The Danger of Market Jitters


There was disaster in the news this morning.  Yesterday’s message Euro and Value warned about imminent risk to the US dollar.  We never know what the future will bring so I cannot claim to have known that the dollar and stock market would slide the same day that the message  appeared.

Then by evening the news had changed.  U.S. stocks and the dollar rebound after a steep selloff.

This type of jitters suggest we are headed toward a time when markets will be ruled by fear. There are good reasons for this.  The US market is over priced and FDR had it right.  He said in his first inaugural address: “The only thing we have to fear is fear itself”.

The US dollar will fall.  The only factor remaining is time, but many investors will lose before the correction because of fear.

We should not be fearful.  I’ll explain why in a moment.  We should however be prepared to deal with the consequences of fear, because the greenback’s crash would bring disaster caused by rising anxiety, angst and despair.  The question is simply “When?”

We should not waste the precious time we have on this earth worrying about this.  We do not have to be pushed along by the way the world reacts to change and the unknown.  We can be happy when most of the world is sad.  We can be steadfast when most of the world is ready to run.  We can be successful and fulfilled when most of the world fails and feels hollow, empty, bereft.

However, I ask you to consider the implications of the articles below.  Then I will explain why the fear should not matter to you and me and what each of us as individuals can do to protect ourselves in such a storm and help steady the rocking socio-economic boat.

WSJ.com

Graph from Wall Street Journal article, “Investors Turn Sharply Pessimistic” (1).

The article says:

  • Markets take a hit around the world; Dow’s 372.82 fall is its worst since September
  • Dow Jones Industrial Average falls more than 370 points
  • U.S. Dollar Index erases post election gains
  • Safer assets rally, with 10-year Treasury yield falling to 2.216%

Turbulence in Washington jolted markets out of an extended period of calm Wednesday.

Stocks, the U.S. dollar and government-bond yields slid as investors pulled back from bets on the swift passage of President Donald Trump’s agenda. Wagers that his policies would boost growth and inflation have been unwinding for months, but those moves accelerated Wednesday.

In one of the clearest signs of waning investor confidence, a closely watched measure of the dollar’s value erased its post election gains.

Later another article at the same paper appeared entitled “Stocks, Dollar Sinks on Washington Turmoil” (2) explaining that the Dow Industrials had suffered their worst day since September 2016.

The article said:  Investors’ burgeoning anxiety about the future of President Donald Trump’s legislative agenda jarred financial markets on Wednesday, upending months of relative tranquility and steady gains.

Stocks have rallied for months even as the Trump administration was sidetracked by political setbacks and controversies. But concerns heightened after Tuesday’s reports that James Comey, former director of the FBI, had written in a memo that Mr. Trump had asked him to back off the investigation of former national security adviser Michael Flynn. The White House has denied the account.

That’s scary enough but may readers will miss the significance for now of another Wall Street Journal article:  “U.S. Household Debt Hit Record in First Quarter”.   Evidently, according to the article, lowered unemployment and an expanded economic outlook have made the public feel optimistic enough to borrow instead of pay off loans.

The article said:   The total debt held by American households reached a record in early 2017, exceeding its 2008 peak after years of retrenchment against a backdrop of financial crisis, recession and modest economic growth.

A slowing economy and falling stock market should not matter much in a person’s life, if they do not have the daily pressure of paying off debt.  This trend of rising debt makes it more likely that investors will react poorly in a fear based market.

There are plenty of opportunities for fear.

A New York Times article “Dangerous Times for Trump and the Nation” (4) gives just one example when it compares risks that Donald Trump will come unhinged and compares his situation to that of Richard Nixon.  The article says (bolds are mine):

In 1974, as Richard Nixon’s presidency was collapsing, he was drinking heavily and aides worried that he was becoming unstable. Fearing what might go wrong, Nixon’s defense secretary, James Schlesinger, secretly instructed the military not to carry out any White House order to use nuclear weapons unless confirmed by him or Henry Kissinger.

This was unconstitutional. And wise.

Schlesinger also prepared secret plans to deploy troops in Washington in the event of problems with the presidential succession.

We don’t know how Trump will respond in the coming months, and let’s all hope for smooth sailing.  But as with Schlesinger’s steps, it’s wise to be prepared.

Is it possible that Trump will try to get everything refocused by attacking some place such as North Korea?   No one knows if the fear will go that far.   That lack of knowing is cause enough to fear.

However, there are qualities we can each use to make sure that whatever happens we are in the best possible position to be successful, happy and fulfilled despite the fear of others.

In the late 1990s, when my writing was mostly focused on global investing,  I wanted to share some ideas about how our spiritual nature has an impact on our wealth.  Readers were not very open to such a message at that time.   The UAL confounded me.  I could talk about having the spirit of adventure, the spirit of entrepreneurship, the spirit of hard work, etc. but when I added the UAL and wrote about investing having a spiritual nature, the message met with resistance.

So I wrote a novel, “65th Octave,” that incorporated 15 natural qualities that we can use to make life better.   These are qualities that in my 49 years of global travel I found used in ancient wisdom everywhere.  My belief in these qualities is based on how well they worked for me and the fact that these are qualities that wise people recommend globally.

The “65th Octave” revealed the qualities as “Golden Words” and wrapped them in animal spirits to make them less esoteric in the hopes that readers would work through the riddles and understand how to use these qualities to improve their lives.

I have found several of these qualities of growing importance in a world that can seem increasingly bewildering.

Qualities we can use when we feel turmoil, anger, depression or outright fear are:

Friendliness.  In the “65th Octave” this is represented by the Spirit of the dog who offers pure friendship and happiness even if given nothing in return.  No matter what situation we are faced with, if we are friendly in our response we will do better than any other human reaction.  This does not mean we should be friends.  There is a big difference to being a friend and being friendly.  Friendliness does NOT mean we should be obsequient, demur or a coward.

Perhaps Winston Churchill’s quote about the civil nature of his declaration of war to Japan sums up the quality of friendliness in the worst circumstances nicely.  His quote was: ““When you have to kill a man, it costs nothing to be polite.”

Compassion.  The spirit of the Opossum uses this quality to engender compassion in even most the violent, hungry predator.   The natural expression of that animal’s wisdom recognizes that compassion is a quality in all sentient beings.  Compassion allows us to understand.

Compassion does NOT mean we have to agree or accept.

Happiness.  I wrapped this into the spirit of the dog noting how our dog wags her tail  for almost any reason even just because Merri or I enter the room.  When events stun, befuddle or mystify, we need to understand that it is not the events that are out of order, it is our thinking.  Everything is in perfect order.  Turbulence is simply evolution beyond our understanding.  We fear change because we cannot see the bigger picture.

That’s okay. That’s how it’s always been.  So whatever happens be happy.  You do not have to be happy about a change or a shift or some event that appears to be a nightmare.  Simply do not let the state of affairs become your inner state.  Be happy regardless.  Being sad, anxious, depressed will hamper whatever proceeds.  Being happy will help.

Strength.   The spirit of the Buffalo represents the strength that allows us to walk though the valley with no fear.  Our friendliness, compassion, and happiness add to our strength and help us accomplish what we believe is right.

You can learn all the Golden Words in my novel.  It has long been out of print but used copies are offered at Amazon.com.

65th Octave

To find a used copy of the 65th Octave at Amazon.com click here

Another way to protect against the fear is to ignore the economic news that focuses on drama and tragedy.   Use financial news instead to find worry free, good value investments. 

When markets become fear based, the professional traders come out to play.

I have spent at lot of time in the trading halls of big European banks working with their trading experts.   This experience taught me several facts.

  • The traders are brilliant.
  • The traders have immense support and capital.
  • Trading is a zero sum game.  Someone loses and someone wins.  There is no win-win in trading.
  • I do not want to trade against these well trained, well financed, brilliant experts. You should not either.

These traders are smarter than I am, have deeper pockets and they have systems that stop them from being irrational.

If we have simple, low cost techniques to diversify into a broad base of good value equities based on current book to price, cash flow to price and earnings we can save time that we can use to invest in doing what we love with our own micro business.

A micro business makes it fun & fulfilling to matter.

We can regain a true power of importance, fulfillment, wealth and freedom by serving others in a profitable way.  A multi dimensional micro business creates freedom as it redesigns your lifestyle by bringing profit, fulfillment and peace of mind, by helping others doing what you love.

We live in a fortunate era.  Throughout most of history, life expectancy and requirements of work meant that the most experienced sector of the work force was no longer physically able to continue.  In our high tech environment we have a chance to create our most important pinnacle career at a time when previously we would have retired.  This is the first time in mankind’s history when the value of our experience is worth more than the cost of getting it.

For the past year, since the 2016 Presidential election began we have been bombarded with increasingly bizarre and worrisome economic and political news.   Most of this information is meant by one side or the other to engender, anger or fear.  This acceleration of  toxic information is a disaster that daunts us everywhere.  Accompanied by a stock market or US dollar crash, the fear factor could rise.

Use the qualities above and see the comedy of life so that change does not turn into drama and tragedy for you.

Gary

(1) WSJ.com:  Investors Turn Sharply Pessimistic

(2) WSJ.com: Stocks, Dollar Sink on Washington Turmoil

(3) WSJ.com: U.S. Household Debt Hit Record in First Quarter

(4) NYT.com: Dangerous Times for Trump and the Nation


Related Artices

If you enjoyed this article "The Danger of Market Jitters" you may find these related articles of interest too: