Not for the Faint of Heart
Picture this...you are a big wig at the White House. You carry a resume that has Goldman Sachs on it. You lead yourself to believe - and the press and expert pundits sure push the idea along - that you are the key factor in numerous things - all economic. You are the king pin - Trump shudders when you speak and the halls of the White House quiet as you walk by - with whispers from the corner offices as you saunter into the Oval.
Then, the crowd let's out a huge cry as the headline hits late in the day on Tuesday - you have resigned. That's it - you are done. You have been pushed around for the last time. You know you are being told everyday how important you are - apparently to the very fabric of the entire global economy. Without you - the market would surely fall apart - and gosh - where would we all go from there?
I mean, seriously, who does the President think he is for lashing out and ignoring your guidance that tariffs are a bad thing? Man oh man. So back to all that you are the man stuff - the risk of markets cratering if you - gasp - consider leaving. Well, you did - and then what?
Yawn ... uh, the market did "crater" at the open yesterday - um, if our new definition of crater is a 1% move lower. It got even worse as you had to slowly find a way to climb down from that really, really high ivory tower - when markets began to recover - about an hour into the day.
I can imagine the stone dead silence in the room when the ink was still drying on your resignation letter as the final tick before the close showed the S&P 500 just a few ticks away from UNCH. That's short for unchanged as your Goldman days taught you. And heck, those bad old tech stocks even had the audacity to completely ignore your retirement and even rally into the green before the close.
So much for all the chatter - the angst - the fears from the pundits - hopelessly wishing for some terrible event to befall us all so they can look brilliant.
Let it be a lesson to the jackpot experts who constantly sift through the rubble of life to show their brilliance by highlighting all that is wrong with the world. Still further to those who fill our airwaves with the proverbial - let me see - what is the word I am looking for - yes, garbage, sold as "expertise" in the constant effort to be the guy who calls the next "Armageddon Event."
Finally it is a lesson on this: no one person is that important. The markets are about human spirit - human effort - the mass audience thinking through and reacting to news, opportunity, growth, perceived risk and then - making decisions. Sprinkle in the pesky robot algorithms which splatter themselves all over the wall each day looking to "pick up pennies in front of a bulldozer" as they say - and you get all the noise you need to keep it confusing for those who think way too short-term.
Don't Stress the Little Stuff...
Think of how many "important people" have come and gone in the White House, on economic teams, in Congress and the Senate - and somehow, still we anoint them as something special. Once in a very rare moment - and only for a small window of time in the grand scheme of things - does any one person become important - and only then when our perception as an audience deems it as such - very often, many years after they are gone. (read: Say, President Reagan for example)
Here is the point - this is not about politics - it is about understanding where the power really is. Not in the White House, not in the vaunted position of "Economic Advisor" - - no, it stands with all of us - people.
Lots of people.
Generation size groups of people.
Those generations move through the pathway of time - and they do certain things at certain stages. Not every single one of them mind you - but most. And in the grand value of time, investing, building wealth and meeting goals - "most" is all you need.
That and a mountain of patience and discipline.
Miss any one of those three points, well - sadly, peril often awaits.
Success in this game is a very, very tough pathway - all because of ourselves. We are the enemy in our own efforts. We over-think, over-react, over-compensate...
The toughest play is to stand by and let things roll through. Let the waves arrive on the beach as they always will. Let people fight battles on a day-to-day basis. Investors who successfully reach their wealth-building goals are more often than not, those who instead focused on winning and wars...and letting others fight the misguided, short-term battles of emotion.
Hey - like the title today says:
Not For the Faint of Heart...indeed my friends.
You bet - treacherous things await. More problems, more panics, more economic setbacks, more failures, more fraud, more misjudgment - more epic disasters than we can possibly imagine.
It will - as always - come out of nowhere. Recents events proved it once again: we fretted over N. Korea and Trump in the press - but the market panicked because of ETF and VXX garbage created by - yep, Wall Street.
It's called "out of left field" for a reason.
So stop fretting.
Well, try this on for size - re-read that paragraph above starting with "You bet..."
Now, picture this: no matter what year you want to pick in the past - we could have rightfully made the very same statement - and it would have been 100% correct.
Yet, as we stand today - over the vast expanse of time passed - there are only roughly 30 days in the history of the market where we were higher.
But know this - the fear mongering will never stop. The audience is addicted to it - and the media will be more than happy to be your dealer - if you choose to partake.
Case in point - right now on a major financial website, which starts and ends with C:
My take - absolutely hilarious.
In fact, were I an actual bear, I'd start charging these guys a fee for the use of my image.
This of course would explain the fear and greed data flooding the sentiment indicators again, all for the good, if you are a long-term, patient, disciplined investor who can muster the strength needed to mentally look beyond the day-to-day garbage sold as expertise.
Sorry but I will need to repeat:
It's why they call it "building wealth over the long-term", instead of "fun."
Even the bond market fear is beginning to wane a bit - almost exactly where we suggested it would target (3%) in the video we did for you on Bonds specifically back in January.
In a perfect world, this chop and churn would last for another couple weeks - such that at least the top three reading dials on the first chart above turn red with fear.
As much as things change - they often (sadly) remain the same. Human nature falls solidly into that camp.
It is the spirit of innovation and demographic powers in place are driving the Barbell Economy in the directions we speak of often.
A patient and disciplined view of the larger forces defining the future will help clearly define for you a more productive philosophy...no matter who resigns from the White House.
Over wide spans of time, people make markets.
The Barbell Economy is real.
You can ignore it, you can disagree - but the two largest generations of our time are set to drive U.S. economic growth for the next 40 years.
In time, innovative and well-run companies standing in that Barbell structure will be set to generate long-term profits, and the shareholders (owners) who patiently invest for the long-term will hopefully participate in the value creation that takes place as a result.
As such - panics like the one the markets are currently finding their way through tend to be good for the long-run. They reset values and perspectives and provide the long-term investor new opportunity to be patient and disciplined.
No one ever stated it would be easy.
Be assured of this: if it were easy, the returns available would be insignificant.
For long-term investors, hunting season is open...time to start looking.
Be grateful for the latest bouts of panic.
The wall of worry has been rebuilt nicely...though chop and churn as aftershocks are always likely - and normal.
Demogronomics keeps you on the leading edge of change but there is a cost: it requires a much larger, more patient and disciplined view of the elements at work.
It's the long-term currents we need to invest upon - not the short-term waves which will assuredly always roll ashore to block the horizon - just as they are now, causing doubt in the minds of millions once again.
Those waves are the noise too many will likely continue to be lost in...and the reason the long-term game is so hard to win based on fearful activities.
In the end, like it or not, long-term investors have learned this:
Demographics Rule The Long-Term Game
Until we see you again - may your journey be grand and your legacy significant.