Investor Points of Few – Pessimism Doesn’t Pay


By Alan Steel

Following two recessions over the last decade, and despite the record setting progress and pace of key western global stock markets ever since, optimism has become (and remains) a somewhat scary proposition for the investor herd at large.

That group has instead been grazing in amongst the bond fund fields, cash deposit slurry and ETF sedimentary ooze, even as the Dow, Nasdaq, S&P and their energy and mining-hobbled British cousin, the FTSE, have been ploughing and sewing some highly investible stock market crops for nearly eight years now.

Eight years.

So why then will the herd not move?

Is it because the black swans are always said to be circling; squawking at those below through the daily installments of The Bad Noise at Breakfast, Midday Doldrums and 10 PM Terrors?

Do investors simply stand and stare, chewing up all that cud about economies poised to fall from a great height because of an allegedly age concerned bull market, and the Brexit, Italexit and even Grexit horseshit that’s been piled high enough to impede any reasonable view of the actual horizon?

Maybes yes and maybes no.

With the advent of the Internet, which has both fundamentally revolutionised distribution while juxtaposing journalism for JPEGs and hard truth for head-turning headlines, the facts have become like a search for hen’s teeth.

Think about it.

  • How can the media credit Trump for driving the market upwards when he wasn’t even around for the other 10,000 or so Dow Jones points that arrived long before he did?
  • Should we really be concerned about rising inflation when it was a core objective just a few months ago?
  • Does it make sense to fear Greek debt when that country’s GDP is only about a quarter of the size of Florida’s?
  • What about that aging bull market then? Is this really a near eight year old secular stock market run, or did we only recover to pre-2008/09 levels back in 2013?
  • And what about the herd itself? Are its members actually wealthy? And if not then how does it make sense to do as the herd does?

I read recently how an optimistic economist (not a misprint) named Max Roser cited one survey that asked people if they thought the world was getting better, worse, or neither. Only 6% of Americans said the world was getting better (it was 4% of Germans and 10% of Swedes).

Gus Lubin at Business Insider writes, “Another survey, part of Gapminder’s Ignorance Project, found that 66% of Americans think global poverty has almost doubled in the last 20 years; in reality, global poverty has almost halved.”

Folks, pessimism is an obstacle to your financial freedom. And those who arrive at that conclusion have a chance to change their fortunes.

Don’t just chew the cud with the herd.

Find another field.

Alan Steel, Chairman, Alan Steel Asset Management

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