It's OK To Be Skeptical

Is the market actually growing to the sky?

The jobs numbers this morning were way ahead of estimates, the headline U3 unemployment rate printed at 3.6% which is the lowest since 1969 and Minneapolis Fed President Neel Kashkari Tweeted that we are not yet at maximum employment. And although there have been a couple of small hiccups along the way, the economy and stock market have been growing for a decade. The most recent layer is the smashing initial success of the Beyond Meat (BYND) IPO which can be taken as a willingness or maybe desire to speculate. I imagine the current lift in Bitcoin has a seat at this table as well.

The FOMC's policy is often blamed for what looks like a repealing of normal cycles. The President regularly jawbones the Fed as well as the capital markets. Both of these factors would seem to hinder free markets based what we were taught about economics and markets but as of now there has been no consequence for the last ten years. Maybe it will be as bad as Peter Schiff and the contributors to Zerohedge say it will be or maybe we will grow to the sky, I have no idea. I lean skeptical because an adverse consequence is what threatens my clients' financial outcomes. Growing to the sky is not a threat to anyone's financial plan. Clients are in and participating in the lift despite my being skeptical, despite my not truly understanding how we can go so long without a true bear market (the thing in Q4 2018 was a fast decline that happened to touch -20%) or recession.

Participating in markets requires flexibility. If the permabears like Schiff are to be believed then I guess they have missed the last ten years? Obviously I don't know but what this really is about is not getting so caught up in how things should be versus what is actually happening. The list of reasons of why the market should not be up so much in the last ten years is very long yet it is up anyway.

In this context previously I have talked about the difference between missing this ten year rally and lagging it. On the assumption that your retirement plans rely on stock market growth, missing the last ten years could be catastrophic. Missing the 18% we are up so far this year could be problematic. If the market were to be flat for the rest of the year and we finish +18%, there aren't too many years where the market goes up that much, they can't afford to be missed. And while the line between missing and lagging is subjective, success in markets probably needs to include understanding what the market is telling you about what matters and what doesn't.

Circling back to Beyond Meat, obviously it is being well received by the markets. I have no idea what the stock will do but in terms of how healthy this is or isn't, "The patties pack four main ingredients: water, pea protein isolate, canola oil, and refined coconut oil." Look at the ingredients. It looks to me to be a processed food, seed oil festival. This would make them very high in omega 6 fatty acids (the bad omega) which promotes chronic inflammation and insulin resistance. If you don't know how unhealthy that is, I would encourage you to look it up.

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