Estimated Reading Time: 6 minutes, 26 seconds (if you read out loud!)
Link: David Atwood Blog – Speakeasy – Thanksgiving Punch
Happy Thanksgiving! As we give thanks, recognizing all that we have to be thankful for, my hope for you is that you find abundance! Much of the good that is taking place around us appears to go unnoticed or it’s ignored. Focus is elsewhere, usually on the imminent threats to our existence, as we know it. It’s a good thing we have a special celebration for giving thanks because without it, the daily grind is enough to squeeze out every ounce of goodness like an old style wringer wash machine roller.
The analogy of the rollers may be a good place to start because rollers were terrifying as a child, perhaps because the fear instilled by a parent is what kept tiny hands safe. It’s natural to focus on the danger.
You don’t need me to point out the obvious – the laundry list of woes would fill a basket. Beyond that list, our standard of living is so good it’s almost an embarrassment if it weren’t for the fact that living well is a worthy objective for any human, or anything else on the planet for that matter. Many of us are living so well that we look over our shoulder as though we’ve been doing something wrong; when we’re not laden with a sense of guilt, we’re chastising other humans for their consumption, the environmental track record, our politics, our fiscal policy, and warring or fighting over trying to get more or less of something or the other.
This weekend we can dump our baggage at the door and enjoy the special privilege of whatever it is that matters to you most, right here, right now. Have fun with that – it’s okay, we’re celebrating! You deserve it, although your choice of where you were born, who your parents were, and when you arrived is wonderfully random. If there is a master plan – I believe you’re it! Thank you by the way, for all that you do and allowing me to be a part of it.
Now here is something you may or may not be aware of, and it could mean the difference between your comfort today and your comfort tomorrow. As we know, many people are focused on their perceptions of imminent danger. While attention is narrowed and focused, the peripheral vision is blurred into the back ground. A weekend like this gives pause, perhaps allowing us to stop long enough to smell the roses and to catch a glimpse of other truly wondrous things beginning to emerge.
Missing out is something none of us wants to do, especially if danger may be involved. So here is what we don’t want to miss out on and the danger worthy of your focus. About 10-12 years ago everyone from the hairdresser to the cab driver had tips on investing, and the cool part was they were usually right! No offense to anyone in particular, even my advice looked good when the wind was blowing; turkeys could fly! Everyone was a hero. The crowd was gleeful to be paying upwards of 33 times for a dollar of earnings and pumping money into the ownership of stocks (equities).
We all know what has happened since then. The crowd has moved out of equities over the past 10-12 years and into the relative safety of fixed income. In the meantime, businesses have continued to operate much the same way, creating goods or services and selling them for prices that allow expenses to be covered and profits to be made. Price inflation is running around 2%, even during this monumental global economic recession. The reinvestment of earnings into the enterprise by way of replacing equipment, expanding or contracting product lines, building new facilities, and finding ways to lower costs has continued and allowed the value of businesses to compound.
Cash levels in corporations are at levels never seen before in my lifetime. Dividends and share buy backs are rising, defaults are at pre-crash levels. Today we can buy the same businesses that are now gushing with cash for roughly 1/3 of what the crowd was gleefully paying 10-12 years ago. Instead the crowd is loading up with fixed income investments which are paying out at rates unprecedented in the depths of their lows. The rush to loan money to others at 2% or to pay off debt costing 3% is hard to fathom.
Look, I don’t want to seem naïve, or thick skinned – the fact is I’m pretty sensitive and a caring person. What I’m seeing here leaves me with a sense of child-like bewilderment. I’m awestruck at the simplistic beauty of nature. Here unfolding before my eye is a thing of absolute beauty. Fear has taken the focus and left remaining unfettered access to the roses of the investment world. It’s like we’ve arrived at the party and the punch bowl is completely stocked up with not a chair out of place, and there is nobody here!
I’ve seen it before and know one thing for sure. It feels awkward at first until you realize it’s way too good to be wasted, and whether we lick it up in a frenzy by ourselves, or later on when the crowd gets here, the only difference will be how much less we get after people start to notice what a good time this is. By comparison, the danger lurking in the aftermath of the surging crowd is erosion by inflation, taxes, rising interest rates, and lack of demand.
So there it is folks, the opportunity and the danger. Don’t wait; life is too short my friend. Later on when you desire comfort tomorrow, you will wish you filled your boots while you had the chance to load up with 3 times as much for the same price.
Oh, and lest we forget, for those that are fully committed already, let me offer you this. If the comfort of tomorrow is already here, we’ve accounted for that and supplied you with income. We are replenishing that supply as needed and we’ve been doing alright, keeping enough set aside to manage when the crowds drift in and out. Even while Mr. Market has gone on his decade long walk about, we’ve managed to replenish your safe money stash when the punch bowl was full. The key here is to live as long as you can, stay healthy, and celebrate your good fortune – you’ve done an amazing job.
Unless you’re still using a wringer washer, your life has improved dramatically. By the way, if you are using a wringer to dry your clothes out before hanging them on the line, I’m sure it’s a choice and that’s okay – just watch your hands. For everyone else, there is enough danger lurking around every corner to keep us preoccupied. My message at Thanksgiving is to simply say thank you, wish you a relaxed, safe and enjoyable holiday, hopefully surrounded by the people you care about.
If you’re looking for me, I’ll be making preparations and excited to welcome the coming crowd.