Growth Against Resistance
February 6, 2018
Dear Friends,
The financial markets always provide an interesting lesson in human nature. What we are experiencing is a very natural process that has been compressed by technology. Yesterday, I observed quite a number of TV, internet and print financial press reports misrepresent what is happening in many ways, all to increase the emotional (read: fear) element and distort the selling. For example, almost all financial news outlets characterized the selling yesterday as the “largest one day loss in market history.” Huh?? Well, if you count shares exchanged and index points, maybe that works. But in terms of the size of the move, it was unremarkable, except for the time compression. As I said in the last message, markets regularly have 5.00%, 10.00% and even 20.00% cycles. If the index is at 10,000, a 10% selling cycle is 1,000 points. At 26,0000 that is 2,600 points, not close to what we saw yesterday. We haven’t had a 10% cumulative move so far. It’s actually been a mild change, given the extent of the gain, particularly over the past year or so. We forgot. We always forget. We secretly like the thrill. It momentarily justifies our anxiety. The overall change may yet accumulate to a normal cycle. But it does not seem to be an indication of the end of the positive business cycle we are in, much less the end of the world.
What is operating here, beyond the usual, is a “new normal”: technology running economies and markets. The compression of market cycles, especially selling periods, is only possible by taking human consciousness out of the immediate process and delegating it to pre-programmed computers, operating on their own. Set it and forget it! The ultimate market appliance. This, and the overall effect of “indexing,” which uses no discrimination in buy and sell decisions, has introduced elements that have compressed market cycles and removed the element of immediate human judgement and flexibility from the process.
Is this a “good” thing? Well, if your goal is simply to trade as many shares as possible, then, “yes.” If the goal is to confidently own the great companies of America and the world, then probably, “no.” The speed and compression requires a deeper understanding of what an economy is and how to support and direct the process to the betterment of humanity.
Yet, this delegation to technology is the world in which we live and we have to adjust to this. It doesn’t preclude investing in the great companies. But it does require us to more clearly look beyond the immediate intensity and understand more clearly that markets have cycles, on an ever upward advance, that reflect the fundamental desire of billions of people to live better material lives. Declines are temporary, advances cumulatively permanent. As the proverb goes, “Let the dogs bark,” (speculators, traders, financial news) “the caravan moves on.”
People will always seek to improve their lives. We are only beginning to see the elevation of all humanity beyond basic subsistence, to a world where billions and more billions will not only have more than enough, but in this pursuit, increasingly solve the most vexing and fundamental problems of our world. We know, intellectually, that it is one world and one humanity. We are still treating the world as the center of the universe and not as part of a wondrous opportunity and responsibility to fully Live.
We humans only grow against resistance. Right now in our civilization, the focus of all valuation is financial. At this time in world history, the economic lens is the dark glass through which we experience all things. It won’t be the lens forever. It is for now, and even with all the negativity we experience in human affairs, we are raising more people from material scarcity to material abundance.
The next big challenge will be how we direct this abundance to elevate human experience, not just prolong it. Life is not an endurance event. It is an unfolding process, an opportunity to experience, learn, grow and celebrate.
As Always, Here’s to (Y)our Good Wealth!
Jerry!
