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Independent financial advisers founded in 1975
Over £1.4 billion client funds under management
17 industry awards for advice since 1989

By Mike Williams, Genesis Managing Partner

Founder and Managing Partner of Genesis Asset Management, New York

Letter from America

What To Do When The Answer is “None”?

By Mike Williams | Monday, 02 August, 2021

“Individuals who cannot master their emotions are ill-suited to profit from the investment process.”
- Benjamin Graham

Oh dear, another week another failed Armageddon…

And it makes you wonder just how many times over the last 40 years that the media’s reprise of “It’s the end of the financial and economic world as we know it” story, supported by parades of experts, has actually been correct?

The answer is “none.”

That’s a pretty bad record.

But the real mystery is why folks keep listening to it.

“Cash Is…Well, You Know the Rest…”

The latest US Federal Reserve reports at the end of Q2 showed $19 Trillion sitting in US bank accounts, checking, money markets, timed-deposits and CDs.

America’s corporate balance sheets had $5.2 Trillion in cash to boot.

Expect a massive capex spending wave ahead as every company – in every sector – becomes a “tech” company. In other words, as the quarters unfold and companies show massive margin gains, we can expect further investing in their own efficiencies and improved expansion strategies.

The dominos just fall that way, folks. It’s not rocket science. People Make Markets® and there are more of them driving the economy forward now than ever before.

Just wait until you see Gen Y and Gen Z operating in unison. The acceleration will be mind-numbing…

…And the media will call it an impending apocalypse at every turn.

By the way, all that capex data leaves out the additional impact of infrastructure spending. With manufacturing set to see huge gains in the coming decades here on US soil, capital flows into the long-term benefit of our economy are set to surge.

The benefits for long-term, patient investors over the next 20 years are set to dwarf those of the last 50.

The Latest Stats

Over the next few weeks, the lion’s share of the market will report. And as we have noted multiple times each week brings more surprises. The growth rates have not yet been caught up with by analysts. The snapshots below are what is staged as the Big Tech names all announce this week.

Expect a significant number of “beats” and even bigger numbers



We also suspect the Q2 column (in billions) will surpass the Q1 shocker.

Look how far ahead it already is when compared to the Q2 2019 number (long before the pandemic):



We started the Q2 parade a few weeks ago the expected growth rate was a bit over 60%.

The image above shows you we are already closing in on 75% (at the time of writing).

Given how strong earnings surprises turned out to be in the preceding reporting cycle (Q1 2021) and the numbers out already for Q2, the final earnings growth tally for 2021 Q2 could easily end up north of +80% – a number never contemplated before.

The Bottom Line

Scared investors are betting against America.

And that has never been a good bet over the long-term.

©2022 Alan Steel Asset Management Limited is authorised & regulated by The Financial Conduct Authority. Please note that the Financial Conduct Authority does not regulate some forms of tax advice. Company Registration: SC58014

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