We presently live in a country where, unless we shun it, we’re constantly bombarded with someone else’s narrative. Wherever you fall on the political spectrum, unless you try to focus more on practicable solutions than fear; TV, social media, print media and our most elite universities are constantly driving home a message and it either makes you feel good, or, afraid of the “other” side.
Newspapers and TV shows are driven by profit. If they can overwhelm and engage their audience with messaging that makes them more committed to ideas that make them feel good, while mistrustful of opposing views (more tribal), they sell more adds and make more money.
This is not new.
Print and on-line newspapers are battling for their lives due to low barriers to entry for alternative news sources. They need to grab and hold your attention to survive.
Social media and the internet have been around for a nanosecond with respect to the history of humankind and thus our brains aren’t evolutionarily wired to deal with the speed and consequence of what might go on in that space. The artificial intelligence algorithms directing content to social media users are relentless in pushing whatever gets one too look and keep looking. If one shops for information with a narrow band of interest, one will mostly get content pushed in that band.
These days, to many, the things they believe according to what they’re shown by the places they shop for information seem totally certain. There are kernels of truth in the different narratives but given the nature of what’s available to us one must, unfortunately, make extra effort to formulate broader perspective and find irrefutable facts.
I delved into this because we’re about to have an election where we’ve reached an incredibly deep divide between the political factions and we regularly get calls, have conversations, or are told by different clients that they want to wait until after the election to consider investing more money, or, maybe they should take some money out of markets given the apparent craziness. Whichever side one is on they likely think things will be really bad if the other side wins.
We received a lot of clients after the last election when economic results didn’t align with expectations. Then as now many people would rather not have a connection to the stress of having to make decisions about how their money will be invested and so it’s our ethical imperative to try to stay connected to base facts and maintain a broad and reasonable perspective.
This is an ongoing endeavor requiring constant focus and we’re always searching for new information to help us better serve our clients.
The economy is coming back after being shut down. Unemployment is at an extremely reasonable level (7.9%) given the immediate and severe shock to the system. We came into the pandemic in one of the most stable and positive economic environments ever in the history of our country. Unemployment was the lowest in over 50 years while growth was decent and inflation contained with no signs of excess in markets or in our economy. This is called a goldilocks economy.
Depending on one’s information sources the situation may seem much worse than it is. The situation is not great, and many people are hurting, but The Federal Reserve Bank and our government have made strong efforts to keep the train on the tracks while things get reconfigured to a certain degree.
Markets have done quite well and one simply can’t argue with the consensus determined by trillions of dollars all directed with the incentive to profit, not lose.
We don’t know what the election will bring but unless the person who winds up in office tries for a massive wealth transfer, my guess is most of us will keep waking up every morning with basic human needs, and there will continue to be people and companies to fill those needs. Global economic progress will likely thus continue. Global economic progress has lifted about a billion people out of poverty over the last decades.
As always, we appreciate the trust you put in us to manage your investments. We are always available for a conversation should questions arise.
Erik S. Wolfers, MBA, CFP®