Look at this picture. Let me ask you a couple questions.
I just finished up teaching a Retirement Planning class at Fairfield University. I generally ask at the beginning of class how many of the attendees had some level of motivation to sign up because the 2008 collapse remains in the back of their mind. With teaching this course for the past 4 years, I would say over half the people raised their hand and did so with legitimate concern on their face. But this most recent class, I witnessed a lot of shrugs, “Eh, that was 10 years ago.”
My gut is that it’s less about the time frame and more the double digit returns the markets provided in 2017. Now, this blog isn’t going to be a Debbie Downer about the market and economy. I’m actually quite happy with the growth of corporate revenue and earnings, dramatically lower unemployment, Trump’s implementation of promises and yes, I believe what he’s doing with Tariff’s is not only brilliant, but necessary.
In the Spring of 1998 I was having lunch at an outdoor restaurant in Stockholm Sweden, while on break from a Wall Street analyst meeting. As I was about to enjoy another bite of crispbread, I watched a guy walk up to a vending machine, point his phone and click - a pack of cigarettes dropped out. I put my food down, literally rubbed my eyes and turned to my colleague next to me and asked incredulously, “Did you see that?” My associate was too busy gawking at the natural blonde women at a table across from us, so I was left with my own thoughts: Why can’t we do this back in the United States? Obviously, this is universal technology, how can Sweden be so far ahead of us?
There's a famous story about how Joe Kennedy (John F.’s father, who was ruthless and manipulative as he was wealthy) avoided the 1929 stock market crash. He said that when his shoeshine boy gave him some stock tips, he knew it was time to get out. I believe Joe had a bit more inside knowledge that instigated his timely exit before the greatest meltdown in stock market history. So, a question before us is, should we pay attention to what ‘certain’ investors or institutions do with their money? I will argue yes, but let’s come back to this in a bit.
I’m typing this blog after the market close on Friday with the Dow and S&P up fractionally and the NASDAQ off slightly. Wall Street not only had the entire day to chew on Hurricane Harvey news, but I will tell you that they had information much sooner than what you’ve been witnessing on the television Friday afternoon... and it didn’t spin the market into a sell-off. Why? We’ll get to that in a second, but let’s focus on Harvey for a moment.
Sorry, that decison has already been made for you.
I ended the last blog with the question: “Should you take a bite of Bitcoin?” To answer that, I believe it will be helpful to provide some context in several areas: Expensiveness, Long-term Viability and Better Mouse Trap.