If you unexpectedly end up somewhere suspected, why not suspect that you might end up somewhere unexpected.
I know, but think about it. Long term investors wound up where we feared in 2009….way down and falling. Selling just helped keep sanity but otherwise investors were shell shocked the markets would deliver such a blow. All along we suspected it could happen. Turn off the market guru’s belaboring each tick of the market on TV. You’ve heard that from us before. Knowing our patience will be tested over and over in the course of our lifetimes, the idea of staying mostly invested over many years has had its rewards.
If the market gets overpriced and gets labeled a ‘bubble’ again, investors today will almost surely be well rewarded. Today, 10 thousand baby boomers are hitting 65 years old every day…and this will continue for about 15 more years. Those with investable capital have been taught so much about investing (much of it the hard way)…how to be diversified and hedge risk, save for a rainy day, not have all your eggs in any one (bank) stock. Yet they pay their financial planners/money managers dearly each quarter for advice they are not sure is good or not. The part they did not learn well, mostly because their planner didn’t know either was how to ride out a vicious stock market emotionally. I am still learning myself as are most of my peers. A note from years ago in my office drawer says ‘don’t forget to sell, sell, sell’! A more recent sayings of mine is this; “If you hold your stocks all the way down, at least you can say you were invested at the bottom”. I really wish I didn’t learn that one.
Trends emerging: People eating healthier, performance based healthcare, infrastructure needs changing, technology lowering costs in every sector, durable goods lives likely become longer (disposable TV’s are not good environmentally, but cheap TV’s have been a boon for consumers), data being compiled at record speeds and technology to profit from that is too. The emerging workforce is going to be a force to reckon with, and profit from. They don’t like to make a phone call but they are playing games on their devices, often with people they don’t know, while texting a few others, preferring the fundraiser at an old warehouse, not the St Regis, and buying all their fashion online, learning online, researching online, and yes, socializing to the point that you wonder what’s next, an app to date instead of a person? A good many don’t bother to learn to drive. Oh, according to Wikipedia, they are less likely to practice organized religion. Much less actually. Andy Stanley’s network of churches are filling up with these folks, so maybe there is a chance his model helps turn this around.
These young people are called Millennial’s (Gen Y) and were basically born from 1982-2002. They will be 80 million strong, larger than the baby boomer workforce and a dandy to contend with. These workers will not only be available to consume goods but to also purchase stocks. If they do the latter, watch what happens. (According to surveys by the University of Michigan, they say they want to be wealthy more so (percentage wise) than the baby boomer generation said at their age).
I was recently chomping on an Oyster PoBoy at Wintzell’s Seafood in Mobile, Alabama. J. Oliver Wintzell was quite the restaurateur, but also famous for his wit with thousands of hand painted signs on the walls with musings to keep you entertained while eating his seafood. This restaurant opened in 1938, so the witty sayings can be quite old. Here is the one that caught my eye; ‘This is the only country in the world where as soon as a man can afford a Plymouth he buys a Cadillac’. Isn’t that the best! Yes, this overspend your means has gone on for years…we have seen it on all levels but the money has just about dried up. Detroit filed, Puerto Rico as Barron’s just pointed out is flooded with debt, California isn’t doing well and even Uncle Sam’s Cadillac is tired and needs tires. Sequester was a wake up that the country can tighten its belt. Banks don’t lend money much anymore and were not very good at it anyway, so it is no surprise the only major homebuyers are pools of investors looking for profit from a depressed economy. Home prices have surged, so they maybe be onto a nice trade. Aljazeera news just launched and wouldn’t it be ironic for them to become a go to news source while the traditional ones continue their old manipulative ways? Times do change, but let me remind you of the some things. Corporations have reduced the number of shares in circulation and no longer get away with huge stock option pools; IPO’s are finally able to get done but still lagging historical levels; technology keeps improving return on equity across the board even with sales of many corporations falling; analysts rightly focus more on cash flow than earnings; traders are keeping the average holding period very short….so when the trade is up as we have recently experienced, you see how they can fuel the flame quickly. Can the market be re-priced significantly upwards? I don’t expect that will happen…….but suspect it might
-Bobbo Jetmundsen
Disclaimer: Worthscape, LLC does not guarantee the accuracy of completeness of this report, not does Worthscape, LLC assume any liability for any loss that my result from reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice and are for general information only. This is not an offer or solicitation for the purchase or sale of any security and should not be construed as such. Reference to specific securities, issuers and data for illustrative purposes only.
