Carty Capital Management
Carty Capital Management



Ready To Be Seated

Good Morning,


“The business schools reward difficult complex behavior more than simple behavior,

but simple behavior is more effective.”


“There seems to be some perverse human characteristic that likes to make

easy things difficult.”


Those two brilliant thoughts come from Warren Buffett quotes.  While we never set out to do so, much of what Demogronomics teaches about investing patterns and positioning for the long-term can be seen in the habits Warren has espoused for decades.


"Simple" and "Easy" are not two words normally used in the investing arena these days.  After all, Wall Street would prefer the masses think it opposite.  Constant movement, chatter on the airwaves and unmerciful angst over every syllable a CEO or CFO utters on a conference call seems to be the preferred route.  This leaves out the painful process of waiting for any FedHead to speak at any moment and the painful slicing and dicing of every word, expression or tone used.


Put it to bed.  If all of that really worked, don't you think everyone would be rich by now?


The Title Reference Today


We have heard months of "late in the game", "last of the cycle" and/or my favorite, the proverbial "9th inning" as it relates to market action.


Heck even the bulls are starting to say things like "well, 2018 may bring a top...."  True, of course.   Yes 2018 could also bring the year where Earth is struck by a meteor, caves in on itself, vanishes into a black hole and well, we can forget the 9th inning.


The point?  Neither one of those events is knowable -  but rest assured all those calling for tops will indeed take credit for it when it finally arrives.  And it will finally arrive.  It will be painful.  It will cause some to lose money.  We will see asset values shrink.  And then?


Like all others before it - it will continue on the upward track it has been on since markets began.  Long-term investors know this.  You plan time - not the market.  Your enemy is emotion - not the market.


Think demographics - not economics.


Back to the title.  I have a surprise for you:


It says "take your seats" because the long term demographic view suggests something far different from what the audience hears today en masse.


It suggests that what we have been witnessing is just the warm-up.  The data suggest the players are just preparing, the stands are just filling, the last ticket stubs are being pulled at the gate and fans are still filing in.


If we overlay the generational waves of Gen Y and the Baby Boomers who powered the 80's and 90's , Gen Y is just edging into the time slot where the Boomers were in roughly '79-'80.  In terms of the powerful economic forces still to be unleashed by the record-setting events ahead - the game has yet to begin.


Back to Warren - we also believe in simplicity.  We are often asked about diversification too.  I'd like to tell you how we feel about diversification by borrowing one of Warren's quotes again:


“Diversification is protection against ignorance. It makes little sense if you know what you are doing.”


And for the latest?


The data coming from the economy continues to suggest a slow and steady rise ahead.  Synchronized global growth is a powerful self-fulfilling force, yet still we have masses lining up to buy bonds for "safety" - this after a 3-day down close in the S&P 500:




Guess what?


The world is not ending.


But I would sure like everyone to think it is for another, oh, 35 to 40 years.


Note - that 2.3% 10-year yield is down 8 basis points this week and is present at the same time we are seeing:


continued jobs growth

record JOLTS

record personal incomes

record retail sales

record earnings

record GDP


- and then there is this:




Now at first glance, new highs in productivity seems boring.  It isn't.  It is the mother's milk of earnings and margin growth.  Remember what we have said often:  the deeper Gen Y gets into the corporate structure of America, the higher those margins will rise.


Again...the game has not started yet.


Sure, there will be corrections - pray for them.


The Latest ISM Data


In a word.  S.T.R.O.N.G.


In another.  Hurricanes?


Here are the internal comments from the report (often more valuable than the number):






In Summary


I suppose one can choose to get lost in the fear over the idiot in N. Korea.  But that would not build your wealth, mend your health or save you from anything.


We could get riddled with angst over the next person to be accused of harassment - but that would only be poisoning your soul with wasted hate for people.  And for what really?


We could fret over the tax bill, or the debt ceiling or the New Year or the Middle East or the - you fill in the blank.


I suggest instead we keep our eye on the ball.


Listen - if this was easy - it would have been called fun - and not a life-long, often very tough journey of building wealth to meet your financial goals.


So let this all sink in - things are solid - and getting better - including all the tough stuff.


The Barbell Economy is set to unfold for the next 30+ years.


Sit back and fasten your seat belts - it's going to be a wild ride....and of course, there will be lots of stops along the way up this mountain where it will feel like the world is ending.




The dirty little secret is this:


He/She who moves less wins.


Long-term thinking always wins out over short-term trading.  Worrying about the next setback sells lots of ads but makes almost no money for you.  History proves it.


Forget economics - think demographics.


It's the big picture.  It's the current under the emotionally-driven waves.


Demogronomics keeps us on the leading edge of that long-term direction - but it also demands a much larger, far more patient view of the economic elements at work.


Pray for that correction.


Generation Y is set to do much greater things - far beyond what the Boomers accomplished - or what can be defined today.


Until we see you again - may your journey be grand and your legacy significant.


InvestingMike Williams