle by depreciating it over its asset life (typically 5 years). The actual expense method requires much more thorough record-keeping. You need to keep track of each vehicle related expense throughout the year, and if you use the vehicle for both personal and business use then you also need to keep track of the total business and total personal miles for the year Choosing the Right Method If your vehicle title is in the name of your business you are required to use the actual expense method. However, if the title is in your personal name you can choose which method to use in the first year. You can switch methods in the following years, but there are additional restrictions to do so. It is in your best interest to take the time in the first year to determine which method will be more beneficial. The standard mileage rate method is intended to simplify record-keeping requirements while still providing for an accurate deduction for the cost of using your vehicle in your business. To that end, in many cases the standard mileage rate method should provide the same or greater tax benefits as the actual expense method. However, there are specific factors that can make the actual expense method more beneficial: Price of Car: Since you can deduct the cost of a car over several years with the actual expense method, a more expensive car increases the probability that the actual expense method will be more beneficial Fuel Efficiency: With the standard mileage rate you get the same deduction no matter how many miles you get per gallon, so a less efficient vehicle will eat away at a greater portion of your allowed deduction. Highway vs City: If you are driving primarily in a large city you are likely putting much fewer miles on your vehicle while still spending the same amount on car payments, insurance, etc. If any of these factors apply to your situation then you may receive a greater benefit through the actual expense method. It is also worth noting that under the actual expense method you will receive a greater tax benefit in the first few years while you are depreciating the cost of the vehicle. Once the vehicle is fully depreciated your deduction will drop significantly. Under the standard mileage method your deduction will be relatively consistent subject only to small changes in the standard rate each year. Summary If 100% of the use of your vehicle is for your business and you have large vehicle costs either from buying a newer car or driving mostly in the city, putting your vehicle title into your business can simplify your record-keeping requirements without sacrificing the benefits of the standard mileage rate method. If you use your vehicle for both personal and business needs or you drive an older vehicle with a low market value, you may want to keep it in your personal name to preserve the option to use the standard mileage rate. Previous Article Next Article

WHAT WILL HAPPEN When Social Security Runs Out? At the end of August 2021, a new report was released that showed Social Security is projected to run out of money in 2033, one year earlier than previous calculations. With that deadline only 12 years away it is likely to impact everyone who is not already enrolled in Social Security as well as many who are. What will happen when the fund runs out? You may have heard that benefits will stop being paid once the fund runs out, but that is not likely to happen. We have laid out some of the changes that are likely to be made to Social Security over the next 12 years or after the fund runs out around 2033. Reduced Benefits If no changes are made before the fund runs out, the most likely result will be a reduction in the benefits that are paid out. If the only funds available to Social Security in 2033 are the current wage taxes being paid in, the administration would still be able to pay around 75% of promised benefits. While a 25% reduction in benefits could significantly hurt the retirement plans of those who are relying on their Social Security benefits, it is far less damaging than the program being shut down entirely. With the potential for benefits to be reduced, some retirees may be tempted to apply for their benefits early to receive as much as they can before the fund runs out. However, if you start taking your benefits as soon as allowed, they will be reduced to 70% of your full-retirement age benefit. Comparing this to the 75% that could be received even after the fund runs out, you would still be hurting your retirement by applying early. Increased Wage Taxes To avoid benefit reductions, congress may vote to increase the Social Security taxes charged on employee wages. If the increase were put in place immediately, the employee portion of the tax would need to increase from 6.2% to 8%. This would represent an additional $900 in taxes paid annually for an employee making $50,000 per year. Another proposal in wage taxes that has become popular in recent years is an additional tax on high earners. Rather than increasing the social security tax of 6.2% on all payers, this would implement a new tax on wage income above $400,000 to help stabilize the social security fund. Increased Full Retirement Age Even if the fund does not run out, the full retirement age needed to receive your full Social Security benefit is likely to go up in the future as life expectancies increase. Since the Social Security program was first started the average life expectancy has increased 7 years and yet the full age retirement for Social Security has only increased 2 years. As the fund begins to run out, it is likely that the full retirement age will be raised even further, along with harsher benefit cuts for those who apply early. Summary While Social Security benefits are unlikely to be completely eliminated 12 years from now, there is a strong possibility that they will be reduced significantly if revenues are not increased in the next few years. To make sure that your retirement plan is secure, you should analyze your retirement income stream under the assumption that your Social Security benefits will be reduced and determine what changes need to be made if that happens. Schedule a Meeting to Learn More Failing to order your affairs to minimize your tax burden could cost you significant money - so don't wait to take action. If you have additional questions or need some planning help, please reach out to us.

Asset Location and Creating Tax-Free Retirement Income

The Fallacy of the Formula Quarterly: Oct 17 What do Circuit City, Fannie Mae and Pitney Bowes all have in common? If you answered that they have all been remarkable failures in the past eighteen years, you would be half-right. If you answered that they have all been remarkable failures AND were three of the eleven “Great Companies” identified in Jim Collins’ Good to Great book, you would be more-right. Good to Great: Why Some Companies Make the Leap... and Others Don't took the business management community by storm when it was published in October of 2001. Like the latest Hallmark movie, the book follows the same pattern of past business books: create a list of great companies based on some “quantifiable” measure and then identify the formula that brought these companies to greatness. And imply that your readers can apply the same magic formula to achieve greatness within their own organizations! Ignore luck, randomness and good fortune, and over-attribute all the greatness to the formula and the management team. Oh, and one more thing – make sure you have a BHAG! (a big, hairy, audacious goal) It doesn’t matter if the BHAG is a good one, it matters that it’s HAIRY and AUDACIOUS! The core message of Built to Last is that good management practices can be identified and implemented, and once implemented good results will follow. The fallacy of this logic is that Collins was essentially comparing successful firms with less successful firms and attributing the success to something other than luck and randomness. Of the 5,000+ publicly traded companies that existed from 1986 to 2001, there was a reasonable probability that eleven of them would outperform over a 15-year period! “Knowing the importance of luck, you should be particularly suspicious when highly consistent patterns emerge from the comparison of successful and less successful firms. In the presence of randomness, regular patterns can only be mirages.” Daniel Kahneman. Nassim Taleb touched on this human tendency when he introduced the narrative fallacy in The Black Swan. The narrative fallacy describes how flawed stories of our past shape our views and expectations of our universe. Driven by our need to make sense of our world, narrative fallacies are the simple, compelling stories that create meaning and assign larger roles to things like talent and intelligence rather than luck or randomness. Focusing on the few significant events that actually happened, rather than the countless number of events that could have happened, we wrap our view around a nice clean narrative and fail to account for the randomness that exists in our world. People have a deep need to be reassured that actions have consequences. And we all want to believe that success will be the rewards of courage and good decision-making. Books like Good to Great provide a nice clean message about the determinants of success and failure by offering a sense of understanding. But their logic is faulty and misleading. The reality is that the world (and especially stock prices!) operates in a more-random fashion than most people care to recognize. The recognition that our world has a randomness to it does not however, leave us powerless. It can actually empower us to make better decisions when we recognize that fact. We will address how to make better decisions in light of a random world in next week’s Insight, but before we wrap up this week, let’s look at how Collins’ eleven “great” companies have performed since Good to Great was published 18 years ago: On a cursory look, the end results show three remarkable losers in Circuit City, Fannie Mae and Pitney Bowes; four weak performers in Kimberly Clark, Kroger, Wells Fargo and Walgreens; two market performers in Gilette and Wells Fargo and three winners in NuCor, Philip Morris and Abbot Labs: Remarkable Losers 3 Market Performers 2 Underperformers 4 Winners 3 That doesn’t sound like “greatness.” Some underperformed, some outperformed and some were right in the middle. It sounds more like randomness and a reversion to the mean from former greatness.