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They say the stock market climbs a wall of worry. There is enough uncertainty going on in the world. As an investor, I am not letting this ruin my day or throwing in the towel. Here is my reasoning:
1. I have a financial advisor. I was a financial advisor. I know our portfolio is getting attention. If we need to do something, they will be in touch. If I get nervous and have questions, my call will get answered and they will treat me like their most valued client. I believe all their clients get the same attention.
2. We use professional money management. We don’t buy and sell individual stocks that often. We own good stocks and hold them. We also have several managed portfolios, each with a unique account number. These are different managers with different skill sets. They make the day-to-day decisions.
3. Free enterprise and capitalism work pretty well. When some people see problems, others see opportunities. When egg prices went up, some people thought prices would keep going up or stay high forever. Others realized it takes six months before a newly hatched chicken starts laying eggs. Large eggs are now down to about $2.70 a dozen. When prices go up, it makes news. When prices go down, it doesn’t.
4. Are rising oil prices a worry? The US can produce a lot of shale oil. Research shows oil needs to be trading above $60 a barrel for shale oil operations to be profitable. If oil prices rise, This might put the US in the position of having a large supply of crude oil available at home.
5. Isn’t the stock market a leading indicator? It has been said the market is providing a glimpse of what the economy might look like several months in the future. If the stock market is holding up, this implies someone thinks the outlook for the economy is positive.
6. Is a weak dollar a bad thing? Logically, we would think the answer is yes. As a matter of national pride, we want a strong dollar. As tourists traveling abroad, we like a strong dollar. In reality, a weak dollar can be good for business. Many American multinational companies earn money overseas. If the dollar is weak, those earnings in foreign currency means more dollars reported back home in profits. Also, a weak dollar makes Us goods more competitive overseas.
7. Will the US dollar and US bonds lose “safe haven” status? This is a fear aligned with the US running up debt and adding to the budget deficit. That is a serious issue. However, is there a credible alternative to the US dollar and US markets at the moment? Not really, or at least not in the large size required.
8. Many big name US companies have been around “forever.” In our area we have a restaurant that celebrated it’s 300th anniversary about 15 years ago. When the pandemic occurred, part of their advertising was: “This isn’t our first pandemic.” Many US companies have been around for decades, some even a century. They have adapted to changing times. American companies are good at that.
9. Does anyone seriously think the US would default on it’s debt? Anything is possible, but it is highly unlikely. The rating agencies that assign a grade to US debt would probably think the chances were very low right now. Let us assume “right now” is what we are concerned about.
10. There are smart minds in the government, Wall Street and American industry. We sometimes think policy is made by only a handful of people. A lot of people each contribute their part to the research and how policies will be implemented. Other minds in industry figure out how to profit under the new rules.
There is always the possibility that something bad will happen. Many people give us reasons to be fearful. In many cases they’re often not around when things somehow manage to work out OK.
Related: How To Create a Sense of Urgency