Even as earnings continue to come in nicely above expectations and markets hit the pause button over political noise, sentiment continues to remain in the "paltry" zone.

In simplest terms, there are more bears than bulls out there.

Imagine that.

As you saw in your last note, even the sell-side on Wall Street is in a funk.  Their sentiment readings on market exposure remain below those seen during the March 2009 lows; over 13,000 Dow Jones points ago. 

Big Picture Thought

After two bear markets inside the same decade, you might forgive the investor audience for being highly-tuned to risk.  But risk is always there; it always has been and always will be.

But we only think of risk when we sell something for less than we bought it for, right?

So let’s be honest: If you buy at $35 per share and sell it later for $78 a share, do you ever once register any fear of risk in your mind?

Probably not. In fact, you’re more likely thinking: "I’m the smartest guy on the Street."

Now, there’s no doubt the March 2009 lows marked a deep wound in the psyche of most investors.  Some of those folks felt they were burned so badly that they will never return.

But imagine looking back at that now and feeling the same way?

I have a hunch that maybe decades from now our kids will laugh at us too:  If America’s 200 (plus) year history tells us anything, it is likely they will be amazed that we were terrified of Dow 20,000 today.

Nutty right.  Call it the cost of fear.

Speaking of Fear....

Since the March 2009 lows, the speed at which Wall Street and the investor crowd turn bearish is shockingly quick; sometimes on a dime. And the fear of falling so far down from this height is so deeply ingrained that any bad headline can trigger it.

Meanwhile, even as we hit the so-called earnings recession, and a near two year pause in any significant forward movement in the markets, Wall Street analysts consistently underestimated S&P 500 earnings strength.

Is There a Culprit?

It could be that the media machine has convinced so many folks out there that there is some genius or expert who can call the future every single time. 

And that claim has birthed a new sense of "news" from the media's insatiable need to get your attention for revenues.

That new process goes something like this:

"The Guy Who Called the Top in Crude Now Sees This...."

Uh, yeah, right.

This only does harm.

The very language of the link implies that a) this is the only guy "who called the top" and b) that somehow that automatically makes the next guess more valuable.

Let’s keep it simple instead and say: A business grows in value as it provides more services or widgets to a growing number of potential buyers.

And the most important element in that thought is the part about, “…a growing number of potential buyers."

People make markets. And you need people before a single red cent is earned.

You Can Choose

Now, I can choose to listen to all the garbage in the news.  I can choose to be fearful of every company that missed earnings expectations by a penny over the last 90 days.  And I can choose to be petrified that the Baby Boomers are retiring as some experts suggest I should, or buy into the fear of reduced consumption.

But history does not equate those perspectives to productive results in building wealth.

Or, I can keep it simple and understand that the Baby Boomers are retiring, and if your customers are Baby Boomer and your widget is a high speed motorcycle, then you’re in trouble.

However, if your widget is related to overall health and stability of teeth, eyes, knees, bodies, travel, luxury, relaxation or care etc., then get your work boots on because the next 35 years are set to be busier for you than any previous 35 years in history.

Back to that Culprit

Like it or not - there is a constant stream of opinions about the market, stocks and bonds that re put forth every day to feed the long out-of-control beast that is the mainstream and financial media.

Sadly, and this relates to the individual investor audience, advisors and even Boards of endowments or public pension funds; the error is always the same.  They’re looking in the wrong direction.

Instead of using the simplified logic above, the constant underlying assumption is that there must be one person, (pick your poison from the headliners) who will deliver outperformance in all markets.

Bad plan.

Patience and discipline will always remain your best investing tools, boring as that might sound.

Media Thoughts

The attention-capture game has a player pitching some serious heat right now: The President.

And the sentiment underlying the reporting is all about hatred and disgust.

Shame on you, whether you’re a Democrat or Republican, man or woman. That is the office of the President of the United States of America.

The media, in their zeal to attack Donald Trump has lost sight of that the world over.  I cannot imagine a past President every seeing this level of zealousness.

The Bottom Line

Fear is an expensive element to keep in your toolbox. Our job is to help you look beyond it.

America’s economy is performing far better than most perceive, and has an engine that is just beginning its cycle of growth and expansion.

There’s much more that’s set to change in the next 10 years than ever happened in the last 30. And so we live in an exciting time; as if it’s the early 1980s all over again.

That Barbell Economy that’s in the process of handing over the economic baton from the baby Boomers to the Millennials is real, and it’s expanding. 

The winners in this process will likely be those who can:

  • Overlook the most media noise
  • Be the most patient
  • Carry the most discipline, and
  • Keep it boring and simple.

Until we see you again, may your journey be grand and your legacy significant

Required Disclaimers on all videos and content  

Mike Williams
Founder and Managing Partner of Genesis Asset Management, New York

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