I have had several conversations lately with people who are terrified by what they see as horrible policies coming out of the new administration. We had the same thing with Trump. The media and democrats were sure financial Armageddon was at hand.
Half of the country feels this way at every election. Whoever you voted for will do well and whoever you hate will crash the market. Normal reaction. But “this time it’s different!!” the four most dangerous words in all of investing. Our ability to predict is terrible. Lots of hand wringers got out after the election and have missed huge gains.
Of course, why guess when you can know? I will never be clairvoyant, nor will you. If we really wanted to know what will happen, we should call the “Psychic Hotline” at 2 a.m.
We can be sure of this: When we own great companies who consistently grow sales, earnings, and dividends we will get wealthy over time. That’s all you need to know. Of course, it is always going to be unpleasant when you feel you are “losing money.”
For some reason, even the smartest people immediately translate a market downturn into a permanent disaster leaving them penniless. But when they are “making money” they don’t extrapolate that they will be a billionaire soon and own an island with an airport. This is nothing but good old human nature. It still lurks in all of us, constantly predicting bad outcomes and sapping our chances for wealth.
Corporate results this quarter are through the roof and consumer spending, employment, sales, and earnings are hitting all time highs for a lot of companies. I think the momentum continues as Covid shrinks to almost zero and low interest rates stay reasonably low. It will end but we never know when. In the meantime, I will keep some cash in your accounts so we can get great companies at low prices when a downturn inevitably happens. And adding cash to buy low is always wise, not just me bugging you!
Well, I thought Verdi was supposed to be getting us out of the market when it’s going to go down and back in before it goes up. I know I never said that, but some still think it. If I could do that I would be a billionaire with my own island with my own airport. No one can but that doesn’t stop the crooks from saying they can. Their success rate is somewhere between baldness cures and psychic surgery.
The question to ask yourself: Is Warren Buffett, Peter Lynch or Cathy Wood trying to get in and out? Are there any successful funds that use this strategy to get superior returns? Answer: No
Okay, what is Trovid? Whenever anything bad happened over the last four years, the media would tend to go straight to blaming Trump. That of course became a joke, i.e., “My car broke down.” Answer: “It had to be Trump.” Now the Trump excuse has changed some. For instance, “There are thousands of mutilated cows in Texas.” “How did that happen?” Answer: “had to be Covid.”
My friend and great realtor Jonathan Leaman came up with “Trovid” as the undeniable, ultimate excuse for all things bad. Blame both Trump and Covid in one! “Why is the market down?” “Gotta be Trovid.” I thought it was funny, so have at it.
Stupidest quote of the week: This is from CNN. Remarking on an article about CNN Chief Medical Correspondent Dr. Sanjay Gupta’s comments on deaths from Covid, CNN said:
“With over 2.5 million global coronavirus deaths, millions more have faced the daunting task of saying good-bye. (think about it)
Another fun fact. Out of $1.9 trillion in stimulus only $400 million went to the checks many received.. Where is the other 1.5 trillion? Now they need to raise taxes?
Next time I will discuss the Biden/Ocasio-Cortez tax plan.
See you soon,
Craig