Why our Bullish Sentiment is Deeply Flawed

Why our Bullish Sentiment is Deeply Flawed

We’d like to share with you an incredibly insightful email we received from Mike Williams at Demogronomics.


The chatter about problems and terrible events awaiting us all has reached such incessant levels, we may not even recognize anymore that it is completely blinding many to the good things we are being blessed with in the US.

Let’ be clear – on too many metrics to list here – life for most has never been better.

  • We have never had this many jobs.
  • We have never had this much collective income or net worth paid to consumers.
  • We have never had this many more job openings than people to fill them.
  • The corporate world in the US has never collectively seen these levels of income and profit metrics.

I won’t bore you with the details – but they are important foundations to recognize…because the game is just getting started.

Bizarre Huh?

Indeed it is – mainly because, against the back-drop above, I’d like to share with you the emotional and fear-based view so many still have.

It is a stark reminder that 2008-2009 is still very fresh in the minds of most – we are miles and miles away from these terrible things people are so concerned with:

Maybe it’s my age – or the number of years I have been watching this data.  Let’s be crystal clear here:  It is shocking that even as markets “struggle” near all-time highs, most of the audience remains deeply uncomfortable with taking any risk in the market.

And be assured…ANY goal you have in wealth building over time carries risk.  ANY investment with even a remote expectation of return above 0% requires risk.  Get that and the word “volatility” will no longer make you nervous.

Just look how many readings (the connected blue line in the chart above) are higher than the current levels (the magenta-colored horizontal line).  Further, note current readings are the same as they were in the early weeks just past the March 2009 lows – when the DOW was still below 8,000.

Jobs and Small Biz?

Well, that’s never been better either.  I know it sounds too good to be true but that worry comes when everyone and their brother finally believe in stocks again – and there are still over 10 trillion reasons sitting in the bank to suggest they don’t:

Expanding job openings above – even as small business continues to ratchet up their hiring plans.

Got Robots?

You better – because in another few years (or less) we will need them.

Forget the News…


Morgan Housel did a great piece years ago.  I have highlighted for you below as a reminder of how quickly we can be easily consumed by some forecast – especially if it is a scary one.

Go back in time.  It’s the day before the Great Depression begins. One of the most important days in market history – would you agree?

So, if one digs through the New York Times that day, one would find that the entirety of stock market coverage is summarized on one page, a third of which is a Chanel shoe ad.

Nothing at all about the coming years of difficulty.  Add that to the 2008-2009 misses and what you get is a new generation of “experts” making sure they don’t miss the next one.

This highlights the oft-referenced joke that “economists have successfully forecasted 16 of the last 3 recessions.”

Human Emotion – Not Money

Over the years, we have mentioned the psychology and emotion of the crowd very often.  Why?  Simple:

Investing is not the study of finance.

It’s the study of how humans behave with money.

When you realize it’s the study of human behavior, you see that it incorporates the lessons and laws from all kinds of different fields. Psychology. Sociology. Statistics. Biology. History. Politics.

Rule of thumb: If it looks into how people behave in groups and respond to incentives, it’ll teach you something about investing.

Old news is the best guide on how to treat current news.

Old news is very enlightening.

As Morgan put it, “It is the most unfiltered historian, offering a view of the world that suffers from no historian’s subjective editing of what’s important.”

The history of old news teaches a few things:

That forecasting markets and economies is nearly impossible; that people will never stop believing in forecasts; and – most important – that the biggest news stories in hindsight are the ones no one was talking about with foresight.

It’s an important framework to remember when reading today’s news.

Old news also shows that most of what seemed like important news at the time was quickly forgotten.

Take this August 2011 headline:

“Dow falls 512 in steepest decline since ‘08 crisis.”

That was a big deal at the time it was written.  But how many people still care about it today? Few, if any.  More important?  Twenty years from now, a 4-digit daily move is likely to be seen as “normal” market action.

Every piece of financial news you read should be filtered by asking the question:

“Will this really still matter in a year?  Five years?  Ten years?”

Further, add this:  “Will I care?”

All perspectives differ.  Emotional and mental games are always at work.

In the process, people play different games – all in the same “market.”

A long-term investor sees a headline about selling stocks before earnings and shakes his head in disbelief.

A trader reads an article about “Stocks for the Long Run” and thinks people are oblivious to the risks “everywhere” today – right now – this minute.

Momentum investors think they’re both missing it.

Bond investors think all three are crazy.

It’s fine. There are all kinds of players in the same game.

What’s vital is that you don’t take your cues or build plans or actions from someone playing or projecting a different game.  A perspective can be highly relevant to one person and irrelevant to another if those people have different time horizons or different goals.

When you find yourself fearful, concerned or worried – that you may be missing anything – or missing out, just pause and ask whether you’re actually just playing a different game than the one being referenced, projected, trashed, ballyhooed or forecasted.

Broken Record Section…on TILT

[…] The bottom line?  We must embrace the changes afoot.  Those changes will be bending at times and will be easy to fear.  Only the leading-edge investor insights will help you understand that we must embrace those changes and see them as the “new normal” to steal a phrase.

It is almost funny that the original birth of “the new normal” was to label an economy that would forever be stuck in low gear.

I have only one message for the droning on of the Prophets of Doom:

Not so fast guys…the road of our history is littered with those who spewed your poison.  Enjoy it when you can because doomsday never lasts.

Some Parting Thoughts…

At times it is difficult to focus on the more important elements at hand.  Our job is to help you see the larger picture unfolding through the haze of attention-getting soundbites.

Learn to lean against the storm…as there will always be another to fret over.

In the end, all those scary headlines are designed to make you do one of two things:

Remain fearful

Move something..anything – through the toll-booth of Wall Street

As one can see above, the foundation building underneath us remains strong – surprising to many.

We can thank Gen Y for that – and this will be clear years from now.

Get used to it….more of these intermittent sloppy periods are surely ahead.

Relax and remain focused on the long-term benefits awaiting the patient, disciplined investor:

Forget Economics…Think Demographics.

The latter drives the former.

People make markets…where they are, where they have been and where they are going.

The rest is human nature, patience, and discipline.

Demogronomics keeps one on the leading edge of change.

The many significant waves of improvement ahead are far better than anything we have seen yet…and more positive than currently perceived by most.

The tough trade is always the same:  remaining confident in that long run.

The easy trade is being skittish, bearish and/or afraid…waiting for the future to “look better” at some point down the road.

In building wealth over time – be assured of this:  easy never wins.

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

Interested  to learn more about reaching your ideal clients with online marketing? Just give us a call or click here to shoot us an email!

Source: Demogronomics 2018/09/19

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