“Boy, can you make folks feel what you feel inside?
‘Cause if you’re big star bound let me warn ya, it’s a long, hard ride”

“The Ride” – David Allan Coe

 

Good Morning,

Thankfully, we still have most of the summer ahead of us.  Comeback records were set on travel this past week.  Expect more – so long as we can take on the media battle with the Delta variant capturing more and more headlines.  There is even a newer one capturing headlines this past weekend.  It is the Lambda variant.  Follow your doctors orders of course – always – but as promised, we can expect that volume to keep getting higher – as more and more head to the beach.  We covered this last week as a likely driver of chop (read: rest) for markets in July.

Idea of benefit:  Focus on the beach  : )

I like today’s quote above.  It comes from a song called “The Ride” and that last line is really what drives home the point.  I have learned a few things in the almost 39 years I have been blessed to serve clients in this profession.  The line in the song sticks with me each time I hear it.  Why?  It seems to me that anything that you will appreciate accomplishing in life, anything that will mean a great deal to you and yours – is, indeed, a long, hard ride.

But, it is also an extreme joy.  The trip up the mountain, the potholes, the base camps, the rest stops – and yes, even the backtracking – requires Faith, belief, discipline and patience.  The strife of the storms along the way chisels into you – your very best.  Time does not wear you down – it makes you better.  It teaches you lessons that can never be learned in books.  Through the heat of battle and the tension of the squalls along the way, your goals are met, your best friends arrive through the haze and the horizon brightens ahead.

Building toward your wealth goals – and sticking to your wealth management plan – carries with it the very same events.

And it too – is a long, hard ride.

I am reminded of another verse from another “song.”  It is called “The Sunscreen Song.”  All the lyrics can be read here.  They are all full of wisdom, the depth of which only means more as one logs more years and time passes.  A couple of my favorite lines that go well with the path we helps clients allow for go like this:

“Sometimes you’re ahead, sometimes you’re behind
The race is long and in the end, it’s only with yourself.”

In essence, it is those base camps (rest stops) that cause too many to feel they must “adjust” or change.  I was reading the stats of a widely held ETF over the weekend.  It has 276 positions in it with a turnover ratio of 66% per annum.  This suggests that the managers “investment time horizon” is roughly 4 months.  Just 120 days as an average holding period.

I am sorry to be the bearer of bad news – but that is not investing.  That’s trading.  The two are like night and day.

Worry and Fear are VERY Expensive

When the pathway gets dark – and it most assuredly will at times – the key is always the same no matter the event:   Stay on your path.

Over time, we all experience the fear and angst associated with the scary events that unfold along the way.  Or even the fear of events that might unfold.  Our future, in the midst of the darkness feels unreachable, at risk and unlikely.  Our emotions are so strong we can almost taste the reality of bad news coming.  We are just clearing out one of those examples in life.  It is precisely then that these simple words mean so very much as the darkness is traversed – and by the way, it is always traversed.  No matter how terrible the events, I have learned in these 39 years that problems come to pass.  They don’t arrive to stay – they pass.

And in their wake they leave something many overlook in the angst-filled environment: the seeds of the wealth many look to build.  Every disaster – in a larger sense – defeats weakness.  Processes that do not work, perish in market setbacks, global shutdowns and/or recessions.  Like the plains of Africa – only the strong survive.  The difficulty is required to make us all better – together.

Read that again – the difficulties are not terrible events – they are required events when then pave the way for the “better” that is always ahead.

They are all tests of our spirit – our ability to stand strong in the storms and keep our minds clear and focused – while others get confused and make poor decisions.  Those too, the poor decisions – are also required along the way.  Remember this always: difficult market windows are the periods where short-term traders hand their holdings over to long-term investors.  It has been this way since the beginning of time.

Once we learn this, once we gain a strong sense of how good our future is going to be, we get better at not only relaxing during the difficult storms – but we also find ourselves embracing “the monsters” instead of running from them in our emotional responses.

How many tough things have you made it through.  How many times did you fear something that was not worth fearing at all.  How many times was “the worst thing” actually a good thing after the dust settled?

Markets are not “tough” – humans make them that way.  Stand above it and let time unfold.

Here is Your Test

Be honest with yourself when you consider this scenario as we ponder it together:  Had we somehow been able to “foresee” the pandemic and the global economic shutdown initiated because of it, try to think about what you would have thought if this arrived in your “inbox” say, last January, as your morning note:

“Good Morning All.

Important news.  We have just become aware that a virus will arrive on our shores in the next 6 weeks.  It will end up being tagged as the reason for nearly 4MM deaths worldwide.  It will cause an undefinable amount of political, human and financial strife.  We will be told it is overwhelming our healthcare systems and you will be ordered to stay at home.  A global lockdown will effectively follow shortly – and the market will fall 30% or so in a matter of 20 trade sessions.  Say goodbye to summer because we won’t have one – indeed, we will be lucky to “come back outside” before the end of 2020.  Yesterday’s normal will never return.  Trillions of dollars in debt will be created globally to rescue businesses where possible and to fund the life needs of humans so they can exist until the virus departs.

But here is the good news:  While all of this is going on, a series of events will unfold parallel to this disaster that may end up surprising you.  We already noted that markets will fall 30% in March and April.  They will double in the following 15 months.  Hundreds of thousands of businesses will close their doors and millions of people will lose their jobs.  Meanwhile, we will launch more new companies and businesses in the US than in any other year in our history.  Fifteen months from now we will have a record-shattering numbers of jobs to fill – and not enough humans to fill them.

Robots need to arrive to build the growth curve ahead – far faster than most may be comfortable with at this time.  Earnings will skyrocket and set all-time record highs.  By the time 2021 dawns, analysts will be so far behind in their understanding of the complete remake of all business structures that they will miss expectations by over 90%.  We will see companies make hundreds of billions of dollars more in profits for 2021 than they saw in 2019.  By Q3 2021, the explosive growth that will be unleashed by the pandemic’s shutdown forces will be setting the stage for S&P 500 levels of 5,800 to 6,000 by 2025-2026 or so.

Our advice?  Do not budge – it will most certainly get frightening and ugly for a few quarters – and then you will be pleasantly surprised by what things look like in the summer of 2021.

And just one more thing for the morning note today – a bigger monster will be forming after this series of events is behind us.”

The answer is pretty obvious, no?

Most readers would have not read much after the first paragraph.

WARNING:  Significant Abundance Ahead

Does anyone know the level the DOW reached in the depth of the Great Depression?

The answer is 27.  Imagine that – 27.  Can you further imagine how many people at the time would have believed you had you told them then that, “in just 93 years, the DOW will be 34,800 – or a smidge over 1,200 times higher than it is right now…”

I would like you to consider this and let it sink deeply into your soul:

While the pathway ahead is assured to be home to a sizable number of disasters which will be placed upon us for a window in time, the abundance and opportunity that will accrue for long-term investors, on a parallel path – while the strife unfolds, will dwarf all current levels of understanding.

Re-read that as many times as may be required until it feels acceptable to you.  I say that because one of the other things I have learned in these 39 years is somewhat simpler:  you must accept, no matter how uncomfortable it may feel to do so sometimes, that our very best years (by many multiples) are ahead of us.

Make sure you watch this video if you haven’t already:  www.trubeginnings.com

Many Monsters Have Perished

Too many somehow overlook what we have been through together to get here.  Think of just some of the things we made it through already:

The Oil Embargo of the mid-70s

The Recession of 1980-1982

The Crash – October 19, 1987

The Commercial Real Estate Collapse Recession of Early 90s – 1500 Banks and S&Ls lost

The Tech Bubble Bear Market and Recession of 2000-2003

The 9/11 Terrorist Attacks – and 20 Years of War After

The Great Recession – 2008-2009

“Brexit”

The 2020 Pandemic

…and yet, as of last week, we are again at record highs.

Pray for the Setbacks and Dark Spots

I told Max the other day that an incredible amount of difficult travel points across life had been dealt to his Mom and I.  I expressed to him how deeply grateful I was for every single setback and calamity.  I told him I would not change a single thing – even if I could.  He looked at me – as only a 20-year old can – with that “Dad you are not making much sense” look, and asked me why.

I told him that every single thing had to happen just exactly the way it did – for God to bring us him.

So embrace all the monsters – and don’t be afraid.

Instead, remain strong, patient and stay on your path – as the best things in your life tend to be birthed in the darkness.

Our very best years are ahead.

America (and her economy) only gets better when you kick her in the gut.  Lesson learned.

We just have to be willing to let the game unfold.

Have a great Holiday-shortened week – and have a fun summer with family and friends.

And remember

 

“The best time to plant a tree was 20 years ago. The second best time is now.”

Until we see you again, may your journey be grand

and your legacy significant.