Changes Again

I don’t know how many times over the years that either I, or Kendall before me, tried to address the subject of change. Change is such a weird subject for people. We all know change is both an inevitable and required part of life and survival. That is true both for our own individual lives, and for each social structure we find ourselves a part of. However, change is also usually a miserable thing to deal with. Most of us do not like change. I believe that is because we want to view our current lives as the sum of all of our decisions throughout our past, and at the same time we like to believe that we got it right the first time. Changing means either admitting we could or should have done something differently, or that the forces outside our lives are much greater and more powerful than our control over them.

Luckily though, after any changes we are forced to deal with, or that we enact voluntarily, are allowed to settle, we look back and see the benefits… and maybe even take credit for how smart we were to get ourselves to here and now. Then that process repeats itself. Eventually, we hopefully get to understand what the 13th-century Poet, Rumi, explained when he said, “Yesterday I was clever, so I wanted to change the world. Today I am wise, so I am changing myself.”

Today we have the new schedule from the Summer season, cicadas and hail storms, and the U.S. presidential election. Also, 2024 is the year when the most voters in history will be holding national elections around the world. This includes 64 countries plus the European Union, which accounts for just shy of 50% of the global population. That is a lot of change on the table. Plus, Libby as you just read, is making a big change in her own life to pursue a life-long dream. It is a courageous move, and one that if she was going to make needed to happen now before it became less of a possibility. We wish her godspeed, happiness, and success.

So, amidst all of this change what are we supposed to do with our investments and investment behavior? All those elections are going to make a lot of ripples in global economics and political policy. Right now, leaders around the world are already fighting about interest rate policy changes, and changes in leadership create even more uncertainty on this subject.

The things in the news that are the so called “things investors should be watching” all revolve around when the Federal Reserve is going to start lowering interest rates. In hopes of being able to guess correctly on that timing, people are hyper-focused on the Consumer Price Index, the Producer Price Index, employment figures, and whether the consumer will continue to spend. Briefly, without putting a lot of figures down, I’d say those metrics are all healthy looking. Despite little fluctuations in the numbers, employment is good as are wages. Consumers are still able to keep up with inflation and have record “wealth” in the form of equity ownership, savings, and home ownership, while they also earn excellent interest on risk-free savings. And inflation, although stubbornly remaining at current levels, does not look set to go jumping up drastically further anytime soon.

As I have said so many times in the past, we simply need to remain observant as we adapt to the changes as they come. My hope is that individual companies and sectors get jiggled up in the settling enough to offer us bargains to profit from into the future. Even though it feels as if there is a lot more change than usual going on, if we were to pull out our notes and diaries, and truthfully try to analyze the past, I believe we’d discover that all that we label “change” is simply life, and each of us handle it better than we often give ourselves credit for.

We have profited greatly by having Libby with us here in the office these many years, and our thanks goes out to her. She leaves behind her countless documents, schedules, checklists, policies, and instruction sheets that Anderson Griggs will continue to profit from going forward. She is going to be here for me and Craig as long as it takes to fully cover the individual items she handled in the past, as well as help with the transition when we bring another person onto the team.

Now I will leave you with a few facts about the markets and history as they relate to the presidential election years. Although these may be reassuring, as usual our commonsense approach would never put blind faith into hopes the future repeats the past. Since World War II, every election year that showed S&P 500 gains in January resulted in positive full-year returns averaging 15.6%. In addition, if the first half increase exceeded a median advance of 4%, the S&P 500 gained an additional 5.5% in the second half, and showed price increases 89% of the time.

I hope you all have wonderful plans for the Summer. It is usually a slower time in the markets and here at the shop, so please, whenever you have the itch, reach out and give us a call or come in and visit. We are always here for you.

Justin Anderson