Morning Notes: We Weren't Kidding...

Mike Williams |

First of all - we hope your week has been very productive as we watch the last bits of sand marketing this decade slip through the hour-glass.  You can almost hear the Holiday music and see the lights marking the season.  I even got my first Black Friday (sneak peek) email this morning. 

Make no mistake - this Holiday Season will be a record setter.  Even as online sales will surely set another record - with huge increases slated next year as 5G comes into play - expect the stores to be jammed.  Record jobs, record employment, record incomes and record wealth - rarely lead to consumer disappointment.  

And in case you thought we have been joking with the changes ahead - check the latest banner ad running to the top of CNBC:

...and it is life-changing indeed. 

If you think things feel a bit fast today - know this is just barely into first gear.  The escalation in speed and disruptions ahead will be mind-bending.  It will be easy to get lost in the mess of scary headlines. 

√  Strong wills, strong minds, patience, discipline - all mixed with a keen focus on the long-term horizon and a solid plan you can trust in - will all be to your interests as the 2020's and 2030's unfold. 

Please - in all the prep and excitement of the coming Holidays, do not underestimate the value of that last sentence.


Decades of Disruption

Ten years from now, the world will look like a very different place.  Taxis will fly, kids won't drive, offices will change, travel will change, communication will change.

Robots will look real, jobs will expand, benefits will improve - life will change dynamically.

5G will unleash 6G and 7G - unleashing services, concepts, technologies, consumer demand and seeds of yet an entirely new wave of businesses and processes - all of which will drive costs down even further.  

The Fed has little understanding of what's coming - and rates?  Well, they will stay low for a long, long time - not too shabby, huh? 

By the way - what is a good P/E for a stock that grows earnings steadily over a 10-year period, when a bond never growing earnings sells for 50, 60 or 80 P/E's?

Friends - everything is going to change.

Buckle up, refresh your supply of fruit-flavored TUMS, hang on tight, ignore the garbage designed to throw you off course and get ready for the ride of your life.

The one piece of bad news - and please do not take this wrong:  Those who buckle to fear will lose out on the vast opportunity and expansion ahead.  


Clear signs of deep-seeded fear remain:

And I don't mean just from the paltry sentiment readings we speak of often for you here.

The most widely seen signal is not based on comments or questions - but on actions.

In a word:  Cash

Cash levels - above all else - are the final canary in the mineshaft of fear.  The ultimate fear trade.  

We have record amounts of it laying around.  It is everywhere. 

It is loading up banks coffers.  The demand for cash is so significant - even now - that the Fed needs to keep putting money in the system so banks can provide the cash levels demanded by consumers. 

The most significant thing we continue to see is new accounts arriving where the levels of cash in the asset mix are not 10, 12 or 15%. 

No, they are instead, 50, 60 and 70%!  Indeed, stunningly, we have seen accounts this year with millions of dollars in cash - sometimes 100%! 

...and this in retirement accounts that cannot be used for a decade or more.

The more stunning element is not the cash levels - it is the time they have been in cash.  When asked, we find the answer is far more often than not - a time measured in years.

When asked why?  The most common answer is the wealth killer that has affected so many investors across the land - every week - since the March 2009 lows:

"It's so high now - I cannot afford it going down from here."

Sadly, that will be the same answer every thousand-point increment up the mountain from here - just exactly as it has been since I started back in 1982 - at 940 on the DOW.   

"That All Sounds Pretty Scary"

Even though risk aversion is everywhere - the passing of the baton is unfolding.

Do NOT underestimate what that means for everything around you.

The Baby Boomers (the record-setting generation that created more wealth in the world than any generation before it) are passing the baton to Generation Y - the new largest economic event to ever hit the US economy. 

And before you get too concerned about all the terrible things we hear about Generation Y (snowflakes, soft, too lazy, don't like to work, entitled, don't have any money, mooch off their parents, don't want to grow up....etc etc etc), remember this:

Actually - never mind - if you remember it, you weren't there.  LOL

The point?  That picture above is the 70's.  And when we started to hit the economic system in the 80's, we too were thought of - often dreadfully - by the generation before us.  And then - we went on to create the most wealth ever created by any generation before us.

Generation Y will be even bigger than that - by multiples.

The Lesson?

The rainy day fund consumers have accumulated over the last decade is trillions of dollars deep - quickly showing that gut feelings are rarely a reliable method of market timing or investing.

Something is always great and something else always stinks.  Snapshot forward a few years and they often do little more than change places.  

√  Be ready - as the Trade War dies down - more monsters await. 

√  Like before, they will be worse, they will be bigger and we will be told they are more damaging than anything we have ever encountered.


In Summary

But, like always - this all takes patience and a deep breath to relax at times.

And all the while, the headlines will be there to scare you into missing those facts.   

As the new decade begins to peer over the horizon - it will once again become clear that our economy can and will survive the trade war. 

In the process, as companies find or build solutions to move forward - a vast portion of the investor audience will slowly recognize two things:

1) Fear has cost them dearly again

2) They are vastly under-exposed to equities 


For Now?

Get ready to enjoy Your Best Holiday Season

with Family and Friends!


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



The information contained in these notes has been provided as general market commentary and for information purposes only.  It does not constitute any form of advice nor recommendation to buy or sell any securities or adopt any investment strategy mentioned therein. It is intended only to provide observations and views of the author(s) at the time of writing, both of which are subject to change at any time without prior notice. The information contained in the commentaries is derived from sources deemed to be reliable but its accuracy and completeness cannot be guaranteed.  The material does not give regard to specific investment objectives, financial situation and/or the particular needs of any specific person who may read it.  It is directed only at professional investors as defined by the rules of the relevant regulatory authority.  Any views regarding future prospects may or may not be realized. Past Performance or any reference herein is never a guarantee of future results. Any investment can and often does carry substantial risk. Please consult your advisor before making any investment decisions as nothing in these presentations is intended to be, shall be deemed as or perceived as personal investment advice in any jurisdiction.  Investment Advisory Services Offered through Truvestments Capital LLC, an SEC-Registered Investment Advisor.