September 5, 2015

Actions Speak Louder Than Words

It’s possible that most investors, the professionals at least, consider the merits of the correction in the stock markets, while those represented by said professionals are understandably concerned. The challenges posed by the recent financial crisis have left a permanent impression on many Americans, if not all over the world, and when the volatility in the broad markets stirs the morbid imaginations of the modern media the first conclusions are that it’s happening all over again. Of course, I don’t think it is.

But that opinion isn’t based on the usual streamlined set of external issues that we can hang our collective caps on. Neither is it arrived at through the reaffirmation of decade’s long experience. My opinion that we are in the throes of a nasty correction are based as much on the rejection of equities as an asset class, as it is due to the threat of recession in economies outside of the US. The latter presenting a little more credibility in my view since Chinese financial activities ranging from devaluing its currency to buying equities to slow the declining stock market suggests that even if the west doubts what the Chinese government says the Chinese government is speaking through its actions. So if the China economy is slowing is that a problem for us? That’s a question that determines my own temperament. Our economy is far less intertwined with the Chinese economy than Europe is and therefore I believe that Europe has more to loose from the threat of a Chinese recession.

So I would rather see where the European economies respond than to obsess on the credibility of the Chinese government, or the Federal Reserve raise rates or not, other than talk, as well as a respite from the press being bullish when the market is up and bearish when the market is down. They don’t help nor inform anybody with that line of thinking and they only serve to instigate the collective bystanders at the expense of the many real investors with lives too busy to be writing comments to snickering articles.

Instead I admire those investors that are in 401k plans offered at work, or those who have the foresight to open an IRA or a plan for their business, or even those who invest in themselves or the ideas of others are all people who have taken action. And I understand why many Americans choose not to participate in the stock market, if for no better reason than the aforementioned fear mongering, but one thing we all share, in spite of all of our differences is the fact that we can choose to ignore the future, but not to participate in it.