“Most people want to avoid pain, and discipline is usually painful.”

– John C. Maxwell

Good Morning,

Here we are – closing out the next to last week of summer. The summer swoon as the August doldrums flowed through has yet to unfold. Sure, we have seen a little bit of internal chop, but nothing one would call a summer setback. Darnit.

As stated before, no summer setback given the circumstances, suggests much stronger internal strength long-term, easily fooling the perspective of the wider audience.

Clients simply need to stay focused on the larger events,the underlying current driving the massive benefits ahead for the US economy. <– click the link for a short video

The uglier the disruption, the longer the comeback based often on new services, new efficiencies, new perspectives and new lessons. And don’t fret, the entire decade ahead will ripple with disruptions. The world around us will be completely changed a decade from now.

What’s Going Right?

Long-term investors learn over time that a positive view of the circumstances is a better choice. No, that does not mean a rose-colored glasses lifestyle. No, that does not mean that we don’t see setbacks. It means that we focus on the recovery. We focus on the ingenuity, the history of Americans – and America – as a whole.

Let’s count it out:

Housing – we are running out of homes to buy. Builders will be busy for at least a decade. Gen Y – 88 million kids are just beginning to buy their homes. Think of a starting line in a marathon where the runners are just leaving at the starting cannon. Then think about that corral of runners crossing over that starting line – for their race – lasting for 20 years.

Inventories – squeezed – everywhere. Once we get beyond this bat out of hell we will need several quarters of increasing production – just to fill inventories back up to even a thin 28-day supply we saw in January “pre-Covid.”

Incomes – bizarrely – up, even the data just released was “better than expected…”:

We already covered the earnings front earlier in the week – better than expected, to an extreme. That topic in the media world will be drop-dead boring for the next 6-8 weeks. Don’t you fret though, it will be terrible when it comes back up.

And sentiment? Well, maybe the best news of all – it still stinks. Records are being set each week as the data continue to show that the crowd does not like stocks.

The last from AAII still shows more bears than bulls – and hence a new record will be set in the second image below – the string of weeks. Remember, it is not about what is happening right now with this current depth of concern and despair.

It is about what happens next.

Note this item too: it takes a great deal of change to make a 6-month moving average of anything roll back up to their upsides seen on the lower table of the image above – often measured in years. Look at the distance from a time perspective between extreme lows and then the next highs – in the past.

..and then, pray for a few weeks of setback and corrective action. It would set the stage nicely for the rest of the year.

The Health Front?

Improvement in many areas and on several fronts – mainly the treatment and vaccine side of the war. Do NOT be surprised when we find all of this work we are seeing thrown at the problem results in solutions for many more things beyond this virus.

It is our view that combining medicine, science, technology and capital at the pace and levels we are witnessing, will result in a massive foundation of explosive benefits to come. The stage is being set for very beneficial discoveries in the life-sciences, health and longevity parts of our world. Never forget – out of darkness comes light.

Forget Looking for “Normal”

Think “brand new” instead.

The New Economy is forming right before us. Sure, things will be different – some of those things vastly different. But suggesting we won’t win that battle and successfully rise to new heights has been a bad bet since our ancestors arrived here.

The best news of all? Wait until you get a load of the monster coming after this one. Good Lord. It will make this last 6 months look like a summer camp. And if it doesn’t, you won’t pay attention, the media addiction will fail, their revenues will fall – and the world will become a better place.

In the New Economy ahead, the long-term investor who can remain more focused on opportunity than peril, even as they live through that peril – will win. It’s a tough game – but that is why they never called it “fun.”

“Of all the liars in the world, sometimes the worst are our own fears.”

—Rudyard Kipling

In Summary

Overlook the Waves- pay attention to the underlying current.

Adapting, overcoming and making things better are all foundations of American History. Doubting it for anything more than short stints during the shocks themselves – has been a bad bet, forever.

Demogronomics©does not fade.

It may be lost in the haze of current fears – but it will remain the underlying current.

Ignore it at your peril as a long-term investor.

The DOW people figured it out – check their latest changes – both end ofThe Barbell Economy™were covered in the new additions this week.

The 80’s and 90’s were the Boomer’s Decades.

The 2020’s and 2030’s are the Generation Y Decades – and the rocket-ship driving that expansion will be “everything tech” – including stuff we have not even dreamed of yet.

Grab your popcorn and tighten that seat belt. It’ll be the best Disney ride you’ve been on yet.

The tougher you punch America, the higher she rebounds. It’s how we are all built – together.