I didn't think we would have to address market volatility this early in the year but here goes.
It is essential to remember that market declines are part of what makes markets work. While corrections are never fun, this isn't the first and surely won't be the last. Much of the story is the same. It can be blamed on any or all of the following: China, oil, Middle East, currency, North Korea, the Federal Reserve.
During times like the one we are seeing in the market right now I am reminding of an excerpt from Nick Murray's great book Simple Wealth, Inevitable Wealth:
There is virtually always an apocalypse du jour going on somewhere in our world. And on the rare occasions when there is not, journalists will simply invent one, and present it 24/7 as the incipient end of the world. Thus, the new is always and everywhere antithetical to the truth. And if history must make optimists of us all, there are days on which the news can make a pessimist of just about anyone. So, you must choose: "The truth shall make you free". Or the news will drive you crazy. The fuel on which all successful wealth-building in equities runs is optimism. And optimism is the only realism.
This is not to say that we are waving off bad news. We understand the markets will not likely perform well during times of pessimism and there are certainly enough reasons to be pessimistic right now.
Sometimes the real issues are clouded by the proposed bigger issues. The bigger issues are always there. It's the anomalies that concern me. As I am writing, the latest labor numbers have come out and they are outstanding. Why does this concern me? Because the economy is still so weak. How can we have unemployment at 5% and job creation at a rapid rate yet an economy that is this sluggish? The "normal" school of thought is more jobs means higher GDC. This isn't always the case and it is certainly not the case we are seeing now. Let me say that job creation and putting Americans to work is a great thing but there is no denying the fact that something is going on here.
- Are companies hiring for the sake of hiring?
- Are the positions unproductive?
- Are certain industries being forced to hire compliance related positions that do not add to productivity but are needed to comply with federal and state requirements and regulations?
I'm sure there are many other questions that could be asked in trying to decipher why there is such a disparity between labor and GDC but it is something I think must be watched.
Now, back to what everyone is probably wanting from us..."So, what's going to happen?" We don't know. You know we don't know. No one knows. But, I do know we are going to keep you disciplined and globally allocated. It is likely this is just another blip in the market. But if it isn't then we'll guide you through it.
On another note. I got an Anova Sous Vide for Christmas. If you like to cook (or if you don't) then you have to try one of these things. I can never eat a chicken breast cooked any other way. Take some of your gas savings and get one.