We are moving from an era of increasing certainty to an era of increasing uncertainty. This is roiling the stock markets and causing all kinds of conniptions among the Millennials who are increasingly in charge of world financial markets. Here are some examples of increasing uncertainty:
- The Federal Reserve Bank has stated it will no longer be as forthcoming in spelling out projected future interest rate changes.
- Apple will no longer report iPhone unit sales because they want to focus on total revenues and profitability rather than unit sales.
- We don’t know if there might be an end to trade negotiations between the US and China, and so we sell any stock that has any China connection.
Presumablywe are ok with continued Chinese theft of American proprietary products and technology as long as we don’t have to pay 25% more for the stuff we buy at Wal-Mart that is made in China.
- President Donald Trump is obviously an Intuitive rather than a Sensate on the Myers-Briggs scale, which means he is, shall we say, unpredictable. President Trump’s Tweets and other actions abet geopolitical turmoil, which is probably what the President wants but not what the Millennials want.
We Are All Millennials
I have two Millennial children. However, when I say Millennial Generation, I really mean the Millennial attitude about things. Millennials don’t want criticism. They don’t want to be surprised. They want all information available to them at all times and they want it now. They have not had experience with struggles and bad times. They seldom hear discouraging words. Regardless of whether or not we are actual Millennials, born between 1981 and 1996, we are all (or many of us are) Millennials because we have the same attitudes about wanting it all and wanting it now and about not being able to stomach adversity or uncertainty. People with these attitudes are the drivers of financial markets, and this is one big reason why we are seeing such high levels of volatility in the markets now as opposed to the previous several years.
“If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
(Yadda, yadda, yadda for several verses),
Yours is the Earth and everything that’s in it,
And – which is more – you’ll be a man, my son!”
Also Warren Buffet, who admonishes to Be Greedy when Others are Fearful. The point of quoting Kipling and Buffet is that in Volatility lies Opportunity for you. If you can live with the uncertainty of not knowing exactly what the Fed is going to do, or how many iPhone units Apple sells in a quarter, or when or even if China trade gets resolved, then there is money to be made by buying the dips and holding through the tempest of uncertainty that we now have. It takes moxie, but nobody ever said making money in the stock market is easy.
Don’t try to catch a falling knife, but buying Index ETF’s and building positions during pullbacks caused by increasing uncertainty is a good play, I believe. The discount on financial assets right now due to uncertainty is likely too much. Pick your positions, stick to your guns, and I believe you will be rewarded in the longer term.