And the hits just keep on coming, or so the musical mantra of the 60s said. Back then, pop music was fast becoming a part of Americana, thanks to the refinement of a tiny invention that was born as an idea in 1874, became tangible in 1922, shaped up in 1948, and then became a commercial reality in 1954 – the transistor. That little electronic gadget gave birth to the transistor radio, which then allowed music to become portable. Along with music in teenagers’ cars, America now had music at beach parties, in the backyard, and anywhere else an AM signal went. The music industry boomed and lots of people made lots of money.
I like history, true, but I do have a market related point here, two actually. The first is that we are in a time such as the time right after WWII when the US exploded with technological advances. From roughly about 1950 to 1970, America experienced an economic boom like no other in history because of it. Think energy.
My second point is that the portability of music changed the music industry. It opened the door to a huge market, teenagers and grandparents alike. Think energy and biosimilars. So, back to the hits just keep on coming …
- Consumer Confidence Surges in June
- Sales of New U.S. Homes Surged in May to Highest Since 2008
- Japan and China See Manufacturing Growth After Months of Decline
The first data points above suggest an economic environment that, despite the naysayers, is growing, but that is not the whole story. As important as the above data is to understanding the near-term future of the market, say through the rest of the year, it is equally important to understand current economic growth in historical context.
The US and global economies are moving forward in a period of great technological change, perhaps the greatest in history, and because of that, the world is likely to experience a boom period even greater than that between 1950 and 1970. If so, one can expect the long-term future of the market to be bright, which means lots of opportunity. Think “The Internet of Things,” biosimilars, and energy.
So, don’t listen to the naysayers, celebrity analysts, hilltop screamers, and Uncle Joe who tell you everything is going to Hades in a hand basket.
- It’s a warning that longer it goes, the more intense will be the correction.
They are flat out wrong, unless of course –and here is the forever caveat – the playing field experiences disequilibrium from geopolitics, natural disaster, or unparalleled greed. If all remains within normal market parameters, all should be good with the market for some time to come.
Sure, the market will correct now and then, but rest assured, because of global growth in the context of historical global transformation (on all levels), whatever corrections the market delivers, they will be rebalanced with positive gains and more.
Again, be wary of those who predict demise, particularly those whose words are delivered via TV, radio, and in financial publications of great renown.
- For my part, I’ve tried to help you. I put up time window after time window and the market doesn’t want to cooperate.
The above words come from a writer at Futures magazine, a financial publication of great renown. The tone is arrogant and the meaning is clear – I know the future and you won’t listen. There is also something else in the words – the market should behave the way I say it will, but it won’t, which does not make me wrong, only foolish for expecting the market to behave the way I say it should.
- Sooner or later some people might come to the conclusion that market cycles don’t work either anymore. Just about the time people think that way may be the time they get spanked. Iron Rule: 1 is markets ALWAYS revert to the mean. It might take some time but they always will.
The inability of the writer to say three simple words – I was wrong – is astounding. It is, however, characteristic of the doomsayers. As well, another characteristic these folks demonstrate, along with saying the end is coming, eventually, even if it has not come when I said it would, is their reversion to market truisms. Yes, finally, the writer is correct – the market does always revert to its mean, but Iron Rule 2 states: It does not have to do it all at once.
Trade in the day; invest in your life …
