Beverage – Egyptian Licorice tea
The weather is cooling here in Durham NC and a hot cup of tea in the evening is just the thing. Nearly every ingredient in Yogi's Egyptian Licorice contains some purported health benefits, though the naturally sweet flavor is the main draw for me. It's also soothing for a scratchy throat, which is great for fall allergies.
Podcast – "Time Keeps On Slipping" on Akimbo: A Podcast from Seth Godin
Seth Godin has a knack for distilling complex issues into easy to understand narratives. He discusses the connections among technology, consumerism, and work in this recent podcast episode. The episode is not long (21 minutes, of which the final 10 are spent answering listener questions), so adding a synopsis here will only negate his concise and intuitive dialog. Instead, I will recommend that you listen with an open mind regarding the your own habits as a consumer.
Investing – Don't Believe The Hype
A recent New York Times article described investor "malaise" in the face of 70s-style stagflation. (Stagflation is an economic condition of stagnant business growth coupled with rising consumer prices.) According to the article, "uncertainty has halted the momentum that propelled stocks to a series of record highs over the summer."
Barron's, a weekly financial paper, shared that sentiment in the 18 Oct issue's "Up & Down Wall Street" column. "Now the specter of stagflation has returned," it claimed.
However, that same issue's "Fall 2021 Big Money Poll" reported that 50% of the wealth managers surveyed are bullish on the outlook for U.S. stocks over the next 12 months (meaning they think it's good), while only 12% are bearish (meaning they think it's bad).
So what gives? Why are the experts full of pessimism in some articles and optimistic in others?
It is true that inflation is on the rise. Chances are that it will continue to rise in the near future as supply chain issues and shipping delays confront excessive demand. We are in an inflationary environment, no doubt about it.
It is also true that the U.S. markets have hardly been "stagnant" in 2021. The major indexes are up for the year, with gains exceeding historical averages. As I write this on the morning of 25 Oct 2021, the Dow Jones Industrial Average is within 0.25% of all time highs, while the S&P 500 sits just 0.32% below its record peak.
A stone's through from "the best ever" does not sound like malaise. That actually sounds pretty great – especially considering that there is still a pandemic going on. Better than average growth during worse than average conditions seems pretty darn good.
I won't make the argument that the markets will go up forever (they won't) or that it doesn't hurt when the value of investments suddenly drops (it does). There is never a shortage of volatility in the stock market, and there is always a reason to be pessimistic in the short-term.
I will make the argument, though, that a month of declines – or even the occasional bad year – is simply business as usual, and not all that newsworthy.
Nearly all financial analysts make predictions over short periods of time – typically the next quarter or the next year. The financial media is even more short sighted, often focused on trends over the most recent month or week.
I can't fault analysts or journalists for hyping the doom-and-gloom. A headline describing how bad things are (or are about to be) catches more eyes than "things are pretty normal". That sells more ads, stimulates more trading, and generates more income for the people prognosticating on the dangers ahead.
Most investors would be well served by largely ignoring day-to-day headlines (which exist to sell ad space), focusing instead on their best long-term visions of the future. The ups and downs of the coming quarter will probably not change your long-term goals, and putting your energy into the future you want – and not on short-term trends – will lead to greater success and reduce stress along the way.
Quote – "Treasure this day and treasure yourself. Truly, neither will ever happen again."
– Ray Bradbury