Hundreds of billions of dollars were liquidated from the market in the last two weeks of 2018.  

(Feels like six years ago already, eh?)

And while the markets have just delivered one of the best "bounce-back" Januarys in decades, the press, media and experts are using all the air time to scare the crap out of folks at every opportunity.

The new social media commercial paradigm does not align well to responsible journalism.  

TUMS Required

Now, I know how tough it is to stand your ground when all about you looks and sounds like you should be running for the hills.

I also understand the often necessary dose of TUMS needed to quell that emotional pull, and the churn in your gut that it causes.

And that dank, warning voice of your amygdala will always deliver an apocalyptic tone inside your head with a reprise of: "Mike, you dummy, the markets are all going down in flames. Nothing survives. It’s all just piles of bones and ghosts."

But that’s all part of the road to steady compounding growth over decades of time; you must put a stake in the ground, tether yourself to it, and see history for what it is - over time.

Successful investors eventually realize that the race is long, it’s laden with bad and good events, and stressful moments should be an expectation rather than a surprise.  

Panics are actually opportunities disguised in "Holy Sh*t, what the h*ll is going on?" chatter.  

Once the dust has settled, and the crowd "feels better" prices are usually substantially higher.  

How About Those Jobs?

The US jobs market is consuming humans faster than we can get them graduated.

So, while we’re apparently all witnessing global strife, trade tensions, Brexit worries and the debilitating impact of just about anything Trump says or does according to the media:

Screen Shot 2019-02-05 At 16.49.00 (2)

Of course, someone is going to respond to the numbers above by saying: "Sure you moron, but look at the 80,000 job reduction in the previous reported number!"  

To that I would say he or she is correct, and when we offset it against the 139,000 jobs beat (over expectations) this month you still have 59,000 more than where we started with before the report.

That won't matter to too many in the crowd because it’s easier to be scared, not stand in the storm and stay on your path, and give in and release that tension of angst pulling at you.  

But for those who can stay focused on the long haul this is all great news.

Now Here’s A Funny One…

About recent S&P 500 reporting: Total earnings for the 136 S&P 500 index members that have reported results already are up +12.6% from the same period last year on +5.9% higher revenues - with 69.1% beating EPS estimates and 60.3% beating revenue estimates.

Guess what?

That's much lower than the previous four quarters of growth.

Folks, that’s because the tax cuts (that America enjoyed) only have an immediate impact on the next four quarters, and it burns off towards the end.  

I learned that in maths in the 5th grade.

But it seems the media did not…or at least their script-writers missed that day.

Here is a little game for you:

Plan A - No tax but - normal 7% growth per year:

Year 1:  1.00

Year 2:  1.07

Year 3:  1.1449

Plan B - Tax cut - roughly 20% bump 1 year only and then back to 7% growth:

Year 1:  1.00

Year 2:  1.20

Year 3:  1.284

So, all the terrible news about slower growth is where exactly?

Folks, treat the caravan of false prophets trying to always scare you to death in the manner they’re due.

Ignore them.


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