Business news is getting to be quite tedious.
One the more important points we have tried to get across to our listeners and clients over the past few decades is that conventional wisdom is poison. Maybe I am showing my age, but it has seemingly gotten much more tedious as well. The daily parade of “wizards of smart” trying to explain why the markets have done this, that or the next thing has gotten really old. It would be nice if the people running some of the websites could also change the stock photography every now and then. Some of those photos of distraught looking traders holding their foreheads that they post when the markets are down might have been taken on a Polaroid they are so old.
The daily standoff between bulls, bears, other barnyard animals, is all for what?
Is all that daily static going to help you with your financial preparation?
Do you think that there is anyone or has ever been anyone that can actually predict what the market is going to do over the short-term?
People often forget that the major indexes can underperform for extended periods of time. A recent example, can be the ten-year period from 2000-2010. However, that does not mean that investors need to participate in substandard returns. It has been our experience that difficult market conditions offer extraordinary opportunities for investors that seek strong fundamentals and value when the masses are running scared.
If one takes several steps back and looks at our nation’s overall situation as a whole, the economy, societal issues and politics; it doesn’t look too promising. We have a stock market that has been driven up through the pandemic by certain technology companies that quite frankly don’t excite me. I understand how certain Covid proof companies were able to leverage their position and do extraordinarily well this past year and we continue to feel that certain companies that make up that basket will continue to outperform. What I continue to question are all the people that are perpetually touting the advances in technology. Could be me, call me crazy, but name for me some game changing piece of hardware or software that really blew you away? TikTok?? Sorry…Getting people more and more addicted to their phones now, doesn’t excite me, it scares me.
Many areas of our economy are going to take a substantial amount of time to recover. For example: Two thirds of hotels have stated that if occupancy rates stay where they are over the next six months they are done. Yelp has stated that over 60% of businesses that have shuttered over this past year will not reopen. Try to comprehend the ripple effect that the closure of massive amounts of hotels and restaurants will have, not just the staff, but all of the other businesses that supply and service them. That is the just hospitality industry, but also consider retail, commercial real estate and the list goes on.
Another important point of serious concern is the absurdity of being told that there is little to no inflation. In my opinion, that too is one of the greatest lies ever told. Go ahead and tell anyone that pays the household bills that prices are going down and they will more than likely laugh in your face. Prices are going up everywhere. I was recently speaking with some contractors who were telling me that building supplies continue to go up at such a pace that their quotes are only good for two weeks. But no, just ask Jay Powell and the Fed gang and they are going to tell you just like Sergeant Schultz from Hogan’s Heroes…I see nothing, I know nothing. Hey Jay, I get it, televisions are now a lot cheaper than they were 20 years ago. But can you eat a television? Can you live in a television?
We continue to see some tough sailing for investors for the foreseeable future. Investors need to continue as always to find the best safe yields. Most people don’t realize that the bulk of stock market returns throughout history have been due to dividends and compounding those yields over time. It has always been a cornerstone of our portfolios. Stop looking at what the Dow did today, what the Nasdaq did today? Truthfully, it wouldn’t surprise me in the slightest based upon our current situation as a nation, and what is also transpiring globally from national debt, endless money printing, a zero-interest rate environment and the ever expanding too big to fail dilemma that we could have a decade where the market indexes could go nowhere.
What to do?
Learn how to navigate financial storms, corrections and volatility.
Acquire the ability to recognize and avoid serious risks, including those that have never before encountered.
Discern the difference between the “conventional wisdom” of the day and the reality of the terrain.
Discover where the best safe yields reside and how to apply them in this zero-rate environment.
This is how we at Markowski Investments have positioned our clients for success through some of history’s most turbulent markets going on three decades.